It’s not much more than a year since it all began going horribly wrong for Labor. The problems were longer term, of course, but the symptoms broke out like a plague of boils: Laura Tingle exposed Kevin Rudd’s kitchen cabinet style; Lenore Taylor broke that the CPRS had been delayed; then, shortly before the budget, the Henry Review was used as cover for a mining tax that the government thought would be a cinch to impose.

As we now know, that was just the warm-up for dumping a first-term PM and running a wretched, soulless election campaign centred on a bunch of half-arsed lurches to the right on immigration, climate change and asylum seekers. All symbols of a party leadership that had lost its grasp of what it stood for and thought reflecting focus group results back at the electorate would fill in adequately.

The contrast with Tony Abbott’s Liberals, who don’t know much about policy but know what they hate, was stark.

So how much has Labor learnt since then?

Well, Karl Bitar is gone. That’s a start.

But it certainly hasn’t learnt how to communicate better; federal Labor retains an almost charming inability to sell a cold beer on a hot day, so much so that its efforts to prosecute the case for its agenda must be considered a success if they don’t actually make things worse, or destroy Labor’s credibility on an unrelated matter (cf. mining tax ads that breach Labor’s rules on advertising).

One ongoing problem is that the government is apparently incapable of the simplest forward planning in the prosecution of its own case. Another is the apparent conviction that telling people what they want to hear is good communication. I’ve previously made this point in relation to Julia Gillard’s get-up-two-hours-before-you-go-to-bed-and-pay-mill-owner-to-work proselytising of hard labour; the same sentiment informed the launch of the line “millions will be better off under a carbon tax” last week, which required a set-piece Press Club speech by Greg Combet despite the dearth — dearth, I say — of detail.

What’s absent from the government’s case for a carbon price is the rationale for acting on climate change — that it will inflict enormous costs on our children and subsequent generations, that Australia is in the firing line before other Western countries, that we’re one of the planet’s biggest carbon dealers, that we’ve got a long way to go even to get our economy back to the emissions intensity of most Western countries, let alone properly start the process of decarbonising the Australian economy.

Instead, the new centerpiece of the government’s efforts to sell the single biggest reform of the economy in a generation seems taken from spam emails and bait-and-switch website ads: everyone will be a winner, that big reform is a cash machine spitting money out to hard-working, early-rising households.

It’s a weird corollary of the hypocrisy of Australian business, who hand-on-heart declare they want a carbon price, but then insist it shouldn’t actually do anything — a blatant hypocrisy that Julia Gillard, showing her sadly underused trait of pure snark, skewered the Business Council with this week (and Graham Bradley’s feeble response today showed how accurately Gillard had hit the mark).

Gillard has also been busy trying to craft a prime ministerial image, the set of values automatically associated with a national leader by voters. Historically, they’re accumulated over years in public life, providing exposure to the point where everyone including the most disengaged voters have a sense of what a leader stands for, even if they hate them.

Kevin Rudd was the first modern prime minister to come to office without the public having a deep sense of what he stood for. He had the chance to craft a persona while in office, given his heady levels of popularity, but he never used it, and indeed deliberately wrecked what sense voters had of him by walking away from the “greatest moral and economic challenge of our time”.

Julia Gillard has been at pains to try to craft a prime ministerial persona on the wing, too, explicitly acknowledging last year that she had to start from scratch with the basic formula that all prime ministers need to work through — what she as leader wants for Australia, what agenda this translates into, and how her government is going to implement that agenda.

Gillard’s elevation of hard work to the status of national duty is part of this process of prime ministerial self-definition. It may draw the mockery of chattering class, latte-sipping elitists such as me (methodological note: I do actually drink lattes), but the Twitterati aren’t the intended audience, it’s disengaged voters who are the targets, in an effort to associate the Prime Minister with certain core values regardless of whether people wholly approve of them. And, one might add as an aside, in Gillard’s case, the values appear to be entirely authentic given the Welsh coal mining background of her family.

But whether she’s up to the task of crafting a prime ministerial persona while in the job, at a time when the media cycle is faster than ever and political coverage more superficial than ever, is a good question. The only solace she has is that her current opponent is a man who has no problem about his political definition, who has a well-established and widely known set of values, and yet who, according to all available polling, simply isn’t well-regarded by voters, even if they’d be prepared to elect his party into office.

