Peter Slipper

Peter Slipper Photo: Andrew Meares

THE weekend media reported that ''senior government figures were very happy with the sale of their surplus'' and were finally getting ''cut through'' without distractions. Of course, that was before the fiasco over Labor's hand-picked Speaker, Peter Slipper, blew up.

How the government imagines it is getting ''cut through'' over something that has not been announced - let alone delivered - is a mystery. There is no poll showing any sign of improving support. But government statements such as these illustrate how delusional things are becoming in Canberra.

The government thinks it is doing an excellent job and making the right decisions. It is just that bad luck always intervenes to muck things up, and distractions occur that prevent people from seeing how good it really is. If only it could get clear air to explain itself and put a proper spin on things, its popularity would rise to the level it truly deserves.

In truth, the government is incompetent. Its real problem is not its image - its problem is the substance. It isn't that it failed to sell the carbon tax well, but rather that it decided to introduce a carbon tax in the first place after promising there would be no carbon tax. It isn't that the public is ungrateful for all those insulation batts and new school halls, but rather that the public can see how money has been thrown away on wasteful projects, and does not believe, along with every sane analyst, that this saved Australia from financial collapse.

The more it hears the government claim that it ''saved'' Australia with new spending, the less it believes the government. The gulf between reality and spin is badly undermining its credibility.

Now the government bemoans that the public is ''distracted'' by the Slipper affair. The distraction arises from another very deliberate and conscious government decision - the decision to take someone under a cloud in his own party and elevate him to the highest parliamentary position as part of a ''cunning plan'' to neutralise his vote. What tarnished Labor is the decision - not the presentation.

However, I will say one thing for Slipper: at least he appears to think he is innocent of financial impropriety. He is going to give an explanation for his conduct and answer the questions of investigators, which is more than you can say for Labor's Craig Thomson. Thomson says there is an explanation as to how his credit card got used to pay for prostitutes. It's just that he refuses to give it and refuses to co-operate with the police who want to know what the reason is. Is this an image problem for Julia Gillard? No, it is a substance problem. She could support a full exposure of what is, by all accounts, corrupt behaviour by someone in the Health Services Union or she could give her full support to Thomson. She has chosen to do the latter.

I suggest a new tactic for the government when it comes to selling this year's budget: to level with the public and tell the facts rather than weave the spin.

This would involve admitting it was costly and unnecessary to ramp up spending by 36 per cent in the last four budgets. It would mean admitting that if a budget surplus takes pressure off interest rates now (as the government is claiming), then more careful budget policy would have helped over the last four years when we returned budget deficits of $27 billion, $55 billion, $48 billion and $37 billion - in total $167 billion. And, further, it would mean admitting the 2012-13 budget would not be a surplus at all if the government included its spending on the national broadband network (up to $43 billion), which it has taken off the budget.

Most of all, it would mean that the government would stop all this nonsense that its problems are the result of bad karma and misfortune. In a major speech last week, Prime Minister Gillard, seeking to explain why the forthcoming budget surplus will be so weak, wailed that ''the rivers of gold that flowed into Peter Costello's coffers don't exist any more''. I have news for her - they never did. There were no rivers of gold that could compare with the rivers of iron ore and black coal that are now pumping the Australian economy. Gillard's latest forecast for the coming financial year is that receipts will total $375 billion - $100 billion more than the last full financial year of the Coalition government. Over five years this is an increase of 37 per cent. The problem is that Commonwealth spending has risen even faster.

This government has tried more spin cycles than would be safe for an average washing machine. It needs to change approach. It should try a rinse cycle to get rid of the accumulated grime - and disinfectant to spruce up the end result.

Peter Costello was federal treasurer from 1996 to 2007.