View from The Hill

View from The Hill

Abbott struggles with budget lines, telling the ‘structural reform enthusiasts’ this is not their year

Prime Minister Tony Abbott said that he still expected to return the budget to balance in about five years. AAP/Mick Tsikas

Tony Abbott is making a particular hash of his messaging this week.

The prime minister – and some other senior ministers too (think Treasurer Joe Hockey) – often throws out lines seemingly without much thought about how they can come back to give a nasty bite.

At Tuesday’s joint partyroom meeting, Abbott described the Senate as “feral”. Did he not remember that Paul Keating’s “unrepresentative swill” insult caused a spot of trouble?

Predictably, crossbenchers – never slow to take offence – on Wednesday did go feral, professing hurt feelings. Independent senator Glenn Lazarus invoked a definition of the word (“wild animals roaming the woods”), called the comment “appalling and disrespectful” and wanted to know whether Abbott was “going to apologise to each and every one of us”.

Abbott, under questioning, already had been drilling down into who’s feral and who’s not. Basically the non-ferals are those the government needs when the Senate is divided. “We have a very constructive relationship with the crossbenchers,” he said – though not always in evidence, the cynic might observe, particularly in relation to Education Minister Christopher Pyne this week. It turns out Labor and the Greens are the “feral” ones.

More importantly, Abbott said at Tuesday’s party meeting that he still expected to return the budget to balance in about five years.

Given the budget has been deteriorating on both the revenue and spending side, including because scraping off barnacles is expensive, this heroic statement produced speculation that there’d have to be another round of spending cuts.

Oops, that was not what Abbott wanted the message to be. He’s been saying the budget will be nice to households.

On Wednesday, Abbott was trying to get not just the budget into balance, but his language too.

The May budget would be prudent, frugal, responsible, and much less exciting than last year’s, Abbott said. “Yes, we will continue to improve the budget, but we’re not going to fix our budget at the expense of your budget.” When it came to savings, “people will find it pretty dull and pretty routine”.

“Inevitably, it will be a much less exhilarating budget for those who are budget devotees and structural reform enthusiasts,” Abbott said. Well, they’ve been warned! And do we detect just a tiny note of scepticism in the prime minister’s reference? Pragmatic Tony a while ago checked out of the “structural reform enthusiasts” club, which encourages exploits like jumping without a parachute.

Abbott is trying to say, we’re swearing off imposing pain this year. This is because the electoral numbers are bad, his leadership at high risk and the economy is flat.

But you can’t go from exhilarating to boring without a skateboard, so Abbott directs us to the Intergenerational Report (IGR). The IGR is a document that can be turned to different purposes, which might make it useful politically but has the risk that those running various economic lines can simultaneously invoke it, creating a muddle. Hockey and Abbott can each pick preferred take outs. Far from helping the government’s budget narrative, the IGR is confusing it further.

Abbott on Wednesday said one of the IGR scenarios showed that what the government has been able to legislate so far “takes us very close to budget balance in 2020”.

While close, the budget never actually hits the magic spot between deficit and surplus, on this projection. Admittedly, that’s a detail – what’s far from a detail is that on the scenario, the budget goes down the gurgler from then on with endless deficits out to the middle of the century.

In an unfortunate coincidence of timing, a Treasury deputy secretary, Nigel Ray, was before a Senate committee on Wednesday. Labor’s Sam Dastyari took him through the scenario in question. “There is no surplus across the 40-year projection period,” Ray said. “There would need to be either the government’s announced policy or some replacement for them [to get there].”

In the minds of the “structural reform enthusiasts”, this scenario highlighted by Abbott was supposed to reinforce the argument that the Senate should pass outstanding measures or other savings would be needed.

But Abbott says he’d rather take “a glass half full than a glass half empty approach to the achievements of this government when it comes to budget repair”. So he is using the scenario to support his argument for a softly softly approach.

“The task this year is at least 50% reduced from the task last year.”

The “emergency” of the Labor days is under control. “As an emergency services volunteer, I know what it’s like to get to the scene of an emergency. If you get to the scene of the fire, immediately the situation starts to ease.” Even, it seems, if the “ferals”, however defined, have punctured some of the fire hoses.

But the pesky structural reform enthusiasts might have a question.

If this year’s budget is as passive as Abbott seems to be saying, what’s the future for hard structural reforms – apart from the leftovers from last year’s budget? Next year will be an election budget. And if the Coalition polling numbers are anything like they are now the 2016 election campaign could see reform pushed to one side - as, in anticipation, changing the GST post 2016 already has been.

Postscript

Amid reports that the possibility of a double dissolution had been discussed but dismissed by ministers this week, Abbott said on Wednesday night: “The government intends to serve a full term”. Sources said Abbott had not been the one to raise the question of a double dissolution. The question of whether Abbott himself serves a full term is an open one.