Federal Politics


Is Swan readying Abbott's alibi?

There was a time when a federal budget announced the government's agenda for the year, and the years ahead. Next week's budget is instead the agenda itself - a very good example of how and why this government hardly ever seems able to get its politics right.

And even in being the agenda itself, the budget is focused only on one fact - its bottom line. One can foreshadow with confidence that the bottom line will be a complete confabulation, but, so far as it has any meaning, it will magically show that the government is planning for a modest surplus next financial year.

This, it is hoped, will further encourage the Reserve Bank to lower interest rates, but also remove from Labor the supposed slur that it is a government of rising debt, driving the nation into bankruptcy. It will also show that the Treasurer is a man of his word: despite any amount of advice, from both his left and right, to abandon or delay the surplus fetish, he has stuck with the job, even at the cost of making some ''hard'' and ''decisive'' decisions.

Some of these are non-decisions, yet with important symbolism, not necessarily of political advantage to government. Mere bringing forward, or deferral, of acquisitions is essentially accounting jiggery-pokery.

This year's much larger than planned blow-out (caused by the bringing forward of money that would have normally been spent next year) will compare with the supposed tight discipline of next year's projections.

Defence could easily manage forward expenditure cuts many times those which have been announced, but the manner in which the government has attached its cuts to specific projects means that uncritical defence urgers will suggest that Labor is endangering future national security for a squalid short-term political purpose.


Other cuts will hurt amorphous targets such as the public service, with the pretence that they will not affect services. Some revenue measures will avowedly hurt the rich, not least over superannuation tax expenditure, or by different policies applied to mining expenditure.

To show that this is a Labor government which, even in the very toughest times, never forgets its focus on working Australians, there will be a few announcements - big on long-term spending with only minimal effect on next year's figures - of projects for the future, such as aged care and disability reforms.

But there will be real cuts, and they will hurt. Many will hurt selected constituencies of the poor; the changes will be dressed up, as modern poor laws always are (and old poor laws always were) as being for the recipients' own good, lest they drift into a life of continual poverty and pass it on, as a virus, to their children. Decisions taken not so much to vacuum up money but as ''reforms'' designed to ''reform'' the poor.

(One might think that if the belief that government owes people a living was so bad and such a contagious disease, Labor might do something about its own ranks of the publicly salaried being so full of the sons, daughters and grandchildren of people on parliamentary pensions, as well as of others who have never worked, other than ''in the Labor movement'' all their lives.)

No doubt also for their own good, students and young people in training will probably receive no increase in youth allowances. The real rate of this allowance has not been increased since 1994, and is slipping, not only by comparison with age pensioners, and (especially) the salaries of ministers, MPs and departmental secretaries, but also well below the poverty line.

There will, of course, be the July 1 arrival of the carbon tax, which the government hopes and expects to be of so little moment or immediate impact on the lives of most Australians that many will wonder what all the fuss and panic was all about. This will lead them (the government hopes) to look critically at all of the other screams and alarms from Tony Abbott over the past few years.

And in any event, there will also be tax cuts, designed to overcompensate for the ultimate cost of this carbon tax but which will, the government desires, if with less expectation, cast it in a warm glow. Or at least undercut the notion that this is a government of ever-increasing taxes and ever-decreasing efficiency at delivering services.

But the real point - if addressed more to the ''markets'' and the Reserve Bank than to the voters - is the budgeted surplus. If the budget were otherwise to

fade immediately from the public mind, Wayne Swan might well claim satisfaction and the achievement of important political, as well as economic, ends.

This would show discipline, not populism. Steadiness, not panic. A focus on the national interest, not the electoral cycle or the selfish interests of the loudest and richest rent seekers, the people whom he has recently decried for having too much influence (on him). From a crude political viewpoint, an economy whose response to the medicine administered will be seen at best advantage a year or so from now, as Australia goes to election. Then will come, the argument goes, such pay-off as there can be.

But the logic is not entirely clear, even if one assumes that this is a government which could regain the affection or confidence of voters. It is premised on the idea that Australia is, at the moment, in some sort of dire emergency, requiring tough and unpalatable medicine, rather than being perhaps the economy in the rudest current health in the world.

Australians are forever being given mixed messages, and not merely different messages from competing politicians. National income and the standard of living have never been higher, and both are improving, not deteriorating. Unemployment is low. Inflation is low. Interest rates are low, and getting lower.

On the face of it, Australians should be cheerful and optimistic. Certainly there has hardly ever been a time when an adventurous or idealistic government could have been less constrained in the pursuit of good policy.

Australians are entitled to ask: ''If now is not a good time, or the right time, when will a good time or a right time ever be?'' In the political and economic cycle, it seems unlikely that there will ever be such a conjunction of opportunities.

Yet there is also a strong strand of pessimism present in the community. People think that prices are rising, and steeply, even if the consumer price index suggests that overall inflation is very low. The Daily Telegraph, campaigning for a change of government as if there were no tomorrow, gave 50 examples of price rises this week, implicitly suggesting that citizens were weeping under the burden.

Focus groups suggest that concern about the rising cost of living is fuelling a good deal of political discontent. The truth, of course, is not nearly as important as the impression or the belief.

Many Australians do feel pressed and insecure. We now seem to need more paraphernalia - and regular upgrading of mobiles, iPads and so on - and bigger houses (for fewer people) than once we did. This is not rising prices but more (often cheaper) ''stuff''. Talk of two-speed economies and headlines about job losses (even in the public service) produce anxiety and an urge to pay off credit cards, or mortgages, more quickly.

Swan is responding by seeming to be tough on ''unnecessary'' expenditure. But he also reinforces a want of confidence, and the failure to give credit to recent governments, for having done a pretty good job in managing so far.

A strategy of diminishing voters' sense of their situation is pretty dumb. Pretending the economy is in the sick ward, needing drastic and savage cuts, is bad for general economic confidence. It will add fuel to the belief that the sooner a more competent bunch come in, the better for everyone, perhaps Labor itself.

On November 11, 1975, Sir John Kerr suggested to Gough Whitlam, whom he had just dismissed, that he might be politically better fighting an election as the victim of a mugging rather than as an incumbent on the nose. (Whitlam did not agree.)

Some who contemplate Labor's situation with despair, and who recognise that only a miracle can hold off the inevitable, wonder if Abbott would shine in present circumstances, if Labor lost the confidence of the independents and Abbott became prime minister. Abbott is an advocate of bigger cuts, but, playing all things to everyone has much circumscribed his options.

Would any honeymoon last long? Would voters see his faults by election day? Might it even get nostalgic for the misunderstood Julia?

One can assume the Governor-General would not commission him unless he promised to see out the term. Constitutional precedent is pretty clear on that.

He must promise to try to last until September 2013, or until he can claim frustration by a hostile senate, or a case for an early but not absurdly early election, say in March next year.

No doubt he would prefer a double dissolution, based on frustration by Labor and the Greens, demonstrated about the same measure on two occasions three months apart. But frustration of what? His 2010 ''mandate?'' Supply? (That won't happen, if only as a matter of Labor tactics.)

What would help Abbott most, of course, is a sense of economic crisis, empowering him to move to ''core'' and ''non-core'' promises, rather as Howard did when he confected the ''black hole'' of 1996.

Perhaps, on Tuesday, he will get just such an alibi from Wayne Swan.