AUSTRALIA got a glimpse of Labor entering its death throes today, as a panicked government began to admit the true consequences of its mismanagement: a $12 billion revenue shortfall, in addition to $7.5 billion announced at Christmas. It makes the likely horror May budget a certainty.
Today’s events almost certainly seal the fate of the ALP; already staggering toward an almighty election belting, the odds on a total bloodbath now seem very short indeed.
Panic. Desperation. Fear. Hypocrisy. Malice. Conceit. Desperation (again).
It’s a lethal political cocktail whose ingredient list has finally been laid bare, and it’s finally clear that this noxious elixir is what drives federal Labor in its deceitful quest for votes.
Julia Gillard marked out the plot for her own government’s grave during the 2010 election campaign with her promise that “there will be no carbon tax under the government I lead.”
The grave was dug by Wayne Swan, with his promise — the first of over 500 such promises by the duo — that the ALP would deliver a surplus budget in 2012-13.
(That’s now, by the way).
The pair lined the Labor coffin with a velvet trimming of commitments of up to $18 billion to fund education funding reforms (Gonksi) and a National Disability Insurance Scheme; a velvet trimming that hid the cold iron casing of a barren money vault.
Bags of nails were supplied by the mining industry and the European carbon markets, where botched taxes (designed specifically to raise revenue, far less any noble ideals of superannuation bonuses and environmental nirvana) delivered two-tenths of diddlysquat.
(Seriously, how the “tax and spend” party learned how to botch taxes is a new feat even for the Labor Party, but this government has, against all odds, managed to do it).
And now the hammers are out: first with the dumping of the surplus pledge (literally) on Christmas Eve by Swan — along with an admission of a $7.5 billion revenue shortfall — and again with this morning’s concession by Gillard that the budget is a further $12 billion short on its forecasts.
The final nail in the Labor Party’s coffin is likely to be driven home on budget night, but my point is that there is now so much damage to Labor’s reputation for economic management that it literally doesn’t matter what Swan announces on May 14.
So unreliable — and so untrustworthy — are Swan’s numbers on GDP growth, revenue, expenditure, and projections of the size of the deficit that frankly, nobody should believe anything he has to say.
Indeed, I would be unsurprised — albeit alarmed — if the actual budget deficit was as high as $50 billion, or even more.
What prompted today’s sudden outbreak of “honesty” over the size of the hole in Labor’s budget? I don’t profess to know, but I’m certain there’s more to it than meets the eye.
For one thing, Gillard and Swan have literally spent three years denying the problem even exists; Swan, in particular, has been at pains to trumpet his economic management “credentials” at every available opportunity.
For another, the pair — having botched two taxes designed to rake in billions of dollars — have studiously avoided any suggestion of tax slugs being imposed upon middle Australia.
And finally, they have spent the duration of their term in office attempting to demonise the Coalition, in advance, for the repairs they know an Abbott government will need to make to the nation’s finances as a direct result of their own government’s incompetence.
Gillard lost the plot altogether today in revisiting this theme, declaring “our opponents and their friends crudely flaunt the bitter language of the cut throat and the brandished axe.”
This was followed by the tired but delusional claim that “we govern for all Australians – we govern to strengthen the economy and to spread the benefits to all.”
Yet the problem is likely to be far worse than either Gillard or Swan have acknowledged; the pair have played fast and loose over the true state of the country’s financial position for so long it seems inconceivable that a full and frank admission has been made.
Especially given today’s “revelations” are really Part II of Swan’s Christmas Eve statement. What are they holding back from the public this time?
And to continue to try to frighten people about cuts a conservative government might make, it follows that there is more for such a government to need to repair than we have been told. Call me cynical, but this government, collectively, has form as a liar.
Gillard made the claim today that “economic simpletons” would simply argue that total government revenues had increased (as we did here last night — accurately — that revenues are up nearly 50% since 2008).
These alleged clowns fail, according to Gillard, to account for factors such as a larger population and rising health and aged pension costs.
I’d say that’s an awful, awful lot of extra people and pension payment increases.
But it begs the question: if things are so dire, what on Earth motivated this government to make promises worth $18 billion on education and disability funding?
Gillard claims that there was no evidence or suggestion that a problem of such magnitude existed, even three months ago, that her government could act upon.
And my response to that is simple.
For her defence to be plausible, it either amounts to proof of the contention that she and her government are the most economically inept stewards in Australia’s history, or that her beloved “professionals at Treasury” are even more incompetent as analysts and forecasters than her government is as a manager.
Which is it?
It brings me to the imminent budget — and believe it, this will be a shocker.
I have been talking in this column of late about savage cuts to spending allocations that will hit the great majority in middle Australia hard: Family Tax Benefit, the private health care rebate, possibly the first home owners’ grant, and so forth.
There are also likely to be tax hikes.
Wayne Swan ruled out hiking income tax some months ago, but given Gillard’s stout declarations that all options “including those previously off the table” would be considered, Swan’s promise can be taken with a grain of salt.
There is a rumour circulating that the Medicare levy is to be raised — possibly as high as 2.5% — to pay for Gillard’s reforms in disability funding.
And to be sure, smokers and drinkers are likely to be hit as usual.
Another group likely to be hit is motorists; I wouldn’t mind a tenner on the reintroduction of the indexing of fuel excise, and probably with an initial jolt of an immediate few cents per litre to get the ball rolling as from budget night.
There are even credible rumours suggesting the reintroduction of estate taxes and an end to negative gearing are on the table, as well as hikes on taxes levied on certain types of speculative gains.
Somewhat ludicrously — given the background — Gillard has been doing press conferences today masquerading as a solemn lady of State; I won’t insult the memory of Sir Winston by describing her attempts as Churchillian, but you get the drift.
“As a Labor Prime Minister, I find these decisions both urgent and grave,” Ms Gillard said.
Powerful stuff from half the duumvirate that has spent years denying the problem exists.
Gillard went on to say that all Australians must share the burden to help fix the problem.
And that’s where the final nails will be hammered into her government’s coffin.
One, that remark signals tax hikes and budget cuts affecting everyone in Australia that will cause real pain, and adversely affect people’s lives in a way that could have been avoided if her government had an iota of economic nous, or had been honest about what it was doing.
And two, should that scenario materialise on budget night, it will confirm the annihilation set to be inflicted on the Labor Party on 14 September, and make the spectacle far worse than it already promises to be.
Gillard can’t possibly expect voters to be swayed by some charade of openness and honesty; her track record (and that of Swan) stinks in this regard.
In any case, it’s too late now.
Shadow Treasurer Joe Hockey got it about right in saying ”there is no limit to what they (the ALP) will do or consider doing to the Australian economy, to families across Australia.”
The bottom line from today’s developments is that the only things held to be sacrosanct are Gillard’s Gonski reforms, and her National Disability Insurance Scheme.
Both worthy, neither affordable, and both measures that will worsen an already massive budget deficit black hole.
“Legacies” and grand statements might be well and good, but I think voters are more concerned about the growing impost of federal government in their daily lives and the increased financial cost that impost is about to inflict on them, and in the end a change of government will trump Gillard imperative for a “legacy” — in spades.