Abbott faces tough budget pitch
Convincing voters that the rich need to pay just a little more tax shouldn’t be that hard.
But when a government has so little political capital, and its hands are bound by over-promising at an election, it becomes excruciatingly difficult.
Tony Abbott has no choice but to break at least a few promises when his government’s first budget is delivered on Tuesday.
The Howard government in 1996 took on the problem by convincing the public it had found a $7.6 billion “black hole” in the books left by Paul Keating.
John Howard also found some wriggle room by talking about “core” and “non-core” election promises and putting in place a commission of audit to do the hard yards in finding spending cuts.
Abbott is taking a similar approach to his political hero and mentor.
Having promised lower taxes and no changes to pensions, Abbott’s version of “core and non-core” is to simplify what the coalition pledged to do at the September 2013 poll into six words – “get the budget back under control”.
The PM is adamant that by implementing measures such as a temporary lift in income tax on the rich, reining in pension and family welfare spending, and cutting the public service, his election promises can be met over time.
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By sheeting everything controversial home to “getting the budget under control”, the coalition is hoping to minimise the political fallout.
A sign of just how fearful the government is of the message being blunted by Labor’s “broken promise” attack was the release this week of a new glossy Liberal Party booklet, titled Labor’s Mess.
Its core message: “After six years of chaos, Labor left Australia with a broken budget, a damaged economy and a serious mess to fix.”
While most coalition MPs are sticking to this message, some have been scathing of the government’s approach to the budget.
Electorate offices have been inundated with telephone calls and emails from worried voters.
Liberal senator Cory Bernardi says age pensioners have been in tears on the phone, worried about the budget.
He is also sceptical of the income tax increase.
“I hope for the good of the country it will simply disappear,” he said.
Opinion polls also have coalition MPs worried.
An average of polls during the past fortnight of budget speculation put Labor four points ahead of the coalition in two-party terms, and Abbott’s personal rating dropping into leadership-danger territory.
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Labor and the Greens have run an effective campaign talking down the idea of a “budget emergency”.
It helps that some of the figures appear to back their argument.
An analysis by ANZ Research says in global terms, Australia’s debt is low and manageable, with annual net interest payments expected to peak at 0.8 per cent of GDP over the decade.
Fiscal tightening begun by Labor, of about 0.6 per cent of GDP a year over three years, is working to bring the deficit down, and revenue is rising.
Former treasurer Wayne Swan came out with a new line this week when he described Abbott and Treasurer Joe Hockey as “fiscal fabricators”.
“I’m an optimist about the economy,” he says. “We came through the global financial crisis better than any other developed economy.”
One of the other issues resonating for Labor has been the proposed “GP tax” – a co-payment for visiting a bulk-billing doctor.
But the argument can be made the “budget emergency” is a long-term challenge.
The population is ageing, putting pressure on health and pension spending.
Landmark policies such as the national disability insurance scheme will start to chew up tens of billions of dollars a year when they begin in full.
Traffic congestion and pollution will continue to be a problem in capital cities without a concerted effort to fix roads, properly plan communities and build public transport.
It is this pitch about Australia’s long-term prospects that will make or break Abbott and Hockey’s first budget.
– AAP
