Angus Taylor is the new leader of the Liberal Party, but the challenges facing the party go far beyond leadership, and its fortunes won’t improve until it addresses them.
The conservative takeover of the Liberal Party is now complete, but only after the Teals cemented their seats, and after One Nation dropped the shackles of being a fringe far‑right party to become, somehow, more compelling than the Coalition. The right‑wing politics of Australia has splintered, and the damage is already done. An Angus Taylor transition will not fix that. Taylor may be conservative, but he is not competent--just look at his time as shadow treasurer--and, as Malcolm Turnbull said, Taylor “is the best qualified idiot they’ve ever met.”
How long can it take to cook an Angoose? Not long I would think. His most likely strategy is to swing towards One Nation policies. He has already attacked on immigration and climate. We can expect Laura Norder to appear before long.
Taylor outlined six broad policy perspectives in his first presser. Here's a rebuttal of them seen through the lens of Modern Monetary Theory (MMT):
First, on “restoring living standards” and cost-of-living relief. From an MMT perspective, the federal government is the monopoly issuer of the Australian dollar. It does not need to “find the money” to support living standards. The real constraint is inflation and real resource capacity, not budget deficits. So framing the problem as one of fiscal restraint or excessive government spending misses the point. Living standards fall when real wages lag productivity, when essential services are underprovided, and when private debt burdens households. If the Commonwealth wants to lift living standards, it can directly target full employment, invest in public goods, and expand productive capacity. Austerity rhetoric or an obsession with cutting spending risks suppressing demand and increasing unemployment, which would further weaken household balance sheets rather than strengthen them.
Second, housing affordability. The core issue is not “too much government” but the structure of the housing market. Housing is treated as a speculative asset rather than a public good. MMT highlights that the federal government can always fund large-scale public housing construction if real resources, labour, materials and land are available. The constraint is political, not financial. At the same time, tax concessions such as capital gains discounts and negative gearing have fuelled asset inflation and shifted credit toward property speculation. Cutting “red tape” does little if the financial system continues to pump credit into bidding up land values. A genuine affordability agenda would involve public investment in housing supply and reform of speculative incentives, not just deregulation and migration scapegoating.
Third, lower taxes and opposition to “bad taxes.” MMT clarifies that taxes do not fund federal spending in a mechanical sense. Their primary functions are to create demand for the currency, regulate aggregate demand, and shape distribution. Cutting taxes during inflationary conditions without offsetting measures risks increasing private spending power and worsening price pressures. Conversely, targeted taxation can reduce inequality and dampen speculative excess. So the question is not “high tax versus low tax,” but how fiscal settings manage inflation and resource allocation. Blanket tax cuts framed as restoring prosperity are economically incoherent if they undermine public capacity or overheat demand.
Fourth, tighter immigration framed around values. From an MMT standpoint, migration policy should be assessed in terms of real resource impacts. Migrants expand the labour force and productive capacity. If housing, infrastructure and services are under strain, that reflects inadequate public investment relative to population growth, not the intrinsic harm of migration. A currency-issuing government can fund the infrastructure required to accommodate population growth so long as real resources are available. Reducing migration may temporarily ease pressure in some sectors, but without addressing structural underinvestment in housing and public services, the bottlenecks remain.
Fifth, defending “Australian values.” This is largely cultural framing rather than macroeconomic policy. From an economic perspective, social cohesion is strengthened by full employment and inclusive institutions. MMT places a Job Guarantee at the centre of macro stability. Ensuring that anyone who wants to work can do so at a socially inclusive wage anchors prices and builds social integration far more effectively than symbolic appeals to values. Economic insecurity breeds division. Employment security fosters cohesion.
Sixth, smaller government and deregulation. MMT distinguishes between nominal size of government spending and the real role of government in mobilising idle resources. If there is unemployment and underutilised capacity, cutting government spending reduces demand and worsens those outcomes. The appropriate size of government is whatever is required to maintain full employment with price stability. Deregulation can sometimes increase efficiency, but uncritical rollbacks, particularly in financial or environmental domains, can amplify instability and long-term costs. Moreover, calls for “smaller government” often coexist with expanded coercive or border enforcement measures, revealing that the issue is not size per se but ideological preference.
