At first glance putting a match to core economic beliefs delivers handsome rewards. That’s what Prime Minister Tony Abbott had to do to put himself and his government back in with voters. And as the early opinion polling results began rolling in it seems the electorate was too mesmerised by the bonfire to notice what was fuelling its flames.
Shadow treasurer Chris Bowen had his safety goggles on at the National Press Club. All he could see through the pyrotechnics was a naked arsonist. His verdict was that the 2015 budget exposed the government’s prescriptions and policies before the election and in its first budget last year as mere rhetoric.
“The Abbott government believes in nothing except prejudice,” he intoned. His evidence? The ditching of two key commitments: a budget surplus and a “fair dinkum” paid parental leave scheme.
The six published opinion polls since the budget have mixed results. Two – Essential and Newspoll – pick up no bounce for the government. In fact, Newspoll saw a tick up for Labor, a distinct embarrassment for The Australian, aka The Government Gazette. It had to refer to its hated rival’s Fairfax Ipsos poll, which showed the budget had put the Coalition lineball with Labor, 50-50. The Morgan poll came in with a result much closer to that with a 51.5 to 48.5 per cent result, still Labor’s way.
Polling analyst Andrew Catsaras says the aggregate of the polls has Labor on 52 per cent to the Coalition’s 48. Certainly the Coalition is back in the game. But a closer look shows the biggest number of respondents to Newspoll – 39 per cent – weren’t all that impressed either way. Catsaras says they shrugged their shoulders at the budget.
Fairfax Media went to the expense of commissioning its own focus group research. Its pollster Tony Mitchelmore, who also does work for the Labor Party, found relief and some cynicism among hand-picked swinging voters. Most saw it as a vote-buying exercise. One would not be surprised if Abbott takes the country back to the polls “quite soon”. While this year’s budget gave them “less to worry about” than last year’s, some take comfort from the fact that Abbott “can’t afford anything unpopular or he would get voted out”.
One woman said she is quite disappointed with the failure of courageous political leadership. She told Mitchelmore, “I don’t think they’ve got any backbone left in them anymore. They’re not game to carry out whatever needs to be done.”
These attitudes were picked up in the Essential poll. The government’s handling of the federal budget barely rates a pass mark, with 34 per cent approving and 33 per cent disapproving. In statistical terms, a dead heat. But perhaps most tellingly 40 per cent think the Australian economy is heading in the wrong direction as against 35 per cent who think it is going the right way.
The near universal approval for the small business instant asset tax writeoff is seen as the budget’s crowning success. This business boost goes a long way to explaining the big lift in confidence picked up by the Morgan and the Westpac-Melbourne Institute consumer sentiment index. When consumers are feeling more confident, governments can rest easier and election options become more tempting. Especially as Mitchelmore found his swingers were back on side with Abbott and didn’t think much of Labor’s Bill Shorten.
The government’s prejudices are most on display when it comes to what it is prepared to do to eventually get back to surplus. It is rapidly becoming the Holy Grail in the sense that it will never be found. Especially if your ideology doesn’t let you fix a revenue problem by raising revenue. Former treasurer Wayne Swan sniffs a deliberate strategy here.
He told a Brisbane Labor forum earlier this week that Abbott and Joe Hockey are running a campaign by stealth to jack up the GST. The blowout in deficit and debt, documented in the budget, and their reluctance to deal with tax loopholes is part of a plan to condition Australians to accepting higher direct tax.
Swan ignores Abbott’s disavowals. The prime minister says there can be no GST rise without the unanimous support of the states and Shorten. But the biggest incentive for the states to drop their reluctance to change the GST is still in the budget. The Commonwealth plans to withdraw $80 billion over the next 10 years from their health and education funding.
