Tony Abbott rains down blows in budget blitz
Date May 15, 2014
Mark Kenny
Chief political correspondent
Whether it was as a young monarchist, or in his subsequent parliamentary career, the high-impact option is Abbott’s modus operandi. It has served him well in some cases and seen him forced to backtrack on others.
Who can forget his original position on paid parental leave, for example? “Compulsory paid maternity leave? Over this government’s dead body, frankly,” he told a Liberal Party function back in 2002.
When the time came to shove Malcolm Turnbull off the stage in late 2009, Abbott again had gone for broke depicting Turnbull’s bipartisanship on emissions trading as completely at odds with the Liberal way, premised as it was on the false assumption that most of the party actually believed in the science of global warming.
Then it was Labor’s turn. Abbott’s campaign – a bruising four-year effort – had a number of sub-elements, but turned on two critical heads of argument: (i) that Labor had squandered accumulated surpluses, mortgaged the nation’s future and thus wrecked the budget, and (ii) that Julia Gillard had destroyed trust.
The two things overlapped, but the latter formed the cornerstone of Abbott’s direct pitch to voters. His most central pledge – some are calling it the “mothership promise” - was the one to restore faith in the political process and it was expressed in myriad ways. We will keep all of our promises and there will be noexceptions. We will be a government of no excuses, no surprises. Australians were to be given an adult government, whose word was its bond.
Even at the time it was obvious that his platform did not add up - scrapping the carbon and mining taxes, keeping all the compensation, and all the while promising no increases to personal taxes, indeed any tax increases. No new tax collection without an election, was a phrase used more than once.
So obvious was the magic-pudding sense of the Abbott formula that reporters explicitly asked that if he were elected, would the dire condition of the budget be cited as an excuse to break promises? Certainly not, they were assured.
Yet by the time Joe Hockey rose to the dispatch box on Tuesday night to deliver his first budget, that commitment lay in spectacular ruins. Abbott, through his Treasurer, had decided to come out swinging.
Broken promises littered the budget, from specific breaches, notably the new temporary deficit levy and indexation of petrol excise, to the obvious betrayals of the spirit of the government’s 2013 mandate on health and easing cost-of-living pressures on families. These include the introduction of a $7 GP co-payment, lower indexation of a range of welfare payments with tougher incomes tests, and the potentially nation-altering cuts to the longer-term trajectory of school and hospital funding.
Abbott and Hockey have pilloried the attacks on the budget over these surprises as exclusively “political”, claiming the opposition and most others have no substantive critique to offer on the economic front. Coming from a prime minister whose approach to opposition was unrelentingly “political”, Abbott’s indignation is hardly compelling.
But in any event, there are question marks over the micro-economic and policy foundations of many aspects of the budget. At their core, many appear to be fundamentally political in nature.
Consider one of its biggest measures, the $7 co-payment for GP visits. Self-evidently, this was an initiative withheld from voters before the election for fear of causing an exodus of potential votes from the Coalition column. Or perhaps it was whithheld because at the time it didn't exist
Even now, the primary justification being offered is not as a fiscal repair measure, like so many other cuts, but as a behavioural tool to convince people not to go to the doctor so often. We know this because the funds raised are not being directed back to the bottom line but to a new medical research future fund. This behavioural modification will be achieved by the insertion of what economists call a price signal where previously there was none.
It all sounds very impressive until you think about it for a minute. Consider the logic. Australians will benefit from the biggest medical research endowment fund of its type in the world, which will turn its resources to the fight against diseases such as cancer and dementia.
To make all this happen, they will be discouraged via the price penalty, from “unnecessary” trips to the doctor. Health experts say this is precisely what not to do to improve public health where early detection is so often the key to avoiding longer-term illness and costly hospital stays.
They cite time-sensitive conditions like “chronic obstructive pulmonary disease” which costs the economy in the order of $200 million a year in treatment and lost productivity. Early detection and treatment of this and hundreds of other diseases – many of them fatal – can sometimes be measured in weeks. Or to put it another way, on whether you consult your GP this month or next.
Luckily for Abbott, his punch-first approach has generally worked. But it carries a big danger if, rather than putting your opponent on the canvas, you merely make them angrier. The Senate remains a big unknown and is unlikely to pass key aspects of the budget – especially the co-payment and the pension and Newstart changes. And state premiers are enraged by a massive projected cut to health and school funding over 10 years.
All in all, the government’s aggressive approach seems to have created new enemies and pleased no one. And it might get worse.
After an indeterminate post-election period, Bill Shorten believes the first Abbott budget has finally clarified the political equation for voters in a way he could not achieve.
His riven and traumatised party has a cause around which to genuinely campaign. So far all we've seen is more Abbott Abbott Abbott and hypocrisy. Everytime Bill rails about broken promises we remember the BIG ONE, everytime he talks about economics we remember the MESS the reasoning behind this budget.
Mark Kenny is Fairfax Media's chief political correspondent.
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