Malcolm Turnbull’s not-so-big loss

Today the premiers got out their guns and shot the prime minister’s Great Big Idea out of the sky.

I suspect this isn’t as bad for the PM as it seems.

Malcolm Turnbull had gone into the COAG meeting today with two big proposals on the table. First, states would get a share of the federal government’s income tax revenue. Their grants would be reduced by the same amount. This would see them get no extra income immediately, but the amount they got would grow faster over time, and they would have more freedom about how to spend it. Second, after 2020 they would have the option of raising (or lowering) income tax themselves.

COAG agreed to further consider the first part of the plan.

The second part is the one that attracted all the controversy this week, and that was the bit that was shot down. It is now off the table. That is an embarrassment for Turnbull, and not a small one. The process this week was pretty rough, and only encouraged the idea that the government has not yet figured out how to govern. The radical idea was floated by the PM at the strange venue of a sporting club, without any accompanying detail, and was undermined both immediately beforehand and immediately afterwards by his treasurer. After a couple of days of fairly confused debate it was killed off.

Another big idea, like the proposed changes to the GST, with a lot of talk, and no result.

But Turnbull gets three important things out of today.

The first, perversely enough, is that he no longer has to argue for his radical plan at an election. He doesn’t have to argue for the states’ right to increase income taxes. He doesn’t have to answer Labor’s cries of “double taxation”. His ego might be dented, but politically he’s probably been handed a win, however unwittingly.

The second is that he now has three responses to the potent Labor accusation of $80 billion of cuts to health and education funding. If you have any doubts about how deadly those claims are, cast your mind back to the ALP’s 2013 election campaign. There were few big policies, but a whole heap of ads about “Liberal cuts”.

When Turnbull is asked about the big gap in funding for health and education he can say, “Well, Fran/Leigh/Laurie/Neil, we have increased health funding [a little, nowhere near enough to make up for the original downgrade]. We’re also trying to give the states access to income tax, which means their funding will grow faster. And you know what else? We offered the states the opportunity to raise more money, through an income tax of their own, but they turned it down. And so now we’re all going to have to live within our fiscal envelope. Which the states can now do better, because we’ve given them more freedom about how to spend their money.”

In other words, it’s another version of the win/kind-of-win strategy he’s set up for himself on the ABCC and the double dissolution. Even if he doesn’t get what he says he wants, he still gets something.

“Fiscal envelope”, by the way, is not my favourite phrase. Turnbull clearly loves it, using it at least 700 times today. Which points us to the third outcome from today.

As the states have now turned down an opportunity to raise more money, Turnbull gets to say, again and again, that we all have to find a way to live within our means. Labor want so much to talk about health and education funding – and they will. And every time they do, Turnbull now has a way to switch the conversation to his preferred ground of economic responsibility.

That said, Labor will not be overly disappointed about today’s outcome. Bill Shorten can probably still wave around the threat of “double taxation”, even though it will have less punch. More importantly, Turnbull might have provided himself with a response, but he has done nothing to prevent Labor talking in the first place about the $80 billion figure. Victorian premier Daniel Andrews made that very clear in his post-meeting remarks. Shorten also has the chance to attack Turnbull over his floated proposal for the federal government to withdraw entirely from public school funding.

Which leaves us heading into the most traditional of election campaigns, with the Coalition wanting to talk economics, and Labor wanting to talk health, education and fairness. Turnbull still needs some economic policies, of course, but then that’s what the Budget is for.

Today’s links

• COAG wraps: The SMH says Turnbull lost.  The Guardian’s report. The Australian says premiers were split. One of the other COAG results is that Queensland will host a national domestic violence summit in October.
• Waleed Aly on Australia’s raw nerves.
• Mike Steketee says there is a truckload of money that can be saved in hospitals – maybe we should fix that before talking about funding. Mark Kenny on the week in politics. Peter Brent says Turnbull did Shorten a favour this week, and Graham Richardson agrees. (I’m not sure of their views now that COAG has killed off part of the state tax plan.) David Crowe says, quite rightly, that the government is not ready for an election.
• On education specifically, federal minister Simon Birmingham says the Commonwealth backing out of funding doesn’t mean there can’t be national cooperation.
• Bill Shorten says the PM should have condemned claims of oil bribery.
• Kevin Rudd had planned to build a new Lodge, and the Turnbulls paid for some of the Lodge’s renovations themselves.
• Fascinating data on the different impacts of marriage on men and women.
• Mainstream “Islamic wear” and its policing.
• The NSW Electoral Commission refuses Arthur Sinodinos’ requests.
• The legacy of Robert Mapplethorpe.
• OK I’m going to try to lighten the burden of Trump news, but I found this interesting: what we can learn about how he’s changed from an interview in Playboy.