Malcolm Turnbull must outline narrative before the budget
It was Aristotle who said nature abhors a vacuum and others have adapted the phrase for politics. This year's vacuum in Australia's economic reform debate has been filled, so far, by Labor. And as we enter an empty period between the parliamentary sitting and the budget, the government risks a Greek tragedy if it doesn't find a way to fill in some of the gaps. Malcolm Turnbull seized his job in a hostile takeover more than six months ago, citing Tony Abbott's lack of an economic narrative as a plausible justification. On his ascension, the new Prime Minister said this was the "most exciting" time. "I'm filled with optimism and will be setting out in the weeks (and months) ahead â€¦ more of the foundations that will ensure our prosperity in the years ahead," he said. He promoted Scott Morrison as his Treasurer, lauding his track record in delivering reform. Yet the pressing problem for Mr Turnbull now is that he has not provided that narrative. 
The Coalition's confusion has been deliberately accentuated by the opposition. The silly pyjama sitting of the Senate was hardly necessary given the broad support for voting reform. Labor's intellectual support at senior levels was expressed by respected former senator John Faulkner in a bipartisan committee report and also in parliament by the former shadow minister who handled the matter, Gary Gray. Clearly, caucus overruled their wise counsel purely to create disorder for reasons of base politicking. Labor was never going to stop the bill but it succeeded in making the nation's governance look even more shambolic.
Parliament won't sit for seven weeks until it resumes for the budget and this period looms ominously for the Coalition. Labor already has outlined clear polices on superannuation tax concessions, negative gearing changes and increases in tobacco excise which, for all their faults, have set the agenda. The opposition has assumed the leadership normally taken by government and the Coalition has been uncertain in its response. One moment Mr Turnbull warned Labor's negative gearing changes would force down housing prices, the next his Assistant Treasurer, Kelly O'Dwyer, said they would push up prices. If Bill Shorten and opposition Treasury spokesman Chris Bowen are as sure-footed in the next two months as they have been so far this year, they are bound to release more policy to further increase the pressure on the Coalition.
Mr Turnbull would point to moves on media reform and inserting an effects test into competition law as economic action, but both have been on the table for many months and are a long way from implementation. Fiscal repair is the imperative and it was Mr Turnbull and Mr Morrison who raised expectations for taxation reform. While The Weekend Australian credits Mr Shorten for releasing policy, his plans are lazy tax increases to fund ever-greater spending. The Coalition needs to resist tax increases and focus on expenditure restraint. Yet we fear they too will propose tax hikes, at least on superannuation and tobacco. This is the wrong response to a spending problem - at almost 26 per cent of GDP, expenditure remains close to GFC stimulus levels - and it squanders a political chance to contrast a pledge of no tax increases against Labor's hikes.
Indeed, the gravest concern this newspaper had about the proposed GST increase was that the idea was driven largely by premiers who wanted more money to underpin unsustainable levels of spending. As Adam Creighton has detailed in our news pages, the expansion of the public sector under a range of state and territory governments is increasing the burden on taxpayers - federal public service numbers have been trimmed below 250,000 while the states have expanded their total workforce to almost 1.5 million. What the nation desperately needs is growth in the private sector and restraint in the public sector. Mr Turnbull must invest some of his considerable political capital in reducing spending, eliminating duplication between state and federal spheres, tackling the regulatory burden, increasing labour market flexibility and, wherever possible, lowering and simplifying taxes on individuals and companies. We expect to hear a good deal about this in the budget but Mr Turnbull and Mr Morrison need to outline their intentions beforehand.A core failing of the Coalition's first budget in 2014 was how the ground was not tilled to make the case for reform, and after the budget the advocacy failed. The Coalition must learn from these mistakes and use the coming weeks to explain what it hopes to achieve - outline the economic narrative it promised. With the Senate voting reforms passed, we won't be surprised if Mr Turnbull calls a double dissolution the day after the budget. So the advocacy may occur in the febrile environment of an extended election campaign - quite a test for a novice budget team. This is a high-risk strategy, not just for the Coalition but also for a nation in desperate need of fiscal repair and economic reform.