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Five weeks on, deal-breaker for voters has shades of ‘93 budget

Not since 1993 has a government managed to arouse such sustained voter antagonism with its budget. AAP/Alan Porritt

Five weeks after its release, treasurer Joe Hockey’s first federal budget is proving to be a remarkably durable political and media commodity, and not in ways that portend well for the Abbott government. Of the many unique or unusual aspects of our political culture – the voting systems we use and their compulsory nature, the short national electoral cycle, to name a few – the cult of the budget is perhaps the most peculiar.

Few, if any, countries place so much focus on a single financial document as Australia does on its yearly budget. Even in these straitened times, the mainstream media continue to set aside enormous resources to cover it, airlifting large numbers of journalists, editors and producers to Canberra on the second Tuesday each May.

Newspapers produce special liftouts full of graphs and analysis; television and radio outlets cut into their regular programming to breathlessly announce what’s up and what’s cut.

And yet, for all the energy attended upon them, experience suggests that budgets can generally not be expected to remain in the national conversation for long. Most years, a budget will have lost its news value by the Friday after its release. While an opposition will try to keep controversies over any potentially unpopular bits going, the political impetus starts to fall away. The opposition leader gives his formal reply in parliament on the Thursday night, almost always to mixed reviews tending towards the negative, and after that the caravan moves on.

But not this year: the 2014-15 budget is the exception that proves the rule. In political, financial and social terms, this budget has so far shown itself to be a game-changer. It has reset the political debate, sparking a community reaction full of heat.

This would seem to be relatively easily explained. The government has presented a prescription for the nation that is dramatically different from the one it took to the election only nine months ago. The Coalition presented an argument to the voters that could be summed up along these lines:

Labor does not know how to handle the finances. We do. We are the grown-ups. If you put us back in charge, we will be able to fix up the finances without you having to go without. You won’t notice the difference financially. We will not surprise you. There will be no disruptions under our government.

But with its first budget, the government – or more particularly, its treasurer – has presented a set of policies that attempt to redraw and redefine the role of the state. These policies challenge not just what took place under the previous Labor government but also under John Howard.

This is in keeping with what Hockey told the Financial Times in February ahead of the G20 economic ministers meeting. He made it plain then that he saw himself as a warrior for a recast international economy, one based very much on neoliberal principles:

I believe in freedom, enterprise and liberty – they are the things that facilitate opportunity. I think our role as finance ministers is to facilitate ambition and lift the yoke of regulation, red tape, taxation and centralised control.

This hinted at a more doctrinaire – and much loftier – set of ambitions than was ever ventilated by the Coalition as it prepared itself to take over from the Rudd government.

So the government is clearly experiencing trouble because it said one thing and now wants to do another. And yes, of course, this seems odd because of the way in which Tony Abbott successfully pursued Julia Gillard over her carbon tax reversal. But is that the only reason the government has so quickly run into strife – the “broken promise”?

Others, often more sympathetic to the government, including some Liberal MPs, offer the assessment that a good deal of the problem goes to messaging. They say that a failure to sensitise the electorate ahead of the budget through coherent and co-ordinated argument, plus some ill-chosen pictures such as the cigar-chomping indulgence of Hockey and finance minister Mathias Cormann, are to blame. That could be partly correct.

But what if the public’s apparent resentment is based not so much on perceived mendacity or bad PR as on common values? If so, that is a much deeper and more intractable problem for the government.

Fairness is, it must be said, an elastic concept in our highly individualised and affluent age. Despite this, it’s a concept still supported by many Australians. Hockey himself should know all about that. After all, he was given the Workplace Relations ministry in 2007 as the Howard government’s WorkChoices laws were killing the Coalition’s chances of re-election – chiefly because they failed the electorate’s fairness test.

If you take one of the most controversial elements of the budget, the A$7 Medicare co-payment, as an example, it is not hard to see why it is facing public resistance. For one thing, it is a price signal, plain and simple. The impost will not go to repairing the budget or paying for medical costs. Instead it goes into a new medical research fund.

On climate change, the government has specifically rejected the application of a price signal. On health care, a vastly more urgent and immediate issue for people, it has embraced a price signal but pushed off any tangible benefits to future generations. Distilled, the government’s message on the co-payment is that because there is a budget emergency, the impost must be introduced but not a dollar of the proceeds will go to ameliorating the emergency.

Significantly, Hockey doubled down last week in a speech at the Sydney Institute. He dismissed portrayals of the budget as unfair, labelling them “misguided”, redolent of the 1970s and “of a political nature”.

Hockey then moved on to a new line of argument, in which he expanded on his Financial Times comments and set out his own concept of fairness. The average working Australian:

… be they a cleaner, a plumber or a teacher, is working over one month full time each year just to pay for the welfare of another Australian. Is this fair?

This expanded on Hockey’s budget-night “lifters not leaners” dichotomy while also opening a new discussion on the fairness of the tax system:

Whilst income tax is by far our largest form of revenue, just 10% of the population pays nearly two-thirds of all income tax.

These taxpayers may argue that the tax system is already unfair, according to Hockey.

Asking the less well-off to see the world through the eyes of the well-off is an intriguing stance for a politician to take from a position of what appears to be, judging by the post-budget polls, not-inconsiderable unpopularity. Do today’s Australians, many of whom – rightly or wrongly – view their taxes as a form of downpayment on an age pension and medical care in their retirement, think that contributing 8% of their wage to the nation’s welfare bill is so bad?

The last time there was such sustained public antagonism to a budget was in 1993 when the Keating government, only months after its surprise victory at that year’s election, rejigged its promised “L-A-W, law” tax cuts, distributing some of them in future superannuation payments. That broken promise was the deal-breaker between the electorate and that government.

They were different times, of course – before the digital revolution, before a precipitous fall in major party membership and after Labor had won five consecutive elections. The Abbott government is banking on the differences outweighing the similarities.

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