IN RECENT DAYS, this column has argued — vigorously — that the appropriate way to rectify the Commonwealth budget lies in swingeing cuts to government expenditure rather than the imposition of new or increased taxes; even so, such remarks should not be construed as a withdrawal of support for the Abbott government. They do, however, belie a deep concern with the electoral consequences of the pursuit of what is the wrong option.
I have found it necessary to post this morning what is almost tantamount to a correction: over the past week or so I have been contacted privately, in forums such as the comments section of this site and on Twitter, and elsewhere by people who read this column every day and who have wanted to clarify whether or not I have now “turned” on the government of Tony Abbott.
Let me reassure readers (especially those who share my conservative views) that I have done nothing of the kind; I continue to hold membership of the Liberal Party, continue to support the Abbott government politically, and will continue to hold the ALP to account for its evasion and its smarm over what is little more than a denial complex over the damage it inflicted on this country during its most recent period in office.
The opinions that have appeared on this site in relation to Tuesday’s federal budget reflect analysis and observation of the political ramifications of what appears set to be included in that document rather than simply saying what I think personally, although — as an economic conservative who finds a lot of government expenditure distasteful, to say the least — it would be dishonest to suggest I’m anything other than deeply, deeply disappointed that so much expenditure seems to be in line for quarantine, with the soft option of jacking up taxes to pay for it being a copout. And a sellout.
I have said before and say so again that the Abbott government (despite the litany of unwise exclusions Abbott committed himself to during the election campaign) was elected with a mandate to restore the federal budget to health by cutting spending and eliminating government waste.
It was not elected with a mandate to increase taxes, and whilst anyone prepared to take a dispassionate view of the nature of the problem Treasurer Joe Hockey and Finance minister Matthias Cormann must tackle can understand why they are including new/increased taxes in the budget, these are options that are being taken when an awful lot of spending that should be cut is set to remain in place.
It must be emphasised that these judgements are based on what has found its way into the public domain to date: after all, the budget itself won’t be known for a few days yet. But Tony Abbott and his team would not be allowing measures like a “deficit tax” or the slug in fuel excise to remain on the table (and already causing political damage) if they were not destined to become law in the budget.
As an observer and as a commentator, it is obvious to me that persisting with some of these measures is political anathema to the electorate.
The rate of fuel excise, for example, was frozen at its current level by the Howard/Costello government — ironically as part of a political fix to salvage that government’s election prospects — and no matter how sound the case for raising or re-indexing it, or how much cash doing so might yield, the symbolism of such a move will resonate with voters well beyond the actual impost of another cent or two on every litre of petrol.
A Liberal government junking a fix that was fashioned to restore faith with a Liberal base invites blame for doing so to be directed at itself — no matter the size of the latest black hole left by Labor in the country’s finances.
A “deficit tax” is sheer political folly: even restricted to higher income earners as it now appears it will be (which, admittedly, is some improvement on original plans to hit middle income earners too) this measure flies in the face of proven orthodox conservative management principles that by cutting tax rates for upper income earners, a government will collect more revenue from them as the incentive to work harder and earn more sees an increased stipend directed to Treasury coffers in the form of additional tax payments.
(Which is also one of the reasons the “hit the rich” ignoramuses on the Left are so misguided to oppose certain tax cuts for the “rich,” surrendering as such a position does the prospect of collecting additional revenue to redistribute and buy off its own preferred constituencies lower in the food chain. But I digress).
There are a lot of people — many of them earning the average wage or less — who are going to be deeply, and bitterly, disappointed if Tuesday’s budget confirms what has seemed obvious for some time now: namely, that when it comes to slashing spending, the Abbott government is going to at least partially squib it by hiking its tax take instead.
Obviously, Hockey and Cormann are set to wield the axe on one hand at the same time as increasing their take with the other. The political problem will stem from the fact that public appearances suggest too much reliance on the latter and not enough on the former.
And there is a lot — an awful lot — of Labor spending that seems to be in line to escape the guillotine.
The National Disability Insurance Scheme is a case in point: at $22 billion per year once it’s fully operational it’s an expensive scheme on any analysis, and was (in part) a fiscal trap set for the Liberal Party that Julia Gillard explicitly stated she would not pursue unless the Liberal Party supported it; it’s not funded, it was never properly explained or sold beyond its raw hot button appeal as “something for the sick,” and with just 130,000 people set to benefit from that $22 billion in annual outlays — $70,000 per annum per beneficiary — it in no way represents value for money.
I have made similar observations in this column in relation to the so-called Gonski reforms, which — despite their lofty rhetoric about adequately resourcing all schools equally — come with a fat bag of cash that is not tied in any way to the delivery of improvements in educational outcomes, and I stand by my assessment that the money will simply end up funding huge industry-wide pay rises for teachers that many individuals neither merit nor deserve. Meanwhile, illiterate and innumerate kids will continue to be churned out of the system in virtually unchanged numbers.
These are merely the most obvious targets to take aim at. There are plenty of others.
Clearly, I have no desire whatsoever to see the return of the Labor Party to office at any time soon (or at all, in fact) and it should be fairly obvious, despite my criticisms of what looks certain to be in the budget on Tuesday night, that my support for the Liberal Party remains unchanged.
But clear and sober analysis of the likely impact of these measures politically points to electoral defeat for Abbott and his government after a single term in office, and the reason — quite simply — derives from the basic premise I have been thumping for the past fortnight.
The Abbott government was elected, in part, to fix the sorry state of the budget by hefty cuts to government spending and by eliminating wastage from the federal budget. It does not have a mandate for tax rises. And the nature of the additional tax imposts seem almost tailored to antagonise the very supporters on whom the government’s survival depends, whether by slugging them harder, dashing their expectations, or signalling that when it comes to explicit election pledges it is no more dependable than the pilloried Gillard.
Even at five minutes to midnight, it’s not too late to pull back.
And should all of this cost the Liberals government in 2016, the greatest injury would not be to the Liberal Party but to the national interest: just as the campaign by unions against the Howard government’s WorkChoices legislation has made it virtually impossible now for governments to address the critical issue of workplace flexibility, a Labor win in 2016 would pretty much spell the end of any moral imprimatur for governments to tackle the very real and ballooning problem with the way government operates, borrows and spends money.
The only people to benefit from Labor falling over the line on the back of preferences from the millions of people whose votes it couldn’t even win outright in the first place would be the puppets who got their arses into parliamentary seats and their masters in the union movement who control them.
Profligate spending, spiralling foreign borrowings and rocketing debt would recommence apace. Which is why — should the worst of political consequences follow Abbott and Hockey all the way to polling day — the stakes on Tuesday night are so high, and why the ultimate victim of their budget could be the national interest it is being explicitly designed to protect.