With his spot at the top seeming safe for the moment, Tony Abbott will pin his hopes of long-term survival on keeping households happy. By Sophie Morris.

Tony Abbott stakes leadership future on 2015 budget

Prime Minister Tony Abbott during question time on Wednesday.
Prime Minister Tony Abbott during question time on Wednesday.

When Prime Minister Tony Abbott decides it’s time to shut down an issue that could be politically damaging, he has a habit of deploying rhetoric that leaves no room for retreat.

Think of the ironclad promises he gave on the eve of the election: “…no cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS”. Not much wriggle room there. That’s what has caused him such grief. 

This penchant for absolute promises when under political duress is a habit Labor is learning to exploit.

In question time on Wednesday, it took several attempts for Labor to line Abbott up for what the opposition suspects might become another “broken promise”. It took four questions on health funding, but they got there.

In setting up the question, Opposition Leader Bill Shorten referred to an answer Abbott had given just minutes before, stating that the government was “determined to protect bulk-billing for children and concession card holders”.

“Does the prime minister’s answer signal a government intention to limit bulk-billing to children and concession card holders or to introduce means-testing for bulk-billing?” asked Shorten.

The prime minister’s response was unequivocal, ruling this out as definitively as possible.

“No and no – absolutely no and no,” said Abbott. “I just want to make it absolutely crystal clear today, as I did yesterday, that any government-imposed co-payment, any co-payment, is dead, buried and cremated. I cannot make it clearer than that. It is dead, buried and cremated.”

1 . ‘Modest contribution’

Well, that sounds rock-solid and final, until you consider that the comments from his health minister, Sussan Ley, had been considerably less clear cut.

It fell to her to confirm on Tuesday that the government would finally axe the GP co-payment, which it first unveiled in the budget last May and has sought several times to salvage in recent months. But she has continued to talk of the importance of “price and value signals” and the idea that those who can pay should make a “modest contribution” to see the doctor.

 “At the moment, bulk-billing rates are too high, too many people who can afford to make that modest contribution are in fact paying nothing,” she told Sky News on Tuesday, an argument she repeated in question time on Wednesday. Ley seemed to be still mounting the case for some sort of restrictions on bulk-billing, according to a person’s ability to pay. 

It seemed that either Abbott had overreached in his enthusiasm to rule that out, or his health minister was lagging behind him in understanding that it was truly, definitively off the table. 

By Thursday’s question time, Ley had caught up, declaring the government had “ruled out absolutely means-testing of Medicare”.

What remains on the table is the freeze in indexation on Medicare rebates, worth $1.3 billion through to 2018, which doctors argue could force them to bulk bill fewer patients.

It remains to be seen what final policy emerges from Ley’s consultations with doctors, but if it involves any restrictions on bulk-billing, then Labor will replay Abbott’s question time sound bite from Wednesday ad nauseam.

It was a week in which Abbott stared down another brewing threat to his leadership, then sought to shut down issues that have caused him grief with Liberal backbenchers. He took responsibility for the bungling of the GP co-payment, confessing he “should have known better than to attempt health reform without the strong co-operation and support of the medical profession”.

A day after confirming 300 military trainers would be deployed to Iraq, he placated some Coalition MPs by agreeing to a more generous Australian Defence Force pay rise, of 2 per cent a year, up from 1.5 per cent. It was still not enough to win over bolshie independent senator Jacqui Lambie, who wants 3 per cent.

2 . NSW election looms

Given the New South Wales election looms on March 28 and further federal dramas could hamper Liberal premier Mike Baird’s campaign, Abbott’s leadership is now assumed to be safe until beyond the budget, barring massive cock-ups.

The budget on May 12 will be his audition to remain leader. Abbott and Treasurer Joe Hockey need to persuade not only voters, but also their party room.

They began the sales pitch this week. On Thursday, Hockey described the Intergenerational Report, showing the budgetary pressures arising from an older population, as “a call to arms in relation to reform”.

Hockey’s message about last year’s budget was mixed, arguing its deep cuts were justified, but conceding “it did bite off too much”. “Last year’s budget was a budget that tried to do 40 years’ work in one year,” he said.

As Hockey and Abbott write its sequel, they are still constrained by the promises they made while in opposition, including that they would pay down the deficit, quarantine spending in certain areas, and that there would be “tax cuts without new taxes” under a Coalition government.

Since then, of course, commodity prices have dropped significantly and unemployment has risen sharply, slashing government revenue and requiring increased spending on welfare.

Add in the ferocity of the voter backlash to the government’s ambitious first budget and it’s clear that, this time around, Abbott and Hockey are confronting a knot of Gordian proportions.

Already, Abbott has promised that households will not feel much pain. 

“This year, the government’s budget focus will be on strengthening the economy,” he told the National Press Club a month ago. “Because we have done much of the hard work already, we won’t need to protect the Commonwealth budget at the expense of the household budget.”

3 . Raising expectations

Leaving aside the fact that some of the “hard work” has stalled in the senate or been abandoned, Abbott’s comments raised expectations that budget measures would not hit the hip pockets of middle-income voters.

This limits the options for the inevitable spending cuts. Social Services Minister Scott Morrison has been preparing the ground for tough decisions in his portfolio, as he searches for extra funds for childcare. “We need to be up-front with each other about how much these things cost and what is funded,” he said this week, when asked whether universal access funding for preschool children would be extended beyond June.

Morrison is also, thus far, resisting pressure to reveal whether annual funding for groups that help the homeless will continue.

The Salvation Army, the St Vincent de Paul Society and Mission Australia are among groups that warned Morrison in an open letter last month that the precarity of their annual funding deal is leaving their workers anxious and homelessness services hamstrung. 

“We cannot negotiate with our staff whose contracts soon expire. We cannot tell clients that the programs they have relied on will continue. We must carefully deliberate whether to accept new clients into those programs which have a long-term delivery model,” they wrote.

In a week in which both major parties vowed to work together to reduce the scourge of domestic violence, their letter sounds a stark warning.

“Women and children fleeing domestic violence, young people who can’t stay with their families and long-term rough sleepers looking for a bed for the night are all affected by the lack of certainty that a one-year funding cycle creates,” they wrote. “You do your budget planning on a four-yearly cycle; please let us do the same.”

4 . Homelessness funding

Peak group Homelessness Australia says about 3000 workers, who provide about 180 services to 80,000 clients, are anxious to see whether their funding will be renewed in the National Partnership Agreement on Homelessness, which expires in June and is worth $115 million this year.

The former Labor government introduced the four-year agreement in 2009 but then shifted it to annual funding in 2013. Some in the sector say that, in doing so, Labor set a time bomb for an incoming Coalition government, which would need to decide soon after taking office whether to continue the programs.

Last year, it took the pressure of the West Australian senate election rerun to prompt Abbott to guarantee the annual deal would be extended. During an interview with Perth radio on March 11, 2014, he assured groups that help the homeless there was “no need to be agitated”. “Come budget night, all will be revealed and I think people will be happy.” 

Indeed, they were granted another year’s funding. But a year rolls around quickly and again the anxiety is kicking in. So far, there has been no similar assurance. Some groups that rely on federal funding to provide services to the homeless are already letting staff go.

If Abbott is indulging in pre-budget promises, then there’s one sector that would appreciate some unequivocal prime ministerial rhetoric guaranteeing their programs a future.

This article was first published in the print edition of The Saturday Paper on Mar 7, 2015 as "Budget cut and thrust".

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Sophie Morris is The Saturday Paper’s chief political correspondent.

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