In short, through an MMT lens, the debate should not revolve around fiscal tightening, smaller government or tax cuts as ends in themselves. The key questions are whether policy maintains full employment, stabilises prices, reduces inequality, and expands real productive capacity. Many of Taylor’s stated priorities reflect orthodox deficit anxiety and supply-side rhetoric, rather than a coherent understanding of a sovereign currency system and its policy space.
I must add that the current Federal Labor Government is also failing to manage our economy properly. Treasurer Chalmers, although a very nice and agreeable fellow, is looking at prosecuting his job through a mainstream, classical economics lens. Sadly, the Greens still haven't fully understood MMT, as revealed by its referring to the myth of "taxpayers' money" and rolling out policies that appear to depend on tax receipts, which we know don't actually pay for anything! 🤗
The Libs are behaving like a chook whose head has been cut off - running around in circles as it dies.
Changing leaders does nothing to fix their underlying failures.
Whining irrationally about immigration doesn't lower rents or increase housing supply.
Defending tax bribes which favour investors doesn't put roofs over peoples' heads.
The Libs need to develop an actual set of serious policies for a better Australia. Until they do, they are as unfit to govern as One Nation, and should be ignored.
Your point about the electoral system is vital. In single member electorates, the Liberals at this stage are toast. Their national polling currently suggest they are sub 20%. The bottom has fallen out.
This is the exact problem FPTP and Preferential voting creates: massively disproportionate representation in the parliament. With a government with 62% of the seats off of 34.6% of the vote, dictators couldn’t create a better system than ours. Is it any wonder they don’t want proportional representation?
One more round of Liberals trying to find effective ways to market freedom from taxation for their wealthy donors and principle media supporters and climate science denial and obstructing renewable energy to please the big fossil fuel miners and the long cultivated gullibles. That marketing is - as before - going to be based in culture war distractions and fanning of alarmist fears.
Teals are doing what Liberals should be - integrity, treating the top level science on climate as if it were true, because it is. Just the integrity would do - treating climate change seriously follows from that. Every big problem we face is easier to deal with in the absence of corruption.
The conservative takeover of the Liberal Party is now complete, but only after the Teals cemented their seats, and after One Nation dropped the shackles of being a fringe far‑right party to become, somehow, more compelling than the Coalition. The right‑wing politics of Australia has splintered, and the damage is already done. An Angus Taylor transition will not fix that. Taylor may be conservative, but he is not competent--just look at his time as shadow treasurer--and, as Malcolm Turnbull said, Taylor “is the best qualified idiot they’ve ever met.”
How long can it take to cook an Angoose? Not long I would think. His most likely strategy is to swing towards One Nation policies. He has already attacked on immigration and climate. We can expect Laura Norder to appear before long.
The song remains the same x Status Quo - they either aren't listening or aren't trying, they will be extinct soon enough.
Taylor outlined six broad policy perspectives in his first presser. Here's a rebuttal of them seen through the lens of Modern Monetary Theory (MMT):
First, on “restoring living standards” and cost-of-living relief. From an MMT perspective, the federal government is the monopoly issuer of the Australian dollar. It does not need to “find the money” to support living standards. The real constraint is inflation and real resource capacity, not budget deficits. So framing the problem as one of fiscal restraint or excessive government spending misses the point. Living standards fall when real wages lag productivity, when essential services are underprovided, and when private debt burdens households. If the Commonwealth wants to lift living standards, it can directly target full employment, invest in public goods, and expand productive capacity. Austerity rhetoric or an obsession with cutting spending risks suppressing demand and increasing unemployment, which would further weaken household balance sheets rather than strengthen them.
Second, housing affordability. The core issue is not “too much government” but the structure of the housing market. Housing is treated as a speculative asset rather than a public good. MMT highlights that the federal government can always fund large-scale public housing construction if real resources, labour, materials and land are available. The constraint is political, not financial. At the same time, tax concessions such as capital gains discounts and negative gearing have fuelled asset inflation and shifted credit toward property speculation. Cutting “red tape” does little if the financial system continues to pump credit into bidding up land values. A genuine affordability agenda would involve public investment in housing supply and reform of speculative incentives, not just deregulation and migration scapegoating.
