Paul Bongiorno
The best-laid plans

The admiration for Anthony Albanese’s political smarts was palpable down the line from one of his senior colleagues, taking time out from last-minute budget preparations to talk to The Saturday Paper this week. “Albo,” he says, “has 360-degree vision.”

The prime minister is not just looking at the next few weeks, his colleague says: he knows where he wants to be by the time of the next election, due in mid-2025, and what the sort of issues are that are likely to be confronted.

It’s not that this source thinks that the prime minister is infallibly prescient. Rather, the source is confident that part of this rounded vision is an understanding that “shit happens” but it’s how you deal with it that counts.

No doubt the assessment of Albanese’s capacity to navigate the vagaries of governing is bolstered by the way in which the Labor leader showed a strategic patience in winning the election and shaping his administration’s approach to the job since.

The government’s first budget next week is a case in point. Long before coming to power, Albanese and his then Treasury spokesman, Jim Chalmers, flagged they would hold their own fiscal reckoning with all the resources of the bureaucracy to assist them early in the term. Before then, the ground would be laid by a jobs and skills summit dealing with issues already identified in the successful campaign. This was to achieve a broad consensus across key sectors of the economy that Labor was heading in the right direction on wage stagnation, labour shortages and a building cost-of-living crisis. In many ways it was an application of political communication 101.

Tuesday night’s budget is another stage in this strategy of defining the problems and then setting out to solve them. Budgets are, after all, primarily political exercises – something Scott Morrison took to heart in the lead-up to the previous two elections, interrupting the fiscal cycle to launch his campaigns. The Albanese government, like its predecessors, is draping its political agenda in the “science” of economics.

Budgets themselves carry gravitas and ritual. The press gallery goes into a secret lock-up to study the sacred documents before they are revealed with huge fanfare at 7.30pm Eastern summer time. This is a vestige of the old days, before the digital age, when it was thought safer to make major economic statements after the markets had closed. Now it has more to do with marketing in prime time.

We are told what will be marketed will be a “reconciliation” of Labor’s promises with the state of the books – after the expenditure review committee went through every commitment of the previous government, line by line, with a view to weed out the “rorts and waste”. This, Chalmers says, is a “bread and butter exercise”. Apparently, there will be no shocks or spectacular reforms – just the results of scouring through the ledgers to help fund already announced eye-catchers such as the $5.4 billion-a-year childcare policy subsidising 96 per cent of Australian families with young children.

Chalmers is promising to begin paying down the “trillion dollars of debt” he has inherited, but much of the diverted funding will go to identified promises such as extended parental leave and prevention of violence against women, announced this week. On Sunday, much was made of Labor’s commitment to $9.6 billion of infrastructure spending. This has the whiff of recycling and reannouncement about it, which is irresistible to governments. So far Albanese has avoided the excesses of Morrison in this regard but he is on notice that once “the mob” – as John Howard used to describe voters – wakes up to it you’re in real trouble.

Albanese’s strategy to consolidate his government’s standing has been assisted by the job Chalmers is doing in the Treasury portfolio. Even some of his political opponents privately note Chalmers has grown into the role and is a clear and effective speaker. Opposition Leader Peter Dutton is not one of them, however. He accuses the treasurer of talking down the economy and not paying enough heed to “the very strong fundamentals” including a 50-year low in unemployment. He says he doesn’t think “Jim Chalmers will cut it on budget night”.

The fact is there are no easy answers to the situation Australia is in. Denial will hardly work. It is difficult to talk up the flood catastrophe that has hit the entire east coast this year and is currently worsening in Victoria. Last weekend, Albanese, like Chalmers, couldn’t put a figure on the cost. The prime minister says it is open-ended. The treasurer concedes it will be billions and his department is struggling to quantify it.

A report by Deloitte Access Economics released in June confirms the worst fears of any keeper of the public purse. It found the estimated total cost of the south-east Queensland floods earlier this year was $7.7 billion. This flooding event hit 23 local government areas and affected 500,000 people. The estimated human and social cost was $4.5 billion.

We are seeing a repetition of this kind of disaster on the nightly news as the catastrophe has moved to southern New South Wales, Victoria and Tasmania. The damage to residential, commercial and public infrastructure is compounded by the fact that many of the areas now being hit are an essential part of the nation’s food bowl. The budget will no doubt have a revised-up estimate of inflation, with fruit, vegetables, grains and meat already more expensive at supermarket checkouts.

Is it little wonder Chalmers reacted so strongly to reports that Medicare rorts and fraud are costing an estimated $8 billion a year. Investigations by the ABC and Nine newspapers pointed the finger at unscrupulous doctors. The treasurer said anyone stealing from Medicare or the National Disability Insurance Scheme (NDIS) was “a grub”.

In a rare display of discord Albanese seemed more alarmed at Chalmers’ reaction, saying, “overwhelmingly our doctors do the right thing, including GPs”. He said the idea “we denigrate these people or tar them with this brush is in my view entirely inappropriate”.

Health minister Mark Butler is sceptical of the size of the claimed rorts but has implemented a review of the evidence and acknowledges there is expensive fraud in the scheme already being pursued and prosecuted. NDIS minister Bill Shorten revealed this week that the budget will forecast the scheme could cost more than $50 billion a year by 2025 and he has brought forward an independent inquiry – not to slash funding, but for better cost-effectiveness.

These reviews are more likely to play into the following budget, slated for May. Chalmers says the lead-up to it will build on the conversation he has been having with Australians. It will be a conversation “between adults” based on a realistic dialogue about the size of the challenge the budget is confronting “over the next four years and over the next 10 years”.

We can safely assume that could mean a painful adjustment to revenue and spending, which we won’t see on Tuesday night.

Assistant Treasurer Stephen Jones, speaking on Sky News, kept open the option of capping concessions for superannuation funds at $5 million. According to the Association of Superannuation Funds of Australia, that could save more than a billion dollars a year. Jones refused to rule anything in or out but confirmed the government was looking at “all of the issues in superannuation”.

Jones went further, saying the government was looking “across the board and seeing where we have distortions in the system”. Essential pollster Peter Lewis believes voters could be persuaded to accept broken promises in the context of broader tax reform leveraging any trust the government’s performance manages to establish. It could be a question of how patient Albanese judges he needs to be.

But there was something of a reality check this week, reminding us that the best-laid plans can go awry. One of the government’s most sure-footed performers, Foreign Affairs Minister Penny Wong, botched the implementation of Labor’s long-held commitment to withdraw the Morrison government’s recognition of West Jerusalem as the capital of Israel.

Labor was always going to enact this policy but had not given it early priority, especially as the Morrison government backed off its hastily announced plan to move the Australian embassy from Tel Aviv to Jerusalem. That decision had been a failed vote-grabbing move in the 2018 Wentworth byelection and a fairly lonely imitation of Donald Trump’s breaking of international consensus on the issue.

Wong was wrongfooted when her department altered its website to reflect Labor’s policy before it was formally announced. On Tuesday she cut her losses and, without giving Israel prior notice, won cabinet’s endorsement to not recognise West Jerusalem as the capital.

The world’s biggest Islamic nation, Indonesia, welcomed the move as peace-enhancing. So did Palestinian groups. Israel’s prime minister, Yair Lapid, condemned it. In a strong statement he said, “We can only hope the Australian government manages other matters more seriously and professionally”.

A leader with 360-degree vision couldn’t help but see the point. 

This article was first published in the print edition of The Saturday Paper on October 22, 2022 as "The best-laid plans".

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