View from The Hill

View from The Hill

Hockey’s bad year will finish on painful note

Joe Hockey will try to lay the blame for the worse than expected accounts on the former government. AAP/Alan Porritt

Modern politicians are schooled in the art of designer “blather” – how, as a dodging tactic, to talk endlessly without saying anything much. They are coached to avoid repeating words of a provocative question so there’s no footage that can be used against them.

But every now and again they break out with golden offerings for critics and cartoonists.

This week Abbott promised to deal with “barnacles”; Defence Minister David Johnston said he wouldn’t trust the Australian Submarine Corporation to “build a canoe”.

If Abbott had talked about one or two “problems” and Johnston had expressed his views in unadorned language, they would still have got headlines. But they’d have invited a lot less trouble – and parody – than has come from these wonderfully (albeit coincidentally) paired nautical references now attached to them like dog tags.

The trouble is the images are so apt for the government’s general problems. It has barnacles all over and often it appears not up to rowing its canoe, let alone steering a liner.

As it drags itself toward the end of this painful year, the government doesn’t seem on top of much, despite having delivered on key election items – except the most central of them, which is repairing the budget.

It is struggling with the big challenges, especially budget centrepieces it can’t get through parliament, and slipping on small but significant matters such as timely appointments.

The budget update will be out mid-next month, yet as of Friday, the government had not announced its new head of Treasury, who is expected to be John Fraser, a former Treasury officer who went to the private sector.

It’s not as though it has lacked time. It sacked outgoing secretary Martin Parkinson (who leaves in December) as soon as it came to power.

With Treasury having to cope with shrunken staff numbers, a Treasurer who is under-performing, and the early planning for a difficult second budget, there are many reasons why Parkinson’s successor should have been named months ago and preferably installed in some sort of role involving re-familiarisation with the department.

Then there is the position of Statistician, which has been vacant all year. There was an able candidate in David Gruen, one of the best economists in the bureaucracy (previously in Treasury and now in the Prime Minister’s department). But he wasn’t appointed.

Whether the new Treasury secretary will be sitting at his desk by the release of the mid-year budget update is unclear.

But Hockey will be the one facing the media and it is likely to be another tough day for the Treasurer, who is under a lot of criticism from his colleagues.

The mid-year economic and fiscal outlook (MYEFO) will show the revenue situation has significantly worsened since the budget, notably due to lower-than-expected iron ore prices and slower-than-expected wages growth.

This means the deficit will be worse across the forward estimates. The budget had projected near-balance in 2017-18 (A$2.8 billion deficit) but that won’t be achieved.

The figuring still has to take account of the September national accounts, out next week.

Hockey will try to lay the blame on the former government. But the deterioration is in comparison with his own budget – and he had little sympathy when Labor had to keep redoing its revenue estimates.

The budget has also been affected by the amount of money lost when measures haven’t started on time or deals have had to be done – in return for Senate support – that gave away some savings. For example, the Palmer United Party insisted as a condition of axing the mining tax that the schoolkids bonus stay until after the election.

However, items that have not been passed but remain on the government’s agenda – such as the higher education changes, Medicare co-payment – are still counted as savings.

One reason why the government is not anxious to ditch the co-payment at the moment is that the money it is supposed to yield ($3.5 billion over the budget period) helps the budget bottom line, even though it goes into the medical research future fund. The only proviso is that it is not spent (the idea is to spend the interest).

The government has indicated it won’t use the mid-year update as the occasion for a new round of big savings. The economy is too soft for that. Politically, serious new cuts just now would be the last straw for the already disillusioned voters.

Next week’s final four days of parliament (following the expected trouncing of the Liberals in Victoria) and then the run to Christmas are likely to continue difficult for Abbott. But the Coalition will be hoping the summer break brings some better polling. If it does, the main reason will probably be that the government is not being seen or heard so much.

Found this article useful? A tax-deductible gift of $30/month helps deliver knowledge-based, ethical journalism.