Tony Abbott's armistice on budget reform

The higher education proposals have not yet been formally withdrawn (which has the effect of allowing the Treasury balance sheet to pretend that these "saving" will be achieved), but it seems doubtful, given the drubbing that the government, and Education Minister Christopher Pyne received, that they will be coming forward again. That brings up to about $30 billion the government is short on figures it put into the arithmetic last year. Even bearing in mind increasing gaps between projections and consequences under the last three Labor governments, the 2014 Hockey budget must be set to be the least successful budget in Australian history.

Before and after the election, Abbott and Joe Hockey had spoken continuously about a Labor debt and deficit disaster. They said they were the ones for stern, adult and professional, and probably unpopular, repair work to bring the accounts under control. Any number of glossy publications, prepared by political advocates, including the audit of government finances, and the intergenerational report, as well as partisan advertising campaign at public expense reinforced the message. A fresh advertising campaign mounted on the pretence of explaining the significance of the IGR to voters has been repeating the theme of crisis, emergency and desperate fix justifying extraordinary measures, and, more subtlety reminding voters that any consequent hardships are the fault of uncontrolled excesses, recklessness and lack of economic discipline by Labor treasurers when in government.

But last week, Abbott pretended that the crisis is over, and that everyone should now be relaxed. The original problem, it seems, was terrible, if (as it now seems) less from the immediate figures on the balance sheet than for what they indicated about trends in income, expenditure and debt. There had been a risk of our going to hell in a handbasket. But it was now averted, thanks to Abbott and Hockey's hard work. Last year's Hockey budget, it seems, might have been "overambitious" in trying to address all of the problems at once. But, though many of the proposals had been rejected, the measures which had got through, and some of the systemic reforms, had largely repaired the problem of trends and tendencies. We were left with a result that was not as much of a disaster as some people were suggesting.

Abbott told voters (and business) to relax about a tough budget in prospect. The May budget would be dull and boring, and not exhilarating at all. Although net debt, and debt as a proportion of gross domestic product would continue to rise (and balloon out from about 2019), the 2019 figure, suggesting a net government debt of about 60 per cent of deficit was "only" about half of what had been earlier projected, and that, apparently, was good enough. Not least by comparison with what other countries had achieved.

The problem, from the point of view of Abbott's natural constituencies is that Abbott seems simply to have given up because he has found everything "too hard". And not only because of a "feral" Senate, but because opinion polls suggest the Abbott government, and the Liberal "brand" is deeply unpopular with voters. For the past month, Abbott has been simultaneously juggling contradictions between his need to repair his standing with voters – implicitly by doing fewer unpopular and erratic things – and to regain the confidence of his own party. His strategy for the latter, given that alternative prime ministers must inevitably come from the more moderate middle ground of politics, has been to appeal to the party's right. Hence the tough talk on polarising issues, and the soft talk (and action) on actually tough and potentially unpopular actions.

But Abbott is running a tremendous risk. It is not only with his leadership but with the economy at large. Many voters will judge that he had dropped the ball. They will suspect that this owes less to the real economic situation and what the national interest requires than to mere personal political survival. It is by his own past rhetoric that Abbott cannot, convincingly, declare victory, or insist that "near enough is good enough". He will certainly find it difficult to persuade the business and the economic community, and other natural party constituencies, that the job is done, and that the focus must now shift to crowd-pleasing efforts to address the costs of childcare.

Perhaps it's more a tactic to have things on hold, and appearing benign, over the next week, in the lead-up to the NSW election on Saturday. If that's the case, voters can be expected to be even more cynical and angry at Abbott when they discover they have been had.