Things aren't quite going to plan for Malcolm Turnbull's government

Prime Minister Malcolm Turnbull at Wednesday's Mersey Hospital funding announcement in Latrobe.
Prime Minister Malcolm Turnbull at Wednesday's Mersey Hospital funding announcement in Latrobe. Photo: Brodie Weeding

It's just over four weeks until the federal budget. Parliament has risen, thank goodness, so none of that usual nightmare of daily theatre management.

Federal Cabinet and the expenditure review committee have been hard at work.

It's about the time in the cycle when governments start dropping out announcements made in the budget context lest they disappear on budget night.

You would think that all the concentration might have started producing a slightly more coherent message from the government about what it is about.

Treasurer Scott Morrison says the company tax cut passes the pub test.
Treasurer Scott Morrison says the company tax cut passes the pub test. Photo: Andrew Meares

That is, apart from the various elements of policy which are under intense scrutiny at this time of year, all of that round the table chat would mean senior ministers would have had at least been a bit exposed to the same information as each other and even what their various views were about stuff.

Why not talk policy with drunk people?

As a result, you might think they might convey a slightly more confident sense of where things were heading.

But, no. While regulators are racing around changing the rules on bank lending because of the risks posed to system stability – and the economy – by both excessive property lending and a property bubble, government ministers continue to glibly talk about a supply problem in the housing market.

Supply may be a factor in the wildly over-heated property market. But the federal government has virtually no levers to affect housing supply.

Its only real levers on the housing market reside in tax policy. But there are few signs that the government is prepared to break out of its politically-generated box on housing tax breaks.

The federal treasurer, meantime, who can't produce any economic modelling to show that his signature – actually only – economic policy will work, suggests journalists should go and ask people at the pub about the benefits of the government's company tax cuts.

As a colleague observed, it makes sense that you'd ask drunk people for an endorsement of your policy.

Despite such sage advice from the man in charge of the Treasury coffers, Scott Morrison says the real problem is that it is the dubious reputation of big business that stands in the way of the company tax cuts passed by the Senate last week also going to companies with turnover of more than $50 million. Though others might wonder whether the government's reputation may be starting to have something to do with it.

There are further signs that things aren't quite going to plan in the lead-up to the budget.

The government this week wrote to the states saying that it would not be finalising a schools funding package until early June – after the budget.

Amid all these signs of finely honed strategy – and a helpful intervention from Immigration Minister Peter Dutton linking polls to prime ministerial mortality – an issue of significance emerged this week that warranted a one-off investment of $730 million – payable in the next couple of months – which reminded us of lots of splendidly bad previous policy decisions.

First, let's just run past that number again: $730 million is a really solid whack of money in these fiscally tough times. Yet an announcement this week that it would be wending its way south to the Apple Isle passed close to unnoticed amid the frenzy of other things happening in federal politics at the moment.

Remember the Mersey?

The prime minister went to Tasmania on Wednesday to announce the federal government would give the island state $730 million to (hopefully) put to rest a health policy nightmare that dates back 10 years and started in the dying days of the Howard Government. Remember the Mersey Hospital?

It's the hospital in Northern Tasmania – in the marginal seat of Braddon to be specific – that John Howard announced, six weeks before the 2007 federal election, that Canberra would be taking over. The hospital was facing the spectre of having its services downgraded.

The move – first announced in a YouTube clip at 5am one chilly morning in 2007 – was heralded at the time by Howard as possibly "a model for other parts of the country", saying voters did not care who funded essential services, so long as they were funded.

In turn, the intervention came after Howard's health minister, Tony Abbott, had been touting a federal takeover of hospitals and when Kevin Rudd was storming ahead in the polls pledging an intervention to fix the hospital system.

Ten years on and what has happened? There has been a bizarre situation in which the state government in Tasmania has run Mersey, on behalf of the federal government, but the hospital has been kept outside all the normal hospital funding arrangements.

The federal government started paying around $40 million a year to run the hospital, an amount that has steadily increased, though there has been almost constant uncertainty about how long the deal would last.

In all that time, however, the essential problem of Mersey – staffing – has not been fixed.

The bottom line is that it isn't really viable to have a full suite of specialists at Mersey.

'Rather humiliating task'

The Rural Doctors' Association has lobbied for a shift to a model of rural generalist doctors, with occasional visits from specialists. It argues that the system of locums that have been required to staff the hospital has added around $300,000 per staffer per year to the cost of running the hospital.

The Association will now continue to lobby the state government for this to happen as Mersey is officially re-absorbed into the state's hospital system from July 1 after a particularly unproductive odyssey under federal ownership.

While the spectre of a federal takeover created a frenzy of excitement in 2007, the rather humiliating task of conceding defeat and instead promising to hand over a bucket of cash – the $730 million is funding for 10 years – to the state government to make the whole thing to go away seemed to get a lot less attention.

The move might have been technically a joint announcement by Malcolm Turnbull and Tasmanian Premier, Will Hodgman, but Hodgman was too busy to bother heading north from Hobart for the announcement.

The government insists at least $600 million of the funding is already set aside in the budget (something that would make sense if the feds thought they were going to simply be continuing to fund it each year). The rest will be a top-up.

But once again, the government finds itself trying to clean up the messes of its Coalition predecessors. And in the meantime, it seems unable to find anything to say of its own about where to take the country.

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