Oppositions lose their bearings economically. Without the responsibility of office and tempted by populism, the sound managers of yesteryear become today’s cheapjack advocates of sloppy policy. Labor turned its collective back on the Hawke-Keating years (some say merely reverting to its pre-1980s type). The list of reforms Labor opposed in the Beazley, Crean and Latham years make for shameful reading.
The Liberals in opposition have done the same. They rejected the “comprehensive” emissions trading scheme they promised voters in 2007; they rejected Labor’s efforts to curb spending, they refused to honour the Charter of Budget Honesty process they established, they’ve even embraced the nonsense of anti-dumping. And like Mark Latham, Tony Abbott feels no compunction about using the traditional budget-in-reply address to entirely ignore fiscal and economic matters.
But Abbott went further in his weekend address to the Liberal’s Federal Council, into a fantasy land. Abbott is, mostly, tactically brilliant as an opposition leader. But in policy terms, he’s a shabby economic illiterate. If Julia Gillard is a poor successor to better Labor leaders, Abbott goes further and is actively trashing his party’s tradition of economic management.
This was Abbott’s version of Gillard’s “the brickie and the socialite” speech. It reflected a leader’s attempt to lay claim to his party’s heritage, but revealed only his own shortcomings and misinterpretation of that heritage — although at least the Prime Minister didn’t crack an Irish joke, and better yet follow it by insisting she loved multiculturalism. Maybe Abbott momentarily thought he was back at the Sydney Uni SRC in the late ’70s. Classy and prime ministerial as always.
First, there was the tired repetition of the claim of $50 billion in savings, which, in a perhaps accidental giveaway, Abbott now says would have only improved the fiscal balance by $11 billion over four years. That $11 billion is now 12 months out of date, and is contested by Treasury anyway. Joe Hockey’s petulant reaction to being questioned about this at the Press Club shows just how sensitive the Liberals are about this.
And the savings won’t include cuts to middle-class welfare. “Middle-income families with children are Australia’s new poor,” Abbott insisted. What on earth he meant by this extraordinary statement is one of the sublimer mysteries of the Abbott leadership. Where does it leave low-income families with children? Too old-fashioned for an en vogue politician such as Abbott?
Then there was Abbott’s promise to massively lift spending on infrastructure — not just the usual list of boondoggles likes the inland rail line, but investing in freight rail bottlenecks and integrated motorway and rail networks for capital cities. How would the tens of billions such a program requires be funded? Infrastructure charges? Congestion levies? Innovative public-private financing arrangements that address the now-critical issue of risk? New methods of encouraging superannuation funds to invest in infrastructure? Abbott didn’t say.
It won’t be from increased taxes, because Abbott promised to cut them. But who would get the tax cuts, how big would they be and what would they cost? Abbott didn’t say. In fact, he complained that he couldn’t work it out because he didn’t have the resources to do it, “particularly in the absence of a Parliamentary Budget Office”.
The PBO is being established now, with funding appropriated from July 1, and one of its roles is to cost policies at the request of MPs. Abbott doesn’t need Gillard’s offer of Treasury officials — he can prepare a confidential request for the PBO to cost a tax policy now and have it worked up by the end of the year.
Instead, Abbott offers the sight of an alternative prime minister raising his hands in supplication and apologising for not explaining how he’ll actually achieve the core goals of his program.
Abbott’s helplessness must come as a shock to John Hewson, who along with Peter Reith and a team of advisers put together a comprehensive and fully costed tax reform plan in 1991. Abbott should know, after all — he was Hewson’s media adviser.
It might even come as a shock to Joe Hockey, who wanted to investigate ending the rort around trust funds. The work on fixing trusts has been done before, under Costello and Hockey himself a decade ago. But Hockey was publicly humiliated for his trouble.
The Fightback! example is relevant, though, because plainly Abbott feels there is no benefit from offering anything for Labor to target, lest the government use it to savage him like Paul Keating savaged John Hewson — as if this government could savage its way out of a wet paper bag.
But Abbott wants it both ways — the freedom to announce a package of goodies — tax cuts! New road and rail networks! Welfare for everyone — without the responsibility of explaining — or even faintly alluding to — how it will all be paid for.
The most plausible assumption is that Abbott is relying on the mining boom and resource sector revenues to fund any tax cuts, just like the Howard government did. Hockey outlined exactly that strategy at the Press Club when he spoke about governments needing to “grease the wheels” and give people handouts to ease resentment (entirely without foundation) that they weren’t benefiting from the mining boom.
When the Howard government gave us this approach — let’s call it whingenomics — it led to higher interest rates — thereby punishing exactly the squeaky wheels Hockey wants to grease — and left the budget in structural deficit and more exposed than before to cyclical downturns.
Abbott has always sat a little uncomfortably in the Liberal Party — a big government enthusiast in the party of the free market and small government, a social reactionary in a party of liberalism. Now another difference is emerging, between those eager for the Opposition to start spelling out some detail of positive policy (and what better time than when, on the worst poll, the Coalition is 10 2PP points ahead) and Abbott’s political instinct to stay negative and his incapacity to handle the basics of economic policy.
The pressure is coming from several directions — on IR from Peter Reith and young Turks such as Steve Ciobo and Jamie Briggs — both absurdly confined to the backbench by Abbott, who prefers clowns such as Kevin Andrews and Bronwyn Bishop — and on economic policy from Joe Hockey and Malcolm Turnbull. Turnbull, sensibly, continues to advocate a sovereign wealth fund — a concept inimical to the Abbott idea of pissing the mining boom away again on handouts to “the new poor”.
In the meantime, Abbott continues to trash the Liberal brand as the party of economic management.
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