Labor is off and running

Much of the selling, and most of the listening, seemed to be over by lunchtime on Wednesday. Perhaps that was the High Court's fault for determining Katy Gallagher's fate on the day after the budget. But even many of those who were supposed to be enthusing everyone about budget goodies seemed already exhausted by the effort, and seized on this diversion with delight for the opportunity it gave them to kick Shorten for the misjudgments of his legal advisers, and the embarrassment of soon facing a Saturday in which there will be five by-elections, four for Labor-held seats.

That may have been fun – and reasonable enough, too, given the flaying the government from Shorten over its own mistakes over dual citizenship. But it certainly seemed to detract from ramming home to everyone the budget's merits, whether in terms of the goodies now and in prospect for taxpayers and carefully selected groups, or in terms of the government's hopes of a surplus within two years. On Thursday morning, the first merntion of the budget in the Australian Financial Review, which is supposed to be keener on that sort of thing than ordinary punters, was on page six – surely evidence that it was now old news.

Governments will always virtuously deny that budgets are constructed with elections in mind. But this budget is almost certainly the last of this government's term, and, quite possibly, of this period of conservative government. It can be assumed that Morrison and Malcolm Turnbull have set some money aside as an election war chest, presumably by cautiously or consciously underestimating revenue, or overestimating spending. (The opposition will also have the benefit, in its election pitches, of any pots of money the government discovers, or at least identifies through the charter of budget honesty.)

But even without Labor's opportunity to put up counter-propositions, it was far from clear even on Tuesday night that the budget contained the basis of a winning strategy, either of tax cuts or economic management. The initial tax cuts are very modest – perhaps the more so if measured against reduced services. Even if the public was completely sure that a re-elected Coalition government was likely to fulfill the longer-term tax promises down the track, it was not necessarily an enormous carrot for the ordinary voter, as opposed to the voter already disposed to vote for the Coalition.

But what seemed even more lacking, from a political as opposed to an economic point of view, was a narrative that set everything in context. There were, to be sure, estimates that put the government back in surplus two years hence, but such projections, as was pointed out ceaselessly by Joe Hockey and Tony Abbott during the last Labor government, look increasingly like mirages. Government was priming the pump with infrastructure spending, welcome enough where it was received, but still having some trouble in being painted as pieces in a giant jigsaw of national renewal. As economic management, it was hardly bold; as politics, or even as policy, it was very bitty, even before Labor and the affected interests began pointing to holes in the story.

Perhaps the most astonishing one was the discovery that ASIC, only recently given fresh resources to play the tough cop on the beat (after having earlier had those resources, and more, stripped from it by the Abbott government), was now effectively sharply reduced in its budget allocation, which has always depended partly on self-funding. ASIC has had its own problems of motivation in actually playing tough cop, but the government, in trying to resist the banking royal commission, had been insisting this was all that was necessary. It wasn't long after the commission began its hearing that it was plain even to ministers that bank malfeasance and misbehaviour went well beyond anything ASIC has been geared to face, even if it took ministers, and the Prime Minister, too long to admit they were wrong to oppose an inquiry. But it takes a spectacular amount of budget mismanagement to fail to notice that ASIC was again going to be under-resourced and simply unable to do the job that government had said it could and should do. Another own goal for Kelly O'Dwyer.

A major part of the Coalition's argument against opposition policy has been that its proposals – including, now, its tax cut proposals – can be funded only from generally higher taxes, including, of course, the higher taxes that companies will pay if the Coalition's proposed cuts to the company tax rate are not extended further to big business.

It may be, however, that the remaining company tax cuts have now moved to zombie status, thanks to the Senate, Labor's success in painting them as benefiting Coalition mates at the top end of town, and the generally inept campaign to persuade the electorate that company tax cuts would make businesses more competitive, incline them to greater investment and putting on fresh employees, and lead to better wage outcomes.

Although this has been assumed as economic dogma (even, hitherto, by Shorten and the opposition), government and business lobbies have been unsuccessful in making the case, at pointing to examples of where such outcomes had followed lower corporate taxation, or in detaching the case from wider voter resentments about corporate and multinational tax-dodging. The mere fact that governments have pencilled in the lower rates in the forward estimates as though they had been passed by the Parliament does not necessarily mean that voters will see the policy abandoned as a decision to raise taxes.

