Donald Trump’s trade war with China could be the biggest barrier to Prime Minister Scott Morrison’s strategy to win the next election. Picture: AFP
Donald Trump’s trade war with China could be the biggest barrier to Prime Minister Scott Morrison’s strategy to win the next election. Picture: AFP

Trump could topple ScoMo’s plans

DONALD Trump is looming as the biggest obstacle to Scott Morrison's action-man plans to repair and restore the Coalition's election hopes.

The US President's trade adventurism and chest-pounding boasts of being able to tame the Chinese giant - our most important trading partner - could end the prime minister's strategy.

Mr Morrison has made it clear he hopes to spend his way to political prosperity by while still delivering a Budget surplus. And China is a central component of the plan.

Since he took the top job, Mr Morrison has fuelled a quickening in the government's reaction time to issues, shaving it to days if not hours.

This is aimed at rebuilding political stocks - a central element of the swift action this week in response to the rash of strawberry tampering, which was a big concern to voters.

It was more than a bid to grow the new PM's relations with voters. It was a declaration of distinction from predecessor Malcolm Turnbull, who was prone to prolonged discussions that could not be confused with populism.

But this political strategy costs money.

Scott Morrison’s plan to win the next election is an expensive one — such as a $4.6 billion education funding package. Picture: AAP
Scott Morrison’s plan to win the next election is an expensive one — such as a $4.6 billion education funding package. Picture: AAP

Confirmation came this week with the $4.5 billion in extra funding for private schools.

Mr Morrison immediately harnessed the politics of the extra cash, on Friday visiting a Catholic school in Wentworth, Mr Turnbull's former electorate and the site of an October 20 by-election that is a must-win for the Liberals.

And this week saw the announcement of a Royal Commission into aged care, which is almost certain to lead to extra spending when it reports late next year.

From his first day as PM, Mr Morrison has been talking up assistance for those hit by drought, a blight which cannot only cripple personal finances but weaken the national economy.

The bills are stacking up for a payout next general election, as an act of faith in increasing revenue for the government and a Budget surplus.

However, the US President isn't in on the plan, and Mr Morrison has been warned of the dangers for months. In his last Budget as Treasurer in May, Mr Morrison was told that global factors could undo his plans.

The documents released pointed to "an increasing risk of global instability in the longer term - such factors as faster tightening of monetary policy, geopolitical tensions, and policy uncertainty in relation to trade protection".

The government’s response to the drought crisis will cost dearly. Picture: Kym Smith
The government’s response to the drought crisis will cost dearly. Picture: Kym Smith

The then-Treasurer responded in an interview: "The world is not free of risk. Walking out of this building is not free of risk, but we all plan to leave the building at some point."

The last factor mentioned by Treasury - in effect, Mr Trump's protectionism - was the key element of that warning.

And this week it was revealed the Reserve Bank of Australia was also worried. The longer-term risks mentioned by Treasury in May were now much closer.

The September minutes of the RBA board meeting carried the line: "There were still significant tensions around global trade policy and that this represented a material risk to the outlook."

A study by authoritative accounting firm KPMG said the Beijing-Washington tariff retaliations could cost the Australian economy $2 billion in the first year, and increase to $5 billion by 2020.

The economic consequences of Mr Trump's determination to engineer a showdown, and Beijing's preparedness to oblige him, could decide the outcome of the Australian general election.


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