View from The Hill

View from The Hill

Government gambles on voters’ selective memory after the “contribute and build” budget

Bill Shorten has a big task on his hands if he is to get Labor back into the economic debate. AAP/Paul Miller

The government is banking on the hope that eventually voters will be pleased enough about its performance to forget their anger about the broken promises in its first budget. It figures that comes judgement day in 2016, voters will see economic progress and what nasty memories they have will be more about Labor’s record than the Liberals’ 2013 election rhetoric.

Junior minister Jamie Briggs encapsulated the approach when asked on Sunday how the government would address the problem arising from this budget that Tony Abbott had broken his word to the Australian people.

“The Prime Minister’s word was ‘we would fix the budget’. In two and a half years’ time the test for us going back to the electorate will be, have we put in place a sustainable budget?” he told Sky.

“Politics is also a contest. The question the people will confront in two and a half years’ time is, has the Labor Party learnt the lesson of the debacle that they presided over leaving us with deficits for a decade?”

There is no doubt Tuesday’s budget is going to be full of broken promises and “nasties” that hit most people.

In terms of its word, this is a dishonest government. The spin makes it worse, as it defends its tax rises. “I don’t accept that we are breaking promises,” Treasurer Joe Hockey told Laurie Oakes on Sunday, “because what you’ll see on Tuesday night is that taxes will be lower under the Coalition than they would’ve been if Labor were re-elected.”

The Coalition is also hypocritical – doing things, such as imposing means tests, which it condemned when Labor did the same. Hockey relies on the argument that the Coalition inherited “a mess”.

As for its freeze for a year on politicians’ pay rises – Abbott himself summed this up when he responded to Kevin Rudd’s freeze – it’s the “easiest trick in the book”. The government often seems to forget TV networks keep archival footage.

Moving into the post-budget period, though, the questions will be how deeply the issue of broken promises bites, how strongly the pain points are felt, and what sort of reception the budget gets as an economic document.

Hockey has labelled it as a “contribute and build budget”. The building side is literal and figurative. There will be some $40 billion in federal spending on roads over six years (only about a quarter is new money) to be matched by state and private funds.

The aim is to push funds into capital works quickly as investment in the mining industry winds back, to help “build” the economy.

People in the short term probably won’t be too galvanised by the infrastructure boost. They will be more focused on what they personally are losing, or paying more for. Their attention will be on the clampdown on family tax benefits and other payments, a new charge for visiting the doctor and the like.

From the government’s point of view the issue is whether the immediate reaction will so sour voters’ views that they remain jaundiced later on, even if the budget proves to be the right fiscal medicine.

Here the experts’ economic assessments will play a role. They will be less concerned with political honesty than with fiscal effectiveness.

Labor will be trying to nail the politics. But it must be very careful.

The Coalition might have well and truly trashed its own reputation for honesty but it has also succeeded in blackening Labor’s reputation for economic management.

The former government’s performance was poor but not as bad as the Coalition claims. But perception matters as much as, or more than, reality.

Bill Shorten has a big task on his hands if he is to get Labor back into the economic debate. The calls the opposition makes in reacting to this budget will be a major test for him.

Labor will have a smorgasbord to rail against. But the crunch comes when measures hit the Senate. The ALP has already denied the government’s mandate to repeal the carbon and mining taxes. It will harm its own credibility if it votes “no” indiscriminately on budget items.

There is, of course, a difference between criticising a measure and trying to block it. The ALP should be selective in what it actually votes against. For example, despite the egregious broken promise, the opposition would be on shaky ground if it sought to thwart in the Senate the tax rise for high-income earners.

Shorten is keeping his options open on what Labor would do on both the tax levy and the restoration of petrol excise indexation. “We’ll have to wait and see the detail of what they precisely propose,” he said on Sunday.

Shorten and his colleagues will have to calibrate their response not just in light of the immediate reaction to the budget but also on how things might look longer term.

Shorten’s Thursday budget reply will be more important than might ordinarily be the case so soon after an election. Given this budget is a great opportunity for Labor, how responsibly and credibly Shorten performs will be important for him.

Like Labor, the Greens also have a credibility issue in deciding what they oppose. I have earlier written of their dilemma on Abbott’s revised paid parental leave scheme, which is now more or less in line with their own policy. The increase in petrol excise and the income tax levy might be broken promises but the Greens would be inviting a severe backlash from their base if they tried to block them.

There is already criticism from the membership over Greens leader Christine Milne’s strong opposition to the levy, when the Greens support a more progressive tax system. Indexation of petrol excise is Greens policy.

This is a budget that will be a gift to both opposition and minor parties, but it is a gift with some built-in risks.

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