Third, lower taxes and opposition to “bad taxes.” MMT clarifies that taxes do not fund federal spending in a mechanical sense. Their primary functions are to create demand for the currency, regulate aggregate demand, and shape distribution. Cutting taxes during inflationary conditions without offsetting measures risks increasing private spending power and worsening price pressures. Conversely, targeted taxation can reduce inequality and dampen speculative excess. So the question is not “high tax versus low tax,” but how fiscal settings manage inflation and resource allocation. Blanket tax cuts framed as restoring prosperity are economically incoherent if they undermine public capacity or overheat demand.
Fourth, tighter immigration framed around values. From an MMT standpoint, migration policy should be assessed in terms of real resource impacts. Migrants expand the labour force and productive capacity. If housing, infrastructure and services are under strain, that reflects inadequate public investment relative to population growth, not the intrinsic harm of migration. A currency-issuing government can fund the infrastructure required to accommodate population growth so long as real resources are available. Reducing migration may temporarily ease pressure in some sectors, but without addressing structural underinvestment in housing and public services, the bottlenecks remain.
Fifth, defending “Australian values.” This is largely cultural framing rather than macroeconomic policy. From an economic perspective, social cohesion is strengthened by full employment and inclusive institutions. MMT places a Job Guarantee at the centre of macro stability. Ensuring that anyone who wants to work can do so at a socially inclusive wage anchors prices and builds social integration far more effectively than symbolic appeals to values. Economic insecurity breeds division. Employment security fosters cohesion.
Sixth, smaller government and deregulation. MMT distinguishes between nominal size of government spending and the real role of government in mobilising idle resources. If there is unemployment and underutilised capacity, cutting government spending reduces demand and worsens those outcomes. The appropriate size of government is whatever is required to maintain full employment with price stability. Deregulation can sometimes increase efficiency, but uncritical rollbacks, particularly in financial or environmental domains, can amplify instability and long-term costs. Moreover, calls for “smaller government” often coexist with expanded coercive or border enforcement measures, revealing that the issue is not size per se but ideological preference.
In short, through an MMT lens, the debate should not revolve around fiscal tightening, smaller government or tax cuts as ends in themselves. The key questions are whether policy maintains full employment, stabilises prices, reduces inequality, and expands real productive capacity. Many of Taylor’s stated priorities reflect orthodox deficit anxiety and supply-side rhetoric, rather than a coherent understanding of a sovereign currency system and its policy space.
I must add that the current Federal Labor Government is also failing to manage our economy properly. Treasurer Chalmers, although a very nice and agreeable fellow, is looking at prosecuting his job through a mainstream, classical economics lens. Sadly, the Greens still haven't fully understood MMT, as revealed by its referring to the myth of "taxpayers' money" and rolling out policies that appear to depend on tax receipts, which we know don't actually pay for anything! 🤗
Excellent article.
The Libs are behaving like a chook whose head has been cut off - running around in circles as it dies.
Changing leaders does nothing to fix their underlying failures.
Whining irrationally about immigration doesn't lower rents or increase housing supply.
Defending tax bribes which favour investors doesn't put roofs over peoples' heads.
The Libs need to develop an actual set of serious policies for a better Australia. Until they do, they are as unfit to govern as One Nation, and should be ignored.
Thanks David and Eddy.
Your point about the electoral system is vital. In single member electorates, the Liberals at this stage are toast. Their national polling currently suggest they are sub 20%. The bottom has fallen out.
This is the exact problem FPTP and Preferential voting creates: massively disproportionate representation in the parliament. With a government with 62% of the seats off of 34.6% of the vote, dictators couldn’t create a better system than ours. Is it any wonder they don’t want proportional representation?
One more round of Liberals trying to find effective ways to market freedom from taxation for their wealthy donors and principle media supporters and climate science denial and obstructing renewable energy to please the big fossil fuel miners and the long cultivated gullibles. That marketing is - as before - going to be based in culture war distractions and fanning of alarmist fears.
Teals are doing what Liberals should be - integrity, treating the top level science on climate as if it were true, because it is. Just the integrity would do - treating climate change seriously follows from that. Every big problem we face is easier to deal with in the absence of corruption.