View from The Hill

View from The Hill

Abbott should accept budget savings

Tony Abbott and Joe Hockey have a challenging task in their budget reply. AAP/Dean Lewins

Tony Abbott faces two tests in his budget reply. One he can afford to ignore; the other he needs to meet.

The government calls for him to reveal the opposition’s fiscal program. But the Coalition has been pushing the timetable out until after the release of the final pre-election budget update, which follows the start of the formal campaign.

This gives Abbott a get-out for a long time – and makes it hard for the public to judge the opposition’s broad program until very late (even then, we won’t get the whole picture of what a Coalition government would do – its proposed audit commission would allow it to produce a much-revised post-election blueprint).

But Abbott has dual protection at the moment. He can argue that it is important to get the most up-to-date figures. Also, when he is sitting so comfortably in the polls, with people on both sides of politics regarding the election as a foregone conclusion, he has considerable latitude to do things on his terms.

The other test relates to the savings measures in Tuesday’s budget, which include clampdowns on middle class welfare, most notably the abolition of the baby bonus, and the closing of business tax loopholes.

It would be foolish for Abbott not to state the opposition’s attitudes to these as soon as possible.

In the budget’s immediate aftermath he and shadow treasurer Joe Hockey have been dodging, saying they won’t give knee-jerk reactions. Pressed on the baby bonus, Hockey in particular has looked awkward. “I will discuss my position with my colleagues”, he said.

That baby bonus! The pride of the Howard government, it was said to have had a role in a tick up of the birth rate.

But now it has become a symbol of the “entitlement” mentality that has to be tackled when money’s short.

For the opposition, however, it is difficult. When the government announced last year that the baby bonus would be lowered for second and subsequent children, there was division within Coalition ranks. Hockey was in favour of supporting the cut (which is not yet legislated) but families spokesman Kevin Andrews thought it should be opposed and won the day, with Abbott’s backing.

In today’s circumstances, the opposition would lose credibility if it did not “wave through” the abolition of the baby bonus (being replaced in the budget by more modest and tightly targeted help for the families of newborns) and other proposed savings.

The Coalition is arguing the budget is in bad shape – to then fight what are reasonable savings would look hypocritical and expedient.

It would also make a fool of Hockey, who only last week told the Institute of Public Affairs “some resetting of the national mindset on the role of government” was required. Referencing a tough speech he had made on the subject in London just over a year ago, he said “I believe all developed countries are now facing the end of the era of universal entitlement”.

There has been commentary about how the government is using “wedges” and “booby traps” against Abbott in this budget - wedges to exploit internal friction on the baby bonus and other measures; booby traps to lock a future Coalition government into certain expenditure.

Abbott is trying to retain flexibility on one alleged booby trap – the schools funding program, which still has to win support from most states. Pressed on whether he would honour the deal signed between Julia Gillard and NSW Liberal premier Barry O'Farrell, Abbott insists he doesn’t know the detail. (As if he could not ask.) He would like to avoid being saddled with this expensive program, even though education spokesman Christopher Pyne has previously said that if a new funding model was “overwhelmingly” (undefined) across the states “we won’t seek to unpick that”.

The Gonski battle is still being played out. The savings are the immediate issue. The signs are that Abbott will sidestep a fight. He’d be mad to do anything else. To resist them would just divert attention onto himself, lose much-needed money from his own own bottom line and invite unwelcome pressure to make unwise promises.

Also, a gesture of fiscal rectitude over the savings might be helpful when he is under some criticism internally about his too-generous paid parental leave scheme.