Grattan on Friday: Malcolm Turnbull tells others to take risks but will he follow his own advice?

Malcolm Turnbull has had a remarkable start to his prime ministership.

Even in the little things. Sydneysiders John Howard and Tony Abbott wanted to live in their own homes when they were in the top job but were relocated to Kirribilli House for security reasons. Turnbull declared that while in Sydney he would stay in his own harbour-side residence, and that’s what is happening.

The Prime Minister’s first big policy initiative, the innovation statement, has gone down a treat. Never mind that it has had several predecessors in recent years, that its multiple measures are worthy rather than, well, extraordinarily innovative, or that the proof will be in the results. It was, as Turnbull would say, all about the zeitgeist.

Admittedly there have been problems. This week’s budget update has plenty of nasties, in the macro numbers and some of the savings measures. But imagine if Joe Hockey had been delivering it – he would have come in for a far worse walloping than Scott Morrison has received.

Former minister Ian Macfarlane’s play to return to cabinet as a National has left bad feelings, and now the Nationals have finally got their heads around the arithmetic, Turnbull will probably have to concede them the fourth cabinet spot to which they were entitled all along. But if Macfarlane had succeeded in storming the cabinet, rather than the Queensland Liberal National Party executive doing the Prime Minister’s bidding and blocking him, Turnbull would have been put into an embarrassing corner.

Abbott was short of capital of every kind. Over the years he seemed to have trouble with his own financial affairs. He lacked charisma and – except when he first arrived in office in 2013 – other elements of political capital.

Turnbull is the quintessential rich man - materially, in personal attributes, and now, in political wealth.

The question for the coming year is, how much of his extensive political capital is he willing to venture? Is the man who tells entrepreneurs to take risks, not to fear failure, going to follow his own advice?

Soon Turnbull will reach a critical fork in the road, as Kevin Rudd might say.

He could choose to take to the election a modest tax reform package, perhaps paring back superannuation and other concessions to pay for a limited personal income tax cut and maybe a gesture to business.

Or he could throw the dice on a 15% and possibly broader GST, the promise of substantial income tax cuts, lower company tax, and whatever else needs to be done.

As he contemplates the choice between a small political spend versus the big but dangerous investment, Turnbull will be getting advice on both sides of the argument.

Those favouring caution can point out that if he doesn’t frighten the voters, he could win handsomely, preserving the government’s big majority and entrenching the Coalition for another couple of terms. More ambitious reform could be then considered later.

Advocates of going the whole hog would counter that it’s never been a better time for Turnbull to make the total commitment.

People like him, trust him, want to believe in what he says – something that history shows probably won’t last indefinitely. He is facing the weakest of opponents, in Bill Shorten. The only way the ALP can make significant progress at the election is if it is handed the bonus of the government proposing changes to the GST. Even then, it would be unlikely to win.

A campaign about changing the GST would face opposition from some state premiers. Nevertheless, it’s clear that if Turnbull got a mandate the states would fall into line afterwards.

Some of Turnbull’s MPs in marginal seats would pay the price if he took the big gamble – the same people who feared becoming casualties if Abbott stayed. They would be the sacrifice for what would be comprehensive reform.

Putting such reform off until later would have its own difficulties. Turnbull could win on a cautious program but then, if he wanted to do something substantial, he would probably have to break promises. Anyway, the longer action is delayed the more the danger of a natural erosion of political capital, rather like non-interest bearing funds left in a savings account.

Perhaps the crucial question comes down to this: who is the real Malcolm these days? In opposition Turnbull inclined to the crash-through character who believed he knew best. As prime minister he has so far been the consultative leader who takes people with him, favouring consensus, tending to caution. We cannot be absolutely sure what next year’s iteration will be. But as one cynic in the tax discussion quips, “the more he consults, the more limited the tax package will be”.

Beside the debate about reform, there is a parallel debate about election timing. Turnbull has indicated he wants to go full term (around September). Some Liberals would like a dash to the polls early next year to take advantage of the extended honeymoon, and avoid the challenge of a pre-election budget in which money would be short and more savings required.

A pre-budget election would give only the briefest period to finalise and sell a reform package - and would have to be a double dissolution, which could make the Senate situation worse than it is now. It would also carry the danger of looking like an ambush, going against what Turnbull has said.

The one thing that Turnbull should not take a risk with is people’s trust in his word.