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Grattan on Friday: When you actually have to do it, governing doesn’t seem so easy

Nationals, Labor and Indonesians are complicating Abbott’s early days. AAP Image/Jane Dempster

Tony Abbott must be thinking: thank goodness for the “honeymoon”. It is helping lessen the public impact of some quite serious early problems his government is having.

Abbott is assisted not just by the glow around a new government, but also by the fact many voters are more than usually relieved at being rid of an old one. As for business: it is getting an inside run and likes what it sees as the new administration’s more measured style.

At present the government spends much of its time blaming Labor for all and sundry. But that will wash only so much and for so long. It won’t overcome some fundamental difficulties.

These include a serious, high profile rift between the Nationals and the Liberal “dries”; the prospect of an extended wait before the Coalition’s core promise, repealing the carbon tax, can be delivered (assuming it eventually can); business suggestions that consumers won’t get all the savings Abbott promises when the tax does go; and testy relations with Indonesia in the wake of the revelations about Australian spying.

There have also been the embarrassing disclosures that Coalition politicians (in particular) misused travel entitlements which will lead, when the new Parliament starts next week, to fresh pressure to tighten the system.

All that’s apart from the substantial challenge of getting next year’s budget together in tough economic circumstances and a continued deterioration of revenue, to be documented in the mid-year fiscal update before Christmas.

On the up side, the asylum seeker boats have significantly slowed - thanks to Kevin Rudd’s PNG solution and the Coalition’s hard line - but the progress has been overshadowed by controversy about Immigration Minister Scott Morrison’s secrecy.

There is an element of intractability about some of the issues Abbott is facing in these early days.

If it were not for the honeymoon, the row over US company Archer Daniels Midland’s bid for agri-giant GrainCorp would be producing more dramatic headlines about a “crisis” in the Coalition.

With Treasurer Joe Hockey to decide by December 17 whether to approve the takeover, Nationals leader and deputy PM Warren Truss - who must have been very aware of the implications of what he was saying - came out extraordinarily strongly on Sunday in stating his and his party’s opposition to the bid (a position shared by some rural Liberals).

Hockey, asked on Wednesday about suggestions he planned to tick the takeover with conditions, declared, in what could only be seen as a lash at Truss and like-minded colleagues: “Let me say this on foreign investment. I will not be bullied or intimidated by anyone when it comes to dealing with the national interest. Anyone.”

The stakes are high. GrainCorp has become a test of Hockey’s spine and the Nationals’ muscle, and it is difficult to see how the battle is going to end happily.

The carbon tax’s repeal will be the first legislative item for Parliament next week. But now that Labor has dug in, it almost certainly won’t pass before the Senate changes in July. The Coalition can rail against “Electricity Bill” but the bottom line is that it can’t deliver on its promise to voters any time soon. This also forces business to make decisions in a vacuum. Businesses cannot just conduct their dealings on the basis of the government saying the tax will eventually be repealed; the law and contracts don’t operate like that.

Some companies and business groups are now bringing into question just how much price reduction will be passed on when the tax does go, as in some cases firms were not able to include the full cost in the first place. (The Australian Competition and Consumer Commission, however, remains confident of a 9% fall, reflecting a 9% rise.) The government is locked into very specific numbers on the benefits coming to households - Abbott has made himself hostage to these figures.

(While the government is obsessed about the carbon tax, it needs to be more careful with its messaging on climate. Its decision not to send a minister to the United Nations climate negotiations in Poland is unfortunate, especially as it is new. It seems to be going out of its way to signal a lack of interest in the issue and the talks.)

On the very different front of relations with Indonesia, a critically important neighbour, the government has been unlucky in the timing of the disclosures about Australian spying. The revelations would hardly have surprised the Indonesians but they have chosen to make an issue of them, just when the Abbott visit had got the relationship between Jakarta and the Coalition on an even keel.

Foreign Minister Julie Bishop’s assertions that everything was fine and dandy contrasted with the robust comments from the Indonesians, including her counterpart Marty Natalegawa. Presumably the issue will soon blow over but with the Indonesian presidential election looming – when Australia will lose its biggest supporter, Susilo Bambang Yudhoyono – the next few months will be a delicate time for relations.

How a government and a PM handle their early challenges is important for later. In an Australian Financial Review article this week Liberal pollster Mark Textor makes some astute points about the transition into power, from the flexibility of campaign mode to the very different world of bureaucratic advice, administration, and competition among ministers.

One is a warning to beware of “the blinding blue fog of friends” - “rent-seeking business, reactionary columnists [Abbott recently entertained a clutch of right wing columnists at Kirribilli House] and think tanks”. Another is the need to remember “the greatest difference in government, compared with the opposition, is that your public will expect you to adapt your plans to changes in circumstances as they arise. They want governments to update their agenda to suit those changing circumstances.

"When you are locked in the straitjacket of yesterday you will fail to adapt to tomorrow”.

Listen to Senator Sam Dastyari on the Politics with Michelle Grattan podcast, available below, by rss and on iTunes.

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