Budget 2017: Why should Liberals support the principle-free Turnbull Coalition? – The Australian Financial Review

These are Liberal principles and if you don't like them ... we have others.

Are there any principles that the Liberal Party still stands for?

Core Liberal convictions used to include: the importance of sound public finances; the need for honesty in budget forecasts; distrust of "government spending" as a solution to problems; and a preference for low taxes, to reward hard work and let individuals keep more of the income they earn.

Liberals used to subscribe fervently to all of these values and conservatives still do. But after this week's budget, it's unclear if the parliamentary Liberal Party still subscribes to any of them.

Consider them in turn.

After wavering during the Fraser years, the Howard government recommitted the Liberals to balanced budgets as a bedrock virtue. And it delivered, achieving 10 surpluses from 12 budgets and fully paying off the Commonwealth's net debt, despite inheriting large deficits and record debt from Labor. This success reaffirmed budget discipline as a central Liberal tenet, and was the firm anchor to which the politically successful Howard government was tethered.

Indeed, so effective was the Coalition in promoting budget discipline that, although the Rudd and Gillard governments failed to get the budget back to surplus post GFC, both felt compelled to repeatedly commit to that goal.

Yet now the Turnbull government has announced another $37 billion deficit this financial year, unchanged from two years ago, and at least a further three deficits to come to make 12 years of Commonwealth deficits in a row.

To put that in perspective, even after the severe early 1990s recession when unemployment topped 11 per cent, Australia only recorded seven consecutive deficits and one of those was negligible (just 0.1 per cent of GDP). Yet now, with unemployment below 6 per cent and projected to fall, the Turnbull government is untroubled by the prospect of adding at least six deficits to the six Labor already recorded.

Nor is it troubled by Commonwealth net debt hitting a new record level as a share of GDP, surpassing the previous mid-1990s peak, as it commits to huge new spending on health and education in a vain effort to out-Labor Labor.

What about the honesty of the latest fiscal projections?

It was the Howard government that brought in the Charter of budget Honesty and that introduced the underlying cash balance concept in 1996, to stop governments misleadingly claiming budget improvement through one-off asset sales. (Asset sales may or may not make sense each case must be judged on its own merits but they should never be done just to claim a temporary budget boost from "selling off the silver".)

And it was the Liberals that rightly attacked Rudd/Gillard Labor's approach of hiding big spending increases out beyond the budget forward estimates period; of using overly rosy economic projections to prop up its budget forecasts; and of employing accounting fiddles to ensure that billions of dollars of NBN spending never showed up in the budget bottom line.

Yet now the Turnbull government has embraced all three of these tricks.

With its sudden conversion to Gonski spending itself a complete reversal of the principles Liberals supposedly held dear until two weeks ago it now plans to splash $18.6 billion extra on schools over the next decade; yet 90 per cent of this spending is to occur in the final six years, hidden beyond the four-year horizon covered in the budget papers.

As for the budget's economic projections, the latest data show wages rising by less than 2 per cent a year. Yet this year's budget has wages growth rising to three per cent by 2018-19 and to 3.75 per cent two years thereafter enabling big projected increases in income tax revenue despite every single budget for at least the last six years having had wage growth forecasts that were more conservative but still proved over-optimistic.

And as for accounting fiddles, rather than reject Labor's fraudulent NBN approach, the Turnbull government has doubled down on it providing $14 billion to build the Inland Rail and the Western Sydney Airport without a cent showing up in the budget deficit. One doesn't have to oppose these projects to see that this is plainly deceptive.

Finally, what about Liberals' preference for small government and lower taxes? These also used to be defining Liberal values and still are for conservatives but Tuesday's budget shows that the Turnbull government doesn't even pretend to still believe in them.

After all, there's not much that's "small government, low tax" about raising taxes by $20.75 billion and spending by $14.5 billion or about being content for spending to remain at 25 per cent of GDP or more for seven straight years on your watch, the longest period at this level since the Second World War.

Clearly, the 2017-18 budget shows that the Turnbull Liberals have abandoned core Liberal principles on spending, on taxing, and on budget discipline and honesty just as they'd already abandoned other longstanding Liberal convictions on social matters, on valuing self reliance (think of the government's superannuation "reforms"), and on upholding Australian sovereignty (the mercifully thwarted effort to kowtow to China over extradition arrangements).

For Liberals who still believe in those principles, it's time to ask: why exactly should I continue to support a party that has no compunction about abandoning me?

Cory Bernardi is a South Australian Senator and leader of the Australian Conservatives

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Budget 2017: Why should Liberals support the principle-free Turnbull Coalition? - The Australian Financial Review