For good measure Abbott and Hockey have set about to undermine Australia’s progressive tax system. Hockey last weekend released figures comparing the disposable income of a single parent with two kids to a single worker. The “welfare rich” his target. The parent with two kids under six earning $30,000 can generate a disposable income of $66,000 when welfare is factored in. A full-time worker without kids would need to earn about $88,000 for the same outcome. He denied that he was fostering resentment. “It’s information for taxpayers.”
The government seems to think income tax is theft; taking from people their hard-earned cash. They see tax concessions in this light. Never mind that it is a tax expenditure that goes directly to the bottom line of the budget. A concession for one person is paid for by higher taxes on another. In this case it is the nation’s poorer families and low- to middle-income earners who are footing the bill for millionaires. Consider this, 38 per cent of total super tax concessions go to the top 10 per cent of income earners. Within four years the cost to the budget will be in the vicinity of $50 billion – much larger than the “unsustainable” aged pension.
But the prime minister accuses Labor of attacking people’s savings. This conveniently ignores that those savings have exponentially grown thanks to “tax arbitrage”, where smart advisers working the system take advantage of the excessive generosity on offer. Abbott accuses Shorten of regarding “your super as his piggy bank to break open whenever he needs money, and I just think that’s dead wrong”.
Abbott is in grave danger here of painting himself into the same corner he did before the 2013 election. Then he promised to do nothing unpopular, only to find the stance unsustainable in government. Unsustainable, that is, if you want to keep the national interest ahead of your political interest.
The cost of courting popularity is staggering. One of the government’s proudest boasts is its success stopping the boats. Half a billion dollars has been saved, according to the budget. That’s dwarfed by the $913 million a year that implementing the policy is still costing.
The latest figures from the Department of Immigration say there are 1707 people locked up on Nauru and Manus Island. This equates to a cost of $475,000 per asylum seeker each year.
Transfield Services has a contract of $1.2 billion to run security on Nauru. That, as we saw in the senate inquiry, is a cruel joke. It has failed to protect women and children from vile sexual abuse.
Pre-election promises to foreign aid, already a pullback from Australia’s commitments to the United Nations millennium goals to alleviate world poverty, were also thrown on the bonfire. The budget didn’t add to the quantum because $11.3 billion worth of cuts had already been locked in. Cambodia escaped the 40 per cent aid cuts to neighbouring Vietnam, Laos and Myanmar. That’s because it has agreed to take 10 refugees a year from Australia for the next four years. The $40 million allocated amounts to $1 million a refugee.
While it would be cheaper and more humane to ditch this shameful policy, the government has looked elsewhere for some savings. And this is where Abbott’s recovery strategy hit a snag. The budget papers have a line item: Removing Double-Dipping from Parental Leave Pay – $968 million. Chris Bowen says it is an ill-thought-out and illusory saving because employers will opt out of providing paid parental leave and defer to the taxpayers’ offer.
Bowen blasted the complete about-face from the government. When Labor legislated its 18-week scheme at the minimum wage, the Coalition condemned it as woefully inadequate. The shadow treasurer accuses the prime minister of reverting to his unsympathetic type by targeting working mothers. While the Jobs for Families package may blunt that charge, it is baffling how the cabinet thought it was smart to sell the change by attacking new mothers as frauds and rorters.
The government’s embarrassment was acute when two cabinet ministers, Mathias Cormann and Josh Frydenberg, fessed up that their wives had taken full advantage of the legal and hitherto encouraged “double dipping”. Shock jock Ray Hadley asked Joe Hockey why the men hadn’t warned their colleagues before the attacks were launched. The treasurer proffered the excuse that their wives may not have told them about it. As improbable as that is, the real clincher came when he went on to reveal his wife doesn’t tell him about the family’s finances. Prompts the question why. Doesn’t she trust the keeper of the nation’s purse with the family’s money?
By week’s end the word inside the Liberal camp was that the bonfire of the party’s beliefs had bought Tony Abbott six more months in the job.
This article was first published in the print edition of The Saturday Paper on May 23, 2015 as "Bonfire of the insanities".
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