Sections

Services

Information

UK United Kingdom

Grattan on Friday: Labor can’t afford to fail budget test

Having decisively seen off Kevin Rudd’s last hope of returning to his old job, Julia Gillard has put the knife in again with a China visit widely hailed for its big advances in this vital relationship…

Julia Gillard has had a victory with her China trip. AAP/Dean Lewins

Having decisively seen off Kevin Rudd’s last hope of returning to his old job, Julia Gillard has put the knife in again with a China visit widely hailed for its big advances in this vital relationship.

An agreement for an annual leadership dialogue and a currency deal that will reduce costs of commerce, together with defence, climate change and other initiatives, and the generally good ambiance surrounding the trip made it a diplomatic success that, only a few years ago, would have been anticipated from a Rudd prime ministership.

Yet, in one of those unlikely circumstances of politics, the Sinophile Rudd had trouble with China relations while the foreign policy tyro (at least until she became PM) has struck a rich lode.

In another twist, it is of course more than likely that it will be Gillard’s opponent Tony Abbott who will be chatting to the Chinese in that first dialogue under the new architecture.

It is hard to translate foreign policy successes into solid domestic advantage, but in this case Gillard’s achievements do fit the government’s narrative about the importance of looking to the Asian Century in preparing Australia for the future.

The NBN debate which has dominated politics at home this week, with the announcement of the Opposition’s compromise plan, is also focused on the future, and it is an issue on which Labor still sees itself as well placed.

Next week is crunch time on another “preparing for the future” front, with Friday’s Council of Australian Governments meeting dealing with the Gonski school funding plan. Negotiations are intense and Gillard will be personally engaged over coming days. It is unclear where the Commonwealth-state head butting will end up. Queensland and Western Australia are the most difficult states. If it can’t get all states, the federal government will live with a patchwork.

After that, it’s on to a budget which, with the weak revenue situation, would be a serious challenge even if it were not an election year.

The promise of a 2012-13 surplus was ditched months ago, and now a recent report in the Australian Financial Review has suggested that there is little prospect of a surplus across the whole budget forward estimates period, which runs to 2016-17.

Some government sources say that is too pessimistic. It would certainly provide a lot of ammunition for the opposition. While it is one thing to explain away a deficits in the near term, especially if most economists are not too fussed, it is another to have no surplus in prospect.

Asked on Sky last weekend whether the budget would offer “a pathway back to surplus”, Finance Minister Penny Wong said “the budget will certainly comply with the Government’s medium term fiscal strategy which has the objective of surpluses over the economic cycle.”

The government’s approach is to let the automatic stabilisers operate (which means not seeking to offset the impact of unexpected changes in the economic situation). But it needs significant savings because the agenda on which it will appeal to the voters, including the school funding program and the disability insurance scheme, demands big spending which must be offset.

There is a degree of flexibility over timing in long term programs, but not so much as to undermine the appearance that the government is committed to them.

The abandonment of the surplus promise also provides some budget wriggle room. There is not now any absolute benchmark against which to measure the bottom line.

The government will cast its deficit numbers as what’s needed to protect growth and jobs – banking on people thinking jobs are the most important priority (unemployment this week rose to 5.6 per cent).

Given Labor’s situation, the budget will be critical. If it turns sour, the government will have no fallback.

It needs the budget to be seen in a sufficiently good light to allow it to apply real pressure to Abbott – for example, to put substance in his budget reply (not an unreasonable demand, so close to the election) and to indicate the Coalition’s pathway back to a surplus. The opposition has been able to push away calls for fiscal details by saying it needs the budget figures.

If the budget tanks – because it is not seen as economically credible or there is sniping within the Labor party over measures – Abbott will once again slip off the hook. One tricky area is the dole – if nothing is done to help those living on this meagre amount, Labor backbenchers are likely to be vocal.

One depressing aspect for Labor is that it will be dropping its budget into a political climate that is deeply negative. That the ALP has been so widely written off makes it harder to get a positive reception for its budget. But the government strategists are still banking on it being able to sharpen the choice on values and policy.

With only five months until the election, there’s an air of fatalism among some in the higher reaches of government. But there is perhaps also a new collegiality in the cabinet. The Ruddite ministers are (mostly) overboard, with former colleagues having no regrets, blaming them for leaks and failure to consult. Those left form a tighter group, as they try desperately to steer the raft.

