Tony Abbott hasn’t quite manoeuvred himself out from the seemingly impossible position he was in after the Coalition’s first budget failed, but his planned political escape route is becoming clear.
He was hemmed in by three things: his 2014 budget was rejected by the public and the Senate as unfair; his government had descended into dysfunction and leadership instability; and he had overhyped the “debt and deficit disaster” line and then found himself without the political authority or the fiscal leeway in a weak economy to make much difference to the deficit.
For the 2015 budget, the government has been careful to build in a counter-argument to charges of unfairness – claiming “it’s all about getting people back to work”. The budget’s centrepiece will be a families package that leaves subsidies for rich families more or less intact and offers more to poorer families.
The “losers” are likely to be lower income non-working families, who will be entitled to fewer hours of subsidised childcare; and about 700,000 single-income families who will lose family tax benefit payments under changes from the 2014 budget that were rejected by the Senate, but which the social services minister, Scott Morrison, now says are the only way to pay for the childcare plan. Labor will argue the cuts are unfair, but this time the government has a prepared reply – that they are reasonable in the interests of productivity and getting parents back into the workplace.
“Unfairness” was also the central charge against the plan to change the indexation rate for pensions. It has been clear for some time the government had ditched that idea in favour of a tighter assets test for seniors receiving a part-pension. A version of this was proposed by the nation’s peak welfare body as a much “fairer” plan.
Reconciling worsening deficits with its own “disaster” rhetoric is a trickier task, but Abbott and the treasurer, Joe Hockey, stopped the “disaster” chant a while back and are now claiming they will chart a “steady path” back to surplus at some unspecified future time. They’ll also use the line that the Coalition has “already halved Labor’s debt and deficit”, based on the intergenerational report’s projected deficits in 2055 obtained through spurious assumptions that make the “Labor” line look dramatically worse and the “existing Coalition policy” line dramatically better. The assumptions include buck-passing $80bn in future health and education costs on to the states, knowing they have no means to pay. Mostly they will say the budget is “careful” and “measured” and hope no one remembers all their previous claims.
And the perception the government was chaotic and couldn’t get anything done has been dampened by a deliberate strategy in place since the failed leadership spill motion – to look busy by getting on with “meaningful, positive looking” things that didn’t need approval from the Senate. It has succeeded in returning a sense of calm in Canberra. And opinion polls now show an improvement in both the Coalition’s primary vote and the prime minister’s approval ratings.
Of course, the government could do much more to reduce the deficit in very fair ways – by reducing generous superannuation tax concessions, for example, or cracking down on family trusts or negative gearing or big business tax minimisation. Or it could spend some of that money on things that are good for the economy and the society – such as the black hole in future education and hospitals funding or increasing the impossibly low rate of unemployment benefit or higher education and training.
But this budget isn’t about big reforms. It’s about longer term survival and getting out of last year’s political bind. It is a means-to-an-end document, part of the escape route from the nearly fatal failure of budget 2014. Its main goal is providing a path to a second term in government, when the Coalition can have another shot at executing major change.
