How did PM Tony Abbott get the budget so wrong?

For once, there is proof Tony Abbott is not a populist. No populist could have put together a budget as unpopular as this. The polls are as sobering as the national accounts.

Almost half the country thinks the budget bad for Australia. Only 5 per cent say they are better off under it – the worst result ever for a Coalition budget. The Coalition’s primary vote fell this week to the lowest level since Abbott took the leadership in 2009. In the two-party preferred, Labor has a 10-point lead.

The swing between the last election and this budget is 7.5 per cent. An election held today would cost the Coalition 22 seats. Bill Shorten, whose personal approval rating is now 10 points ahead of Abbott’s, would be prime minister.

Public sentiment is not the best way to gauge a budget’s worth. But in this instance, the public has it right. This is a budget of exceptional viciousness. In the next four years, it will take $1.1 billion more from the bottom 20 per cent of households by earnings than it will from the top 20 per cent. This while wage growth hits a 17-year low, falling below inflation, and youth unemployment tops 12 per cent. In some places, it is more like 20 per cent.

Abbott’s budget cuts are aimed at the sick, the old, the poor and the young. This is where it will be most keenly felt. And yet there is nothing of the broader structural reforms Australia’s economy and revenue base require: no substantive change to superannuation lurks for the rich, nothing on negative gearing, no mention of GST.

Especially worrying, however, is this government’s treatment of the young. The only plausible outcome of an arbitrary barrier to government assistance for the youth unemployed is a rise in youth homelessness. In happier instances, it will see out-of-work young at home and drawing on their parents’ capacity to save for retirement. Which comes as the retirement age pushes out to 70 and the pension becomes linked to the consumer price index rather than the higher measure of wage inflation.

Youth unemployment will be helped along by huge cuts to education, too. Gonski funding will cease. Universities will be able to set their own fees, the source of protests this week. On the lowest estimates, tens of thousands of students would be priced out of tertiary education. The system would see middle-class and poor students dependent on scholarships. Education as it has been conducted and expected in this country would change fundamentally. There is a good reason this is unpopular.

Abbott has a gift for tactics. He is brilliant at them, and he proved this a thousand times over in opposition. But a budget is, by definition, about strategy. And Abbott is terrible at that.

This article was first published in the print edition of The Saturday Paper on May 24, 2014 as "How did Abbott get it so wrong?".

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