Laura Tingle PUBLISHED: 02 May 2014
Abbott has become a victim of his own excessive attack on Labor. Photo: Penny Stephens
The modus operandi of conservative politics in recent years has been simple but deadly: attack, attack and attack.
Attack Labor for being economically and administratively incompetent; attack Labor for breaking election promises (well, one); attack Labor for being rotten to the core, if not corrupt, as a result of its links with the trade union movement.
Labor has so often made the job easy: unable to authoritatively articulate and deliver an economic strategy; failing to properly implement thought-bubble policy changes and, particularly in NSW, providing a never-ending stench of shady deals and improper influence.
There wasn’t much positive on offer from the Coalition except simple pledges to be better than Labor, to actually honour promises in order to restore faith in the politics that their tactics had helped to tear down, and to cut taxes.
But the last couple of weeks have seen one of those shifts in the political tectonic plates – a long time in the making, but violent enough to make even those with one set of rules for Labor but another for the Coalition – sit up and take notice.
The chaotic messages from the Abbott government on its budget strategy, combined with devastating evidence from the Independent Commission Against Corruption in NSW about Liberal Party slush funds – not 30 years ago but in the here and now – has robbed the Coalition of the high ground it claimed on both economic management and probity.
Labor and its federal leader still have to drag themselves back on to the charts of political contestability with voters.
But the combined shocks of the unravelling of the clothes of Emperor Abbott and his party on both budget management and political probity will have inevitable repercussions on the way politics plays out long into the future.
The impact of ICAC revelations about Liberal Party donation dealings has already been profound. Even Labor people had come to believe that the stench of corruption in NSW was something that only applied to it.
As grubby as each other
It may not be all that edifying for the rest of us to see that both sides of politics are as grubby as each other. But it has had a curiously restorative fact on those in Labor ranks who have felt nothing but shame as tawdry stories about Eddie Obeid and his ilk have pumped out of the ICAC.
Meanwhile, even before we view the first Hockey budget, we know enough to see the infallibility of a still new government’s political and economic strategy punctured. Pollsters report voters are “white hot” about the Coalition’s plan to raise taxes. The government backbench is besieged and angry and the media cheer squad is incandescent.
The senior ranks of the government just look shell-shocked. How could it be, they ask, that a leader who relentlessly said, “We are about getting rid of taxes, not imposing new taxes”, and whose only real pledge was to keep his promises, could possibly be contemplating a “debt tax”?
The damage to Abbott’s authority is revealed by the revolt in his own party over paid parental leave and his humiliating concession that, at the least, the income limit on the scheme will be cut back to $100,000.
It is also revealed by the open brawling with his senior ministers about how the debt tax is applied and even whether the government pursue another option.
The success of Tony Abbott’s relentless attack psyched out Labor long ago. His missteps on the budget will prompt the opposition to reassess.
Abbott has become a victim of his own excessive attack on Labor’s economic strategy and, ironically, a perpetrator of the same strategy.
Away from the outrage about a short-term debt tax, the government’s focus is on finding medium to long-term budget cuts.
For that is where the real problems lie, and not just because of Labor’s disability scheme and education reforms.
In fact, you may have noticed these barely rate a mention as the Coalition has made the case for big long-term cuts in entitlements. It has been areas like the age pension and health – recognised as the real danger areas by both sides for decades – that are the focus.
Big cuts and radical change
All the indications are that the budget will contain big cuts, and radical change, to many areas of spending, including universities and health.
Despite all the “budget crisis” hysteria, the deficit is forecast to wind back sharply from about 3 per cent of GDP to 1 per cent of GDP as a result of Labor cuts.
Abbott’s problem is his boasts about being better able to deliver a surplus faster.
That has left the government feeling compelled to produce an even faster turnaround in the bottom line, despite the warnings about the impact this might have on economic activity.
Hemmed in by his own rash promises to leave so much spending untouched, the Prime Minister has resorted to doing exactly what Labor did: pothole here and there on spending and resort to any revenue raising that can be found.
In fact, the Coalition strategy currently looks for all the world like the one Labor ran: a refusal to engage in deep cuts in the short term because of their economic impact; spending cuts constrained by politics forcing revenue hikes that are even more unpopular; longer-term spending cuts still swamped by exceptionally expensive policy initiatives. In Abbott’s case these are the paid parental leave scheme and his ludicrous Direct Action plan, which the government has not even funded beyond the current budget.
Even the Commission of Audit is suggesting an antidote that looks suspiciously like the one Labor struggled to apply: a 1.75 per cent cap on annual real growth in spending compared with Labor’s 2 per cent target.
The constraints that have forced the government to raise taxes and charges in the looming budget have also forced its hand on promising to outline tax cuts in its next term.
This is locking in the same sort of high- risk policy that has got us into this mess in the first place. We might all want tax reform and lower taxes but locking in expectations of compensatory tax cuts in a few years’ time is high folly when strong economic growth remains elusive and the existing revenue base weak.
It is not as if the government has any real political capital to burn on what was always going to be a very hard budget. It never had a honeymoon. Voters don’t like the Prime Minister.
The Coalition’s only real chance at pulling this off was to deliver a very tough budget that voters wouldn’t like but one that delivered a coherent story – both internally coherent and part of a story about the end of the age of entitlement.
Instead, the wheels of the budget are already looking very wobbly, with less than a fortnight to go until it is delivered.
