Tony Windsor
Why Hockey’s budget rhetoric doesn’t stick

At the time he gave it, Joe Hockey’s “Age of Entitlement” speech resonated with many. But that was two-and-a-bit years ago. Since then he has delivered a budget unable to follow through on the message of moderation he gave at London’s Institute of Economic Affairs in 2012. He has been caught out by his own rhetoric.

The failures are many, but they are partly explained by the arm-wrestle that has existed within the Liberal Party for almost two decades. Hockey’s loss in that wrestle will follow him for a long time and may be the beginning of this government’s destruction. The failure hurts doubly for an electorate crying out for economic honesty.

The dilemma that now exists for the government and the frustrated rhetoric emanating from Hockey reflect the Howard–Costello differences in attitude to revenue and spending from 2004 to 2007, and the legacy of John Howard’s so-called middle-class welfare spending.

The problem for Hockey is that the reasonably simple explanation – that the role of government should not be to provide welfare payments to the middle class and an assortment of “leaners” and “loafers” –
has morphed into a platform of political payback and revenge. The public no longer believes Hockey is working for them. They have become confused and agitated to such an extent that Hockey has lost the plot. Added to this is Tony Abbott’s fanaticism regarding anything that Julia Gillard touched.

Once the budget became a hotchpotch of mixed messages, a vehicle to disassemble existing productivity-enhancing initiatives rather than a conduit to a better long-term future, Hockey lost control of the process. Cory Bernardi attempted vainly to introduce some economic clarity and purpose to the debate, but when the public realised the government was doubling the deficit his ramblings became unstuck

I have known Joe Hockey for 23 years. He was the messenger for Nick Greiner and Bruce Baird in my first hung parliament, in New South Wales in 1991. I have always respected Joe because he is not a “retail politician” like Abbott and Barnaby Joyce, and is obviously wrestling with the “wholesaling” to vested interests. Although Hockey referred to the excesses of Labor as the main reasons to “repair” the budget, he was at least honest enough to also mention the excesses of Coalition budgets.

The resources boom tax cuts that Howard and Peter Costello announced before the 2007 election highlighted the win-at-any-cost attitude of a dying government. Costello would have known that there were structural issues looming and the boom would not go on forever. It was evident in 2002-03 that structural budgetary balance issues existed and both men would have known projections anticipated a structural deficit in 2006-07. Yet they continued to spend in an attempt to buy votes. Howard’s battlers were paid their “entitlement”.

Enter Kevin Rudd on day two of the campaign, agreeing to $31 billon in tax cuts. Each side is as guilty as the other. Rudd knew there were structural issues coming with or without the global financial crisis but ignored the advice.

History shows that Howard in 2004 contributed 16 per cent of the kitchen table budget. Compare that with Paul Keating’s 14 per cent in 1992 and that much-maligned welfare agent Gough Whitlam, who contributed 9 per cent in 1972.

Hockey missed the moment when he used the Abbott office rhetoric of loafers and leaners – the real recipients of largesse essentially escaped the net. Things such as superannuation arrangements for the more well-off, negative gearing, a well-structured profits-based minerals tax and other tax reforms all failed to get a mention, even though they all have structural budgetary impacts.

Hockey had been complicit in many of the decisions that put large amounts of unsustainable cash on the kitchen table. The original baby bonus was defended as economically sensible, as was Abbott’s paid parental leave scheme. It snuffs out the austerity message completely. The baby bonus encouraged some people to have children for the “nation” – now some of the same people will be penalised by the nation if they fall into the wrong criteria elsewhere.

The invention of the “budget emergency” in opposition was shown up in government, where these simplistic slogans do not work. The Gillard–Rudd war and its electoral damage to the Labor Party weren’t going to be enough to carry an ill-conceived message. Dog-whistling about the borders, unsettled Aboriginals, or people with disabilities, or other social minorities and victims was not resonating.

The snorting of “We’ll all be rooned” by Joyce wasn’t cutting through except with the redneck brigade. They always like a victim as long as it’s not them.

Very little was said about the impacts on revenue caused by the odd circumstances surrounding real and nominal gross domestic product, the terms of trade and the value of the Australian dollar in recent years. Economists and business leaders refuted the emergency tag and argued for moderate structural changes to the budget that had long-term productivity consequences. They rightly argued that debt-to-GDP ratios were some of the best in the world but there were structural issues that needed addressing. Kicking to death a few aged-care workers on $16 to $20 an hour is hardly the stuff of major reform.

So where is the problem and why are the productivity enhancers essentially being ignored? The answer to that lies with those who funded the Coalition victory and has little to do with budgets other than perhaps their own.

There is no doubt that there are structural problems within our economy that need to be addressed. Policy areas such as infrastructure, aged care in the face of an older and older population, long-term education and health costs and benefits all need attention. So, too, the sleeper that may negate the rest as long-term economic issues: climate change.

Costello and Wayne Swan understood the aged-care dilemma – the high operational costs of delivering services and the massive capital budgets required if the current models were to be built for a large group of people, with the inevitable stranded asset problem once the baby boomers pass on.

The prime minister wants to be remembered as an infrastructure builder. Some – myself included – have taken to calling him the “Roads Scholar”. He is concentrated on urban roads as some form of economic saviour in terms of productivity increases, which is fine for the road builders but a recipe for more congestion. Little mention of the most important infrastructure of this century, the National Broadband Network, perhaps at the behest of the American billionaire Rupert Murdoch.

Another American, president John Kennedy, said not long before he died: “All of us do not have equal talent but all of us should have an equal opportunity to develop our talents.” The Gonski needs-based funding model provided a structural platform that removed the public-private-religious school impasse of generations, as well as providing an economic ramp for the future and an obvious social dividend. The Abbott government couldn’t be less interested.

The implications of climate change in an economic and environmental sense are missing from the Hockey agenda. Not because he doesn’t believe something should be done, but because he is bound by his leader’s dogma. Any budget reform for the future must include a market-based approach to emissions as well as constructive renewable energy policy.

The posturing to vested interests and the technologies of previous centuries is a Pied Piper march off a cliff, an insult to leadership and the community. The journey from London to Canberra has been too hard and Joe is “entitled” to feel disappointed by what he’s achieved.

This article was first published in the print edition of The Saturday Paper on Jul 26, 2014 as "Why Hockey’s rhetoric doesn’t stick".

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Tony Windsor is the former independent member for the federal seat of New England. He has held balance of power positions in both the NSW and federal parliaments.