Malcolm Turnbull will make a significant attempt to reset his Coalition government’s strategy on February 1. The prime minister will use an address at the National Press Club in Canberra to chart a course that he hopes will win back lost support within both the centre-right side of politics and the country at large, and to see off an increasingly populist challenge from the leader of the opposition, Bill Shorten.
While the underlying message will remain the same as before – jobs and growth – Mr Turnbull intends to introduce new concepts designed to win public support. They include incentives to stimulate international investment in the regions, particularly from China, the capitalisation of some aspects of health funding, and joining in new trade talks promoted by China as an alternative to the Obama-inspired Trans Pacific Partnership, now buried by US president Donald Trump.
Mr Turnbull will support the pro globalisation stance of China’s president Xi Jinping at Davos last week and echo his statement that there can be no winners in a trade war. He will use Mr Xi’s speech as a stick with which to beat Mr Shorten’s recent slide into protectionism. The prime minister will argue that the Coalition’s free trade deals with China, Japan and South Korea have greatly helped exports, especially in the agricultural sector, and stimulated jobs and growth.
Australia will now focus on the China-led Regional Comprehensive Economic Partnership (RCEP). The RCEP covers 30 per cent of the world’s economy in 16 countries: the 10 members of the ASEAN in South East Asia plus their regional trading partners China, Japan, South Korea, Australia, New Zealand and India. It notably excludes the United States. Negotiations are likely to start in July in India, which was not involved in the TPP negotiations.
Australia may also pick up another Chinese idea – the establishment of tax free economic zones, like that in Shenzen and other parts of the world. Top of the shortlist for the first special economic zone is the Surat Valley/Toowoomba area in Queensland, the most progressive agribusiness centre in the country.
Toowoomba has a set of competitive advantages – including the first privately financed and built international airport that also now serves industrial west Brisbane and offers a weekly (soon to become daily) Cathay Pacific cargo flight to Hong Kong, carrying fresh beef, fruit and vegetables and other produce. Toowoomba is the home of Food Leaders Australia, a consortium formed to promote and export Australian produce, especially to China.
Mr Turnbull was forced to reshuffle his ministry following the resignation of health minister Sussan Ley after revelations about her expenses’ claims, but he will capitalise on the proven experience of Greg Hunt, now in charge of health, and Senator Arthur Sinodinos who now has the industry portfolio.
Australia has one of the best public health services in the world, though you would not think so to hear many Australians speak. Australians choose their own GPs and other healthcare professionals, and have a commercial arrangement with them as a matter of free choice, but they get back the majority of the cost from the government’s Medicare. In the average suburb, a 15-minute appointment with a doctor is arranged within 24 hours and costs $50, with $40 of that returned from Medicare. A 30-minute meeting with a specialist heart or cancer consultant will cost between $225 AND $375, with $225 reimbursed. Most people pay for prescriptions, but expensive drugs or treatments are heavily subsidised, and free for the poor or disabled.
But, with an ageing population and an increasing demand for the highest quality international treatments, keeping the cost of health care under control is not easy, especially when operationally most of it is a state responsibility.
That goes for education too where, despite rising spending, Australia has been slipping down the world competitiveness league, falling behind Asian countries, especially in languages, maths and science. Experience in recent years has shown that extra cash and smart new buildings do not solve the problem.
In our view, it’s not likely that the Turnbull speech on 1 February will reinvigorate a sagging share market. February is not traditionally a great month for the ASX, and we don’t see much reason for optimism. But, for Turnbull, a lot hangs on this speech. If he comes up with a convincing narrative, the political winds will start shifting against Mr Shorten who, after all, is nothing if not uninspiring.