Still, the funny thing about the “hard work” routine from the Prime Minister is that this remains a government wary of embracing that very ethos. At least it has acknowledged the need to get on with a carbon price, but appears determined to do so via the CPRS, a dog of a policy that buried any price signal under a mountain of handouts to the biggest polluters. And, wouldn’t you know it, the government’s charmingly naïve belief that the compensation levels of previous iterations of the CPRS would be regarded as acceptable by industry has come smack up against the grisly reality of big rent seekers on the hoof. With their distinctive bleating, whingeing sound, the steel industry, the LNG industry, the coal miners, have all converged to suck some more handouts from government, claiming “things have changed” since 2009.

And of course, things have — the economy is stronger than ever, the resources boom again is in full swing, we’re through the GFC and near full employment. In short, Australia is better placed than at any time in its recent history to make a serious start in turning ourselves from the world’s most carbon intensive economy into merely one of the world’s more carbon-intensive economies.

Still at least carbon pricing is on the agenda. Serious measures to address housing affordability and our ever-growing housing shortage remain a no-go zone for Labor and the Coalition, for the crude reason that the number of home owners, who benefit from low affordability, outnumber younger people who will struggle to get into the housing market, an intergenerational inequity of a shorter-term, but perhaps more directly harmful nature than that of climate change. Better yet, each months’ construction and approval figures demonstrate we’re actually making the problem worse.

An unbiased observer might think our protestations about how much we love our children might, on the basis of how we approach intergenerational policy issues, be rather overstated.

Which brings us to the budget, and the dilemma for Wayne Swan of how to reconcile flat revenues, disaster impacts and an uncertain international environment with the government’s commitment to getting back to surplus by 2012-13. Swan’s pre-budget speech yesterday — which maintained the splendid tradition of politicians giving speeches that have already been reported — had the air of the magician who is forced to sadly report that the rabbit he was going to pull out of his hat has died.

But the reconciliation lies in getting stuck into big spends such as Defence and middle-class welfare, and the big tax concessions — particularly those that will directly counteract any carbon price. There’s more than the government’s inept fiscal politics in play here: remember that the budget is forecast to be in structural deficit until the end of this decade, just in time for the fiscal effects of an ageing population to really start hitting home. Sooner or later some government is going to have the wear the pain of either putting up taxes or off hacking into spending or, likely, both.

To its credit, the government has tried to wind back some of the more irksome example of middle-class welfare, particularly the private health insurance rebate — memo Liberal Party: if you want rivers of waste, there’s several billion a year right there — and demanded Defence embark on a major savings program. But a serious attack on handouts to families between $100,000 and $150,000 a year would go a long way towards addressing the structural deficit. If Swan is, as he should be, worried about pulling the rug out from demand in an uncertain environment over the course of 2011-12, then he can always build in a phased series of cuts to Family Tax Benefits and other examples of pointless state generosity.  The same approach could apply to the windback of the billions in pro-fossil fuel tax concessions that will counteract any carbon price, starting with the $2 billion a year lost on the FBT concession for company cars.

Both of course would lead to big fights and yet another drop in the polls. From a political point of view, that’s out of a question for a government that already has enough battles to fight. From a policy point of view, if you’re not making enemies then you’re not doing anything, and the more you make, you better you’re governing.

Labor is stuck in the middle. It’s not the do-nothing government some critics complain of. Nor is it the hard-charging successor the Hawke-Keating governments it claims to be. It’s good at the reform talk, but hates offending anyone and can’t sell the reforms it wants to take on. Its carbon price scheme is emblematic of its problems — it accepts the need for reform, but poorly strategises and sells the return to a poor policy, indeed the very one that helped send the Rudd government spiraling into oblivion. And its leader is still creating herself, looking her best when provoked, but otherwise frequently displaying the same bad habits as her predecessor.

But this is the future for Labor. This is as good as it can get. Changing leaders or dumping policies will only make things worse. Its only goal must be to limp along and try to get in place a carbon price, a mining tax, activity-based funding and performance information for hospitals and get the budget back to surplus. And if it manages all that, it won’t be a bad effort from a government as hapless as this. And, hell, the electorate might even decide to let it have another go.