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The Clock Is Ticking On Turnbull's Prime Ministership

Turnbull’s recent attack on Shorten is symptomatic of desperation.

15/02/2017 7:05 AM AEDT | Updated 15/02/2017 7:13 AM AEDT

Last week Prime Minister Malcolm Turnbull made his most significant rhetorical attack on opposition leader Bill Shorten to date. "There was never a union leader in Melbourne that tucked his knees under more billionaire's tables," Turnbull claimed. The Prime Minister also labelled Shorten a "social climbing sycophant" and "parasite".

These attacks will bolster the Coalition's morale and assist to retake some of the psychological ground lost since the 2016 election. But any political up-tick will likely be short lived.

At a deeper level, Turnbull's recent attack on Shorten is symptomatic of desperation.

Faced with plummeting prime-ministerial approval ratings, the defection of outspoken conservative Senator Cory Bernardi, repeated high profile media appearances by former Prime Minister Tony Abbott, and the potential loss of political support to a resurgent One Nation, Turnbull is embattled.

The epicentre of the Turnbull prime ministership is company tax cuts. Designed to boost employment and stimulate investment, the cuts are yet to be negotiated through the politically parlous Senate. Already, however, it seems that Senator Nick Xenophon and NXT are inclined to block the cuts for companies with annual turnovers above $10 million.

Making matters worse, an army of high profile economists of all political persuasions have condemned Turnbull's faith in trickle-down economics. It is widely claimed that, at best, a company tax cut of the sort proposed would only deliver a 1-2 percent increase in Australian living standards, compared with a 60 percent increase over the past 25 years.

As also pointed out by leading economists, Australian shareholders enjoy franking credits on dividends, meaning that tax is paid on company profits at whatever rate of personal income tax is applicable. Any gains in domestic economic growth from company tax cuts are therefore likely to be modest, with the greatest windfall streaming to foreign shareholders.

Major political problems are also looming in Victoria and South Australia with the closure of the automotive industry. Succinctly stated, thousands of value-adding jobs will become extinct. The loss of car manufacturers such as Ford, Holden and Toyota, and the decimation of approximately 121 component suppliers, will gouge the economies of already struggling communities.

As the economic pain from the death of the automotive industry kicks in during late 2017 and 2018, Turnbull is set to politically pay for his predecessors' policy failures.

To be fair, this debacle was not of Turnbull's making.

Rather, it can be traced to 2013 when negotiations for government assistance were underway and former Treasurer, Joe Hockey, publicly taunted General Motors to leave Australia.

A study by Professor Andrew Beer from the University of South Australia on the closure of Mitsubishi's Adelaide engine plant in 2004 has indicated that those auto-workers "lucky" enough to find re-employment will encounter worse conditions than previously, or instead become permanently unemployed.

As the economic pain from the death of the automotive industry kicks in during late 2017 and 2018, Turnbull is set to politically pay for his predecessors' policy failures.

Turnbull also faces the unenviable challenge of effecting responsible economic reform. In part, the response has been cuts to the aged pension and an increase in superannuation taxes for wealthy retirees. Paradoxically, it is this older demographic which disproportionately underpins the Coalition's electability.

At least it used to.

With record-low interest rates already reducing the term deposit incomes of retirees, Turnbull's reforms will bite hard. There will inevitably be a political cost.

On environmental policy, Turnbull has diligently jettisoned his own convictions and has played to his party's hard right by remaining silent on the threats posed by anthropogenic climate change. Stunts such as the production of coal lumps on the parliamentary dispatch box by Treasurer Scott Morrison make for good theatre, but in the longer-term they risk ingraining the perception of the Coalition as an anti-scientific, anti-innovation party, insensitive to rising temperatures and sea levels.

Although Turnbull's "hands-off" approach to negative gearing may have satisfied the Coalition's disaffected hard right (including the recently departed Cory Bernardi), it has alienated younger voters.

The greatest policy challenge faced by Turnbull, however, is housing affordability. Turnbull's refusal to consider changes to negative gearing during the 2016 election campaign cemented his reputation as a leader aloof from those he represents. His advice to younger Australians during the election campaign was instructive and memorable: wealthy parents should "shell out" to buy houses for their children. By refusing to address this intractable generational problem, Turnbull demonstrated indifference to the millions of younger Australians who for years have been permanently locked-out of the metropolitan housing market.

Although Turnbull's "hands-off" approach to negative gearing may have satisfied the Coalition's disaffected hard right (including the recently departed Cory Bernardi), it has alienated younger voters.

As more young Australians are confined to underemployment and casualisation, and are increasingly unable to afford rent, let alone astronomical mortgages, Turnbull's unresponsiveness will prove politically costly.

The clock is ticking on Turnbull's prime ministership.

It is more likely now that his tenure will be cut short before the next federal election.

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