That was so even before the banks, the finance industry and business generally began receiving a public relations drubbing in the bank inquiry. To be fair to the banks, they do pay their taxes, even on profits that many now regard as having been achieved by sharp practice with customers. But Shorten is working on a potent message in painting $17 billion of the proposed company tax reductions as benefitting banks, in suggesting that the government is lavishing the big end of town with favours as it reduces the quantity and quality of services to citizens, and punishes its critics, such as the ABC. That it could be permitted to suggest that it is rewarding banks for their misbehavior even as it was effectively reducing the capacity of the regulators only further underlines how much government has lost control of the narrative.

It is generally said that when the Coalition can get the opposition arguing about the economy, and about national security and boat people, it is only winning ground, just as the Coalition is almost always on the back foot when it is arguing about health, education and social welfare. But Shorten is showing every sign of relishing a populist debate focused on the “unfairness” of the government's general approach to tax and economic management, with extra added innuendo about the influence of bankers and the top end of town on ministers.

It's a populist attack, of course, and some would say to be the more deplored for its focus on the politics of envy, or class warfare, and on its sabotage of the government's efforts to keep Australian business globally competitive. Yet that is not the sort of debate the government enters with clean hands. Nor, given Turnbull's own efforts to focus the debate on Shorten's character, and to paint him as a man all too disposed to fawn on the big end of town, is it likely to be one that Labor can be shamed out of. To Labor supporters, indeed, the way in which the government is associated with corporate misbehavior, particularly in relation to the financial planning industry, seems quite logical given the assiduous way in which the incoming Abbott government set out, almost as a first priority, to castrate the legislation already on the books focused at conflict of interest by financial advisers, particularly those employed by banks. It's pretty much a matter of chickens coming home to roost, and sits neatly alongside the almost automatic association of Shorten (hardly ever a Labor militant) with the policies and personalities of the CMFEU.

The simultaneous by-elections represent some threat to Shorten, given the possibility that Labor could lose seats it has already held, and the virtual inevitability that the South Australian seat of Mayo will revert to Liberal hands. Yet he could hardly have a better opportunity to road-test his budget reply, which has not only much more of the look of an election manifesto, but also the promise of tax cuts and the offering of a reason to give Turnbull and Morrison a good kick in the pants. The Labor campaign, moreover, offers up the opportunity to capitalise on further running revelations from the banking inquiry.

Shorten has also manoeuvred himself into the delicious position of seeming to have shifted to the Turnbull government's right on the question of addressing the deficit – one which has grown significantly under the Coalition government, despite the terrible noises it made about the problem when it was in opposition. It's reminiscent of the way that Kevin Rudd, 11 years ago, was able to attack John Howard for irresponsible spending during his last desperate election campaign. Rudd, the self-styled fiscal conservative, declared primly that he would not enter such an auction.

But it also brings to mind the series of elections during the 1980s during a period when there was major reform of the economy, with governments unusually frank with voters about short-term pain for long-term gain. The modern Coalition has generally persuaded the modern electorate that it wholeheartedly supported these reforms, but, generally, in election campaigns, it was the Coalition rather than Labor which was pushing for immediate benefits for voters, such as tax cuts. For once, perhaps because of a sense that Labor had been frank with voters, electorates seemed to prefer austerity to instant handouts, and a sense of being embarked on, and sticking with, a long-term plan. For once, contrary to the prevailing wisdom, voters did not seem to be favouring the party offering the most instant gratification.

Of course that could be a warning to Shorten about merely seeking to outbid the Coalition. But he seems to understand that, being as focused on assuring the electorate of a broader message, threaded in with his government-meanness message about making something of being in government. Alas for Turnbull and the Coalition, neither the words nor the action, let alone the fireworks, seem to quite explain why they went to such trouble to get to where they are, or why they need more time to do whatever it is they are doing.

Jack Waterford is a former editor of The Canberra Times. jwaterfordcanberra@gmail.com