Nice Budget, Shame About Your Government, Aussies Tell Turnbull

(Bloomberg) -- The good news for Australian Prime Minister Malcolm Turnbull: voters have given his latest budget the tick of approval. The bad: they still don’t like his government.

The former investment banker may have been scratching his head after opinion polls showed Australians liked the centerpieces of his Liberal-National coalition’s annual fiscal blueprint delivered last week, but still preferred his Labor rivals to rule.

“Turnbull’s biggest threat is some people just aren’t listening to him because they’ve already decided they don’t like or trust him,” said William Bowe, an analyst of opinion polls at the University of Western Australia. “But he’s got time to turn it around and if he holds his nerve and sells it properly, the budget should help him do that.”

Turnbull’s failure to make an immediate gain on the main opposition Labor Party shows the scale of his task in winning back voter trust. His authenticity has been damaged by a recent Donald Trump-style bout of populist policies, which jar with the socially progressive image that endeared him to many voters when he became prime minister in 2015.

While there’s little sign of renewed leadership rumblings that saw Australia churn through prime ministers during a decade of political chaos, Turnbull knows he must start connecting with voters. He needs authority to overcome an unruly upper house, where minority parties that collectively hold the balance of power have blocked savings measures.

The government needs to convince voters it has a workable plan to reduce a budget deficit forecast to reach A$29.4 billion ($21.8 billion) in fiscal 2018. It must also show it can follow through on nation-building initiatives including a A$75 billion infrastructure drive and an extra A$18.6 billion in school funding.

Doubts linger about the budget’s projected return to surplus by 2021. S&P Global Ratings on Wednesday affirmed the nation’s AAA credit rating while keeping its negative outlook, saying “if downside risks to government revenue materialize, then budget deficits could persist for several years, with little improvement.”

Scattershot

Since narrowly avoiding defeat in last July’s election, Turnbull’s policies have been scattershot. Moves to the left to neutralize Labor through increased funding for schools and health could appear at odds with a tough pilot plan to strip the jobless of welfare should they fail drug tests.

A tax cut for small companies was welcomed by the business community but a subsequent A$6.2 billion tax on banks put it offside; and while claiming to welcome investment from outside Australia, he created new levies on foreign workers and overseas real-estate investors.

Still, according to opinion polls released this week, voters have generally welcomed the budget -- the second his government has released.

Some 41 percent of voters surveyed in a Guardian Essential poll approved of the budget, with 33 percent against. Yet on a two-party preferred basis, 54 percent to 46 percent still favored Labor. Separate surveys from Fairfax/Ipsos and Newspoll showed the coalition trailing Labor by six percentage points, with the former showing the gap narrowing, and the latter indicating it had widened.

“Budgets rarely, if ever, cause immediate surges in poll ratings because voters need time to digest the measures,” said Martin O’Shannessy, a partner at OmniPoll with two decades of polling experience. “So the government shouldn’t panic.”

Trump Talk

Amid a rise in support for populist parties, including the anti-Muslim immigration One Nation, Turnbull has used language that echoes Trump by saying he’ll put “Australia first.” In the past two months he has announced a crackdown on foreign workers, a tightening of citizenship rules and curbs on gas exports to protect domestic supply.

Such policies have compounded confusion about what Turnbull -- once a passionate advocate of Australia cutting its ties with the British monarchy, tackling climate change and allowing same-sex marriage -- stands for. After toppling his predecessor and Liberal colleague Tony Abbott in a party coup, he’s been hamstrung by conservatives in the coalition and shied away from such a socially progressive agenda.

“Turnbull has made hard work of establishing what his brand is,” said Stephen Stockwell, a political analyst at Brisbane’s Griffith University. “Since becoming leader, he’s always had a problem in keeping his coalition’s conservative base happy and being his own man.”

Still, should he keep the economy on track and manage to defuse snipes from disaffected back-benchers, including Abbott, Turnbull can shore up his leadership credentials and gradually turn the polls around before elections due in two years, according to analyst Bowe.

The prime minister’s strongest advantage is he remains a more popular leader than Labor’s Bill Shorten; Newspoll gives him a 13 percentage point lead over the former union boss. Plus the budget is perceived as fairer than the fiscal plan handed down by Abbott’s government in 2014, which included sweeping cuts to public services that triggered a slump in its approval ratings.

“Turnbull can turn it around because Bill Shorten isn’t a great alternative for most voters,” Bowe said. “The important thing is the government now has an argument to put to the electorate: we’re not the nasty party we were under Abbott.”

To contact the reporter on this story: Jason Scott in Canberra at jscott14@bloomberg.net.

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Chris Bourke, Edward Johnson