Julia Gillard. Illustration: Michael Mucci.
It's not a good look for Julia Gillard when even some Labor aides are laughing about the ''S'' word.
They crack up when it's put to them that the government is ''on track'' to deliver a budget surplus this financial year. They believe the objective is now risible and, through the tears of laughter, they begin to speculate on an early election.
They wonder if Team Gillard would be so bold as to attempt to disguise a looming failure by going to the people before the report card is in on the budget. That's what happened with the midyear budget update, released before it was known the mining tax produced zilch in its first three months of operation.
A big reason for the staffers' idle musing is that the official ''talking points'' have changed recently. The promise of a budget surplus is now to be described as ''an aim''.
That's a massive watering down from the earlier ''hell or high water'' pledge to turn around the multi-billion dollar deficit.
But, does anyone in the country now seriously think the budget is going to return to surplus? And does anyone think making more cuts to achieve that largely political target is a good idea, given the possibility of damaging confidence?
Wayne Swan has made structural changes that will benefit future administrations but if he has to make swinging cuts to maintain the political target of a surplus, the Prime Minister will have to weigh up the damage to her electoral prospects and the economic damage to confidence.
If the economy slows down under further cuts, consumers will also cut back their spending, magnifying the slowdown. More likely, the budget will be subject to another pea and thimble trick, with programs brought forward or pushed back, along with further changes such as the recent reduction in the baby bonus.
In recent days it looked like Gillard was toying with the idea of an early election. Perhaps she was tossing up her options, just playing with our heads to see how it looked.
One reason for going early would be to have her face off against ''misogynist'' Tony Abbott, rather than the urbane, climate-change-believing Malcolm Turnbull.
But in Canberra, an early election could be bad news for Zed Seselja. He would have little time to organise a campaign if he wanted to capitalise on his very strong personal vote in the ACT elections by having a crack at the electorate of Canberra, held by Labor's Gai Brodtmann. The federal electorate envelopes the city's southside, where Seselja did so well.
In 2010, ''G for Giulia'' Jones ran for the Liberals in the electorate when long term Labor MP Annette Ellis was retiring.
While Brodtmann scored 44 per cent of the primary vote, that was a swing of almost 7 per cent against Labor. Most of the lost votes went to the Greens who won almost 19 per cent of the primary vote, a strong result for the balance of power party.
The Greens' preferences pushed Labor to a huge 62-38 win but the Greens' performance in the ACT election was shocking and now the sole survivor, Shane Rattenbury, has formalised his links with Labor.
At the next federal election, the Greens' support in the electorate of Canberra could be down, and Seselja might be in the race, trading on his local prominence.
How would an early federal election play among the people and the media? Surely, the only answer from the hard heads in the government could be - very, very badly.
The Prime Minister would be seen to be running scared from the budget.
The election would be lost in a massive landslide as voters reacted in alarm at the prospect that Gillard could be hiding Australia's version of the ''fiscal cliff''. Her credibility would be scarified. Abbott would be (almost) lost for words in the rush to take up such a golden opportunity to shred her reputation, basing his election campaign solely on lack of trust. The scenario is as simple and brutal as that.
In any case, the independents have a ''rolled gold'' written agreement with Gillard that the Parliament will go full term.
Gillard knows all this and she ruled out an early election in an interview published with a women's magazine this week. ''I read in the newspaper today that I was, but no,'' she told Marie Claire at The Lodge last month, when she was accompanied by six of her female ministers.
A clear answer, for once. But not so much, when the ''S'' word is mentioned.
In an interview on the ABC this week, Samantha Hawley asked the Prime Minister: ''Can you guarantee, as you've been asked in recent weeks, that the surplus will be delivered by your government?''
Gillard: ''I've dealt with this question many, many times and the answer is the Midyear Economic and Fiscal Outlook … we needed in that budget update to deal with the fact that revenues had been written down again by more than $20 billion. And we did in that budget update what we did in the budget and the budget update before that and the budget before that and so it goes on. We worked hard to identify savings, many of them controversial. So we stand by the figures in the Midyear Economic and Fiscal Outlook.''
We clear on that?
Around the time that interview was being broadcast, Deloitte Access Economics was undercutting the claim the budget would be returned to surplus, because of the gloomy situation of falling commodity prices and economic contraction in Asia. Its analysis said the budget was back in deficit ''before the ink was dry'' in the midyear budget update.
''We think 'profit taxes' will disappoint and we see the mining tax providing the worst news,'' it said. ''When China sneezes, the [mining tax] was always going to get pneumonia.''
Instead of the government's prediction of a wafer-thin $1.1 billion surplus - already revised down from $1.5 billion over the past few months - the Deloitte Access Economics analysis predicts a deficit of $4.2 billion owing to sliding mining revenue.
No way is that going to be allowed to happen. Penny Wong is already talking darkly about ''difficult choices'' that have to be made to be able to pay for the National Disability Insurance Scheme and the Gonski education plan. The difficulty will be the political juggling act if the government is forced to make unpopular cuts in the budget with an election (presumably) not far away.
Swan just shoots the messenger: ''Access Economics doesn't always get it right. The midyear review shows that the government's on track to return the budget to surplus.''
The public is expected to put up with this bluster and hope the economy stays in the groove, despite the lacklustre mining tax.
For example, economists had built up expectations the Reserve Bank would cut interest rates on Melbourne Cup day, which would have slightly eased the burden of mortgage repayments.
The bank's decision to hold off on another cut was said to be justified when the Bureau of Statistics reported on Thursday there was no change in the national jobless rate. As always, that survey contained mixed news - an 8000 fall in part-time work was offset by a jump of 18,770 in full-time employment.
Maybe the bank will cut rates next month and boost confidence before the Christmas spending spree but in any case, Swan is now looking seriously at where he can cut back, to keep his job and tell those bemused Labor aides to put a sock in it.
Ross Peake is Political Editor
Twitter: rosspeakeCT