Join the conversation

44 Comments sorted by

  1. john davies
    john davies is a Friend of The Conversation.

    retired engineer

    The first sentence here is really something! Gillard's success in China is interpreted as having "put the knife in" (to Rudd) "again."
    Having read her for (very) many years I'd been more tolerant of Michelle than many other contributors to this site, but it is now obvious that she has completely lost the plot. No longer worth reading!

    report
    1. Stephen Ralph

      carer at n/a

      In reply to john davies

      i agree with john

      this is a pretty shabby piece from MG.

      i think she has let herself down by exposing her unwillingness to write a balanced appraisal of JG performance, without injecting some negative hyperbole.

      she needs to quit writing for this forum and go back to journalism school, rather teaching journalism.

      poor form MG.

      report
  2. John Foley

    Various ...

    Sure labor can't afford to fail this test. Of course, it will be judged to have failed this test regardless.

    report
  3. Jack Bloomfield

    Retired Engineer

    Michelle, your first sentence is a disgrace -can't you get over it?
    Political leaders get replaced from time to time by all parties, but Rudd was "knifed".. after he resigned - it sounds better doesn't it. An opportunistic negative spin to a Gillard good news story.

    Julia Gillard presented to the voting public as Labor leader at the 2010 election - Labor legitimately formed a minority government following that election - accept it! It's called democracy.
    The rest of your article I didn't bother reading- I've had enough of this style of commentary in MSM.
    You are working for "The Conversation", but have never joined it.
    Conversation implies 2 way communication.
    You are still delivering your commentary in MSM simplex style.

    report
    1. Stephen Ralph

      carer at n/a

      In reply to Jack Bloomfield

      if the editors of this forum set about hiring MG to create some controversy, they have succeeded.

      if they hoped for balanced, inspiring and worthy political comment - they failed.

      report
    2. Robert McDougall

      Small Business Owner

      In reply to Stephen Ralph

      I wonder if Gina bought it? Do we expect to see Andrew Bolt as a regular contributor at some time in the future?

      report
  4. Peter Johnstone

    logged in via Twitter

    'Julia Gillard has put the knife in again'. Is this the standard of journalism we expect from a senior journalist?

    report
    1. Steve Birdsall

      Retired

      In reply to Adrian Tosello

      I had stopped reading and copied "Julia Gillard has put the knife in again" to paste into my comment. I see I'm not alone.

      report
  5. Will Hardy

    logged in via Twitter

    I clicked on this article for my amusement, to see if and how Ms Grattan would question Gillard's leadership.

    Even while expecting something low quality, I was still shocked at that terrible first sentence.

    report
  6. John Phillip
    John Phillip is a Friend of The Conversation.

    Grumpy Old Man

    Hell's bells, what fantasy land do some of the respondents live in? Of course JG put the knife in. In fact she has achieved something of which Rudd has proved incapable. The very fact that the expectations placed on Rudd to improve relations with China in a meaningful way were crushed by the man's lack of ability has allowed JG to actually shine. Her success on top of his failure in an area in which he was supposed to be the gun has certainly drawn a knife across his political throat. Instead of constantly bleating and whining about Grattan's turn of phrase, those poor, sulky folk need to harden up and acknowledge what a crap job the ALP has done since 07 and acknowledge the pathetic Machiavellian manoeuvrings that ousted Rudd in the first place. This is one of their few true success stories, a least find some happiness in that instead of constantly wanting to shoot the messenger.

    report
    1. Giles Pickford
      Giles Pickford is a Friend of The Conversation.

      Retired, Wollongong

      In reply to John Phillip

      I agree John Phillip. The moaning of the rusted on left remind me of a cranky old priest who used to berate his flock accusing them of "the perpetual pleading of the petulant parishioners". Michelle Grattan is a fine journalist. I don't have to agree with her every time to know that. I mean I might be wrong, mightn't I?

      So I offer Oliver Cromwell's advice to King Charles - "I beseech you my Liege, think but that in the bowels of Christ you might be wrong".

      report
    2. Steve Birdsall

      Retired

      In reply to John Phillip

      "Having decisively seen off Kevin Rudd’s last hope of returning to his old job, Julia Gillard cemented her position with a China visit widely hailed for its big advances in this vital relationship"

      Presumably that's what MG meant, so why not write it?

      report
    3. Stephen Ralph

      carer at n/a

      In reply to Steve Birdsall

      why mention KR at all.........she just can't help herself it seems.

      how can labor move on from that regrettable past if peeps like MG just won't let go.

      i know others may say they deserve to be reminded all the time, but for heavens' sake - move on.

      report
    4. Robert McDougall

      Small Business Owner

      In reply to John Phillip

      Crap Job? ok John. Actually there have been quite a few success stories, sadly the Murdoch and Gina Media Machine don't want anyone to know.

      report
    5. Robert McDougall

      Small Business Owner

      In reply to Stephen Ralph

      i would surmise that if the media hadn't been frothing at the mouth about Rudd, Julia, knives and backs for such an extended amount of time, the leadership thing would have dissappeared a very long time ago.

