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Business may come to rue the Liberals' Budget block


The State Liberals’ move to block a key Budget measure is a short-term decision which South Australia’s business lobby may come to regret, writes Adelaide tax lawyer Andrea Michaels.

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While the business lobby groups cheer Opposition Leader Steven Marshall’s decision to attempt to block the Government’s bank levy, they may want to look further out than this budget and more broadly than this one measure.

Both Marshall and the business lobby groups may live to regret getting what they wish for if the Liberals succeed. What Marshall is proposing is not blocking supply like Malcolm Fraser did in 1975—that effectively meant the government was going to run out of money. In South Australia, there is a separate Appropriation Bill that allocates the spending of government money. The Budget Measures Bill contains the bank levy as well as other changes like the proposed cuts to payroll tax.

Marshall is blocking policy, not supply of money.

If he succeeds, the business community will cheer today but likely grizzle tomorrow. You only have to look to Canberra to see why.

What is the major complaint about the Federal Government from business and the community more broadly? No clear direction. No real policy reform. Can’t deliver on an agenda. What do they stand for – “Labor Lite”?

Have the business lobby groups thought about why this is so? It’s simple. The government puts up policy reform in a budget and the Senate then cherry-picks the policies it wants. So the Federal Government is not delivering its agenda – it’s delivering whatever the Senate allows. This tends to be more populist spending and less unpopular cuts – that’s why government debt is blowing out to record levels.

Look at the black and white outcomes of the last Turnbull Budget and the first Abbott Budget, both from Coalition governments. Turnbull knew he couldn’t get Abbott’s savings measures through the Senate so he did the opposite and went on a spending spree.

So with key crossbenchers in South Australia’s upper house now controlled by senators Bernardi and Xenophon, guess what? They are now adopting the Senate tactic – taking the lead to block budget measures in South Australia. They can’t believe their luck.

To my knowledge, Marshall has been the only Opposition Leader to have now twice broken the long-standing tradition of not blocking budget measures for short-term political gain. But what Marshall has really done is empower the likes of the Australian Conservatives and the Xenophon team.

Minor parties get a long-term win. Government of any colour – and South Australia itself – loses big time. If it’s okay for Marshall to block Labor’s bank levy today, then it’s okay for a future Labor opposition to block Liberal budget reform tomorrow.

Marshall has delivered more power to the minor parties that threaten to take seats from his own party and delivered South Australia a system of less budget certainty and no clear direction.

The last thing South Australia needs is less long-term certainty. Personally, in the current political environment, I’d rather see certainty on a policy I might not agree with than the uncertainty and lack of direction that goes with a short-term popularity contest.

All Marshall had to do was say he would repeal the tax on winning government.

All he has done is weaken South Australia for a short-term political hit.

Andrea Michaels is a tax and superannuation specialist and the Managing Director of Adelaide law firm, NDA Law. Twitter: @michaels_andrea

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