Australia's Prime Minister Malcolm Turnbull and opposition leader Bill Shorten have presented vastly different economic visions ahead of the federal election, leaving voters a choice between boosting business investment and extra education spending.
With the July 2 ballot looming, analysts say the competing economic plans pose the starkest choice at an election in decades. The plans have largely followed the traditional ideological divide, with the ruling conservative Coalition backing measures to try to spur business activity and scale back public spending. In contrast, the left-leaning Labor Party supports greater investment in education and health.
"They are really quite strongly opposed perspectives," Professor Tony Makin of Griffith University told The Straits Times. "The government is adopting a pro-growth approach via reducing the role of the state by cutting taxes and stimulating private-sector growth. Almost diametrically opposed, Labor is adopting a pro-government spending strategy to stimulate growth."
Australia's economy has had 25 years of continuous growth - longer than any other country - but has begun to lag as a China-fuelled mining boom ended. Despite fairly low unemployment of 5.7 per cent, consumer sentiment is weak. A June 16 poll by ReachTEL found the economy to be the biggest issue for 30 per cent of voters, followed by health (19 per cent), job creation (17 per cent), education (12 per cent) and climate change (11 per cent).
Campaigning on a mantra of "jobs and growth", Mr Turnbull has pledged A$48.5 billion (S$48.7 billion) worth of tax cuts for businesses over the next 10 years, cutting the corporate tax rate to 25 per cent from 28.5-30 per cent now.
Labor opposes the cuts except for small businesses and instead wants to commit A$37.3 billion to school education over the next 10 years. Mr Shorten has said that a fairer, improved school system will "create jobs (and) increase productivity and grow the economy". Labor also wants to curb tax concessions for property investors - a step backed by most economists as a way to cool the surging housing market and assist first-time homebuyers.
GROWTH BY DIFFERENT MEANS
The government is adopting a pro-growth approach via reducing the role of the state by cutting taxes and stimulating private-sector growth. Almost diametrically opposed, Labor is adopting a pro-government spending strategy to stimulate growth.
PROFESSOR TONY MAKIN, from Griffith University.
But Mr Turnbull has said housing prices will fall. An analysis released this week by Brisbane-based Adept Economics said Labor's plan will leave home prices about 4 per cent lower than if the tax concessions were left unchanged. Not a property crash, the report said. "But it would mean a reduction in value... which is not insignificant."
Another stark difference is the approach to reining in Australia's growing deficit. Significantly, Mr Shorten has conceded he would deliver higher Budget deficits than the Coalition over the coming four years. Both sides project a return to surplus by 2020-21.
"Labor will not have the same degree of fiscal contraction as the Liberals," Mr Shorten said on June 8.
Most economists say the competing emphasis on promoting business investment versus education is the starkest difference between the two sides, though there is no consensus on which will ultimately deliver stronger growth.
Queensland University economist Flavio Menezes said it was "highly uncertain". "The impact of cutting the corporate tax rate will not be enormous," he told The Straits Times. "With better education, we become more productive and can produce more with less. On the face of it, education is likely to have a bigger impact but it is not certain."
Prof Makin disputed this assessment, noting - as did Prof Menezes - that higher education spending does not necessarily lead to improved outcomes. Singapore, he noted, spends less on education than Australia as a proportion of gross domestic product but has better school numeracy and literacy levels.
"I think the private sector is the source of growth in the long term," he said. "It employs most people… If you improve literacy and numeracy, you achieve better growth. But the question is whether government spending achieves higher literacy and numeracy."
Prof Menezes said neither side has presented a credible path to repairing the Budget. But, he added, Australia's economy is strong and its future would not be significantly affected by a failure to adequately cut the deficit.
"We have very strong institutions - a floating dollar and an independent central bank - and these mechanisms are doing a pretty good job. Regardless of who wins there will be no disaster - unless, say, the Chinese economy collapses or there is another financial crisis."