      My thought is that the MSM where hoping to entice Rudd into exactly this scenario along the lines of "the enemy of my enemy is my friend".

      report
    6. John Phillip
      John Phillip is a Friend of The Conversation.

      Grumpy Old Man

      In reply to Robert McDougall

      I don’t think it's all the msm's fault, Robert. What, would you rather there be a 'suppression' of information surrounding the intra-party issues - so much for transparency, no? The ructions within labor have certainly been pronounced since the Gillard/Rudd coup. It has been the factions within the ALP who are responsible for the state in which their party currently finds itself and this has even been publicly acknowledged by some alp members themselves. I realise it must be hard to watch this ship sink, but it is just disingenuous to lay the blame for it at the feet of some third party - i.e. big bad Rupert, Gina et al.

      report
    7. Felix MacNeill

      Environmental Manager

      In reply to Giles Pickford

      Giles, the fact that somebody has reached a certain cxonclusion, with which you disagree, does not constitute evidence that they have failed to think clearly or openly.

      report
    8. Robert McDougall

      Small Business Owner

      In reply to John Phillip

      ok John, i guess we look at things differently.

      There is no way that you could convince me that Rupert, Gina, Bolt, Henderson, Abbot, IPA etc aren't all working together to bring down the government and aren't using their influence to create the impression of a disfunctional government, when from what i see, they are actually not doing too bad a job and from the viewpoint of the rest of the world, they aren't doing too bad a job either.

      So go ahead, play that game if you like. I suspect that the closer we get to the election, the false polishing of the turd (advertising reference) that are the coalitions policies and the instinctive disquiet (ok, in my case outright loathing) that typifies the gut feeling re Abbott may end up resulting in an outcome different from that pasted across Rupert and Ginas Myface site, otherwise known as the MSM .

      report
    9. Garry Baker

      researcher

      In reply to John Phillip

      Excellent John - yes, it is a Gillard success story. Indeed, which of the two would you take to war with you - says it all.

      Anyway, apart from the Canberra spin(which reads as a translation to a confirmation bias) - this is what a lot of voters would think too - No need to like Gillard, but you had better respect her. It helped Thatcher no end

      Though on this one she needs to be very careful -- ""Gillard’s achievements do fit the government’s narrative about the importance of looking to the Asian Century in preparing Australia for the future. ""

      So long as that narrative doesn't include help with the Colonisation of Australia - as seems to be happening on way too many fronts

      report
  7. James Hill

    Industrial Designer

    The Chinese will have little to do with the Prime minister of "South Timor" whose regime will remind them of the treatment dished to the Chinese in Manilla under the Spanish in the Phillipines.
    A complete extermination every forty years, over centuries.
    Do you think the Chinese people, anywhere in Asia and Australia, are insensitive to the antagonism and xenophobia that pervades the Abbott mindset and by which means he hopes to win government.
    Grow up Aussies!

    report
  8. Stephen Paul

    Community Worker

    It is good to see MG is still setting tests for the Government & Julia Gillard. The PM has passed all the other ones the MSM has set for, I am sure she will pass this one.

    report
    1. Robert McDougall

      Small Business Owner

      In reply to Stephen Paul

      "trial by fire" i guess. You have got to admire the way that Julia Gillard has handled herself in the face of shrill MSM 'opinion" pieces and political hacks.

      report
  9. Mark Skinner

    logged in via Facebook

    I’ll leave the budget issues alone and restrict my comments to Michelle’s opening remarks on the Prime Minister’s China trip. I’m not sure that it was such a success. If it has been, as Michelle Gratton terms it “widely hailed” It may not deserve to be.

    Amongst Julia Gillard’s first comments on the role she would play on foreign affairs was that made at the Asia-Europe meeting in Brussels in October 2010. She told ABC 1's 7.30 Report that mixing with foreign dignitaries was her predecessor…

    Read more
  10. Robert McDougall

    Small Business Owner

    oh Michelle, perhaps a touch of larger reality needs to be included in your musings. No budget is immune to external factors and it is a shame it has become a political football to the detriment of effective governance.

