The hope is that the Turnbull Government can now settle down to governing, with the same-sex marriage legislation out of the way, the dual citizenship issue being “managed” (but maybe not done), and two by-elections won, and dusted.

So, the government used the release this week of MYEFO (The Mid-Year Economic and Fiscal Outlook) to lay the basis for the next budget, and to begin to set their economic agenda through to the next election. Turnbull’s final act for the year was a significant reshuffle of his ministry.

With MYEFO the government was emphasizing the somewhat lower budget deficit this year, and the prospect of a larger surplus and lower debt in 2020/21, and drew attention to the somewhat better private investment outcome on the back of even stronger corporate profits, and the recent very strong employment growth. They didn’t have much to say about the still historically weak wages growth and very flat household spending, against the background of record household debts. 

Although they actually lowered their predictions of future wages growth a little, the assumed prospective pick-up over the next few years is still the way they claim to generate a return to budget surplus. Most economic commentators still view the wages assumption as “heroic” and, therefore, the assumed surplus as quite unlikely, especially as key elements of spending (such as the disability scheme) are expected to run away over the next several years.

Overall, our growth rate still has a “2” in front of it and, given all the global risks and uncertainties, it will be a big ask to get it back to the 3-4 percent they wish.

However, stock markets are breaking records, all buoyed by the prospect of Trump delivering on lower taxes and more infrastructure, but doubts linger as to whether it is funded and sustainable, especially as the Fed is foreshadowing further increases in interest rates through next year. 

Turnbull is now pinning his electoral hopes on promising to deliver both personal and corporate tax cuts. They are using the slightly better MYEFO numbers to create the impression that they will be able to fund it. Turnbull’s low personal poll standing mostly reflects the fact that he has failed to live up to expectations. It is most dangerous to go on to raise further expectations if in the end you again fail to deliver.  

Turnbull’s reshuffle was all politics, and not much to do with merit or ministerial capacity. Most commentary has understandably focused on his “sell-out” to Joyce and the Nats. 

This is particularly hard to understand and accept as the Nats were a large cause of the political disruption and distraction through 2017, and a major reason for the government’s poor standing in the polls. Blatant disunity, attempts to run their own policy agendas (especially forcing a Banking Royal Commission against Coalition policy), threats to cross the floor or sit on the cross benches, Joyce’s own citizenship debacle, and his acceptance of gifts, and so on. 

There is little doubt that the Nats have lost touch with their electorates, and fear One Nation stealing their support. They clearly have much to do to reestablish their legitimacy. But, conning the government into shifting its ministry to their advantage, and other blatantly populist moves, certainly won’t help. Turnbull is left depending on a few new, inexperienced ministers in key portfolios, along with a number of other non-performers. That the Nats argue against quotas for women, but insist on their quota of ministerial posts, basically says it all.