    Governments CAN NOT be run like businesses as they account for more than just the profit motive. Sometimes deficits need to be run, sometimes surplusses. The Mantra of Suplusses at All Costs is one of the more destructive developments in politics today, much like the performance…

    Read more
  11. John Robert Brooker

    Retired

    Michelle,

    Why do you consistently damn the Prime Minister with faint praise? Even given her recent significant foreign policy achievements with China.

    Your first three paragraphs seek to perpetuate a fantasy of competition and make what are now pointless comparisons between Julia Gillard's actions in Government and what Kevin Rudd could, or maybe might have done.

    He has been comprehensively defeated in all of his Freddy like attempts to regain the Labor leadership. Can you please stick to the subject in your next article and give up on the Rudd/Gillard saga. It is over! Get used to it.

    report
  12. Pat Moore

    gardener

    To consistently repeat this mantra "put the knife in again" must be a clause common to Michelle's various contracts. Like a broken record we used to say when there were records. But this phrase must have scored a record itself in Michelle's pieces?

    That she must religiously invoke "the knife in the back" cliche' so that the Prime Minister is permanently associated with a Lady Macbeth type of deviousness to keep LNP voting misogyny alive in voterland? So many times it has been explained that this is normal politics.

    Is it a primitive propaganda trope or a personal fixation?

    report
  13. Felix MacNeill

    Environmental Manager

    Reading Grattan's work is like watching a heroin addict.

    report
  14. Judith Olney

    Ms

    Hi Michelle, I realise that you have a word limit for your articles on TC, but perhaps if you wasted less of your limited words on pointless Gillard bashing, and wrote more on the actual issues you bring up, you would gain a bit more respect for your work, than you are obviously getting here.

    I would have liked more detail, (less hyperbole), on the China visit. I would have liked more factual information on the currency deal, what it means for Australia, and perhaps more insight into the brief…

    Read more
  15. Ronald Ostrowski

    logged in via Facebook

    Seriously, this relentless Gillard bashing is so yesterday. And the Rudd story, so over. Even those not following politics are starting to find it annoying. The China visit and its success was not only Gillard's triumph, it involved the Foreign Minister, other Government Ministers and a lot of bureaucrats working hard for months to make this happen. Nothing to do with soap opera politics which so obsesses Michelle and so many of her colleagues in the Murdoch inspired MSM/ABC. Start thinking…

    Read more
    1. Jack Bloomfield

      Retired Engineer

      In reply to Ronald Ostrowski

      Great stuff Ronald,
      The "wonderweb" has enabled the marvellous immediacy and consumer interaction of the 5th estate - just in time to supplant the money corrupted corporate dictated 4th estate.
      It is the future of journalism and publishing - citizens must embrace and nurture it to spread truth and reality where vested propaganda currently reigns.
      All those old tired journo's (and younger hirelings too) used to dishing out the same old corporate sanctioned distortions of "news" to a mute remote…

      Read more
  16. Lee Emmett

    Guest House Manager

    In the real world where the mining tax failed to generate the expected revenue, balancing the books at Budget time will be difficult.

    The Greens know that getting realistic tax revenue from the mining sector is like drawing blood from stone, yet Christine Milne continues to blame Labor for its inability to modify the mining tax. Milne is being completely hypocritical as she knows Labor can't pass legislation without support of the Greens and sufficient Independents; or by gaining bipartisan support…

    Read more
    1. Ronald Ostrowski

      logged in via Facebook

      In reply to Lee Emmett

      Lee, poor old Simon, whom I once strongly admired for his astuteness and ability to cut through the bias of journalists by their questions loaded with false premise, has totally lost the plot. On the one hand he advocates that Labor return to its traditional values (whatever that is in the realism of a neo-Liberalist global environment, and on the other maintain Howard's bizarre middle-class welfare (one of the few things the pro-LNP ignore in their quest to prop up their poster boy, Abbott). As…

      Read more
  17. ian cheong

    logged in via email @acm.org

    I came to "The Conversation" to read Michelle's articles. I have not been disappointed with her, because she writes insightfully what she always has - political commentary.

    I have been much more disappointed in the rest of "The Conversation", since the blurb suggests more a academic bent with in depth and hopefully evidence-based and unbiased analysis. What I see is lightweight political material from "academics" and others who want to write. I see a dearth of comprehensive analysis which is still…

    Read more
    1. Stephen Ralph

      carer at n/a

      In reply to ian cheong

      where else would you get pithy and insightful comments apart from right here.

      i have no beef with MG, but i do think her bias against labor and JG is mightily apparent.
      now you may or may not be an lnp supporter, and there's no actual crime in that, but to me it detracts from the quality of her writing to be so negative towards labor.

      and is TC worth your time?

      well only you can decide that.

      report