It was supposed to be the day when Treasurer Joe Hockey took charge of events and retrieved his and the government’s reputation.

A reputation that has been in decline along with economic growth since the botched design and sales job of his first budget in May.

Instead, the terrifying situation in Martin Place, Sydney put the spotlight squarely on his leader, Prime Minister Tony Abbott.

• Hockey delivers ballooning debt and deficit
• Hockey has some growing up to do: comment
• Is the PM’s trust deficit already too big to repay?

Former New South Wales premier Kristina Keneally was on Channel Ten’s morning show, Studio 10, when news of a gunman laying siege to the Lindt Chocolat Café broke.

She was asked what would be expected of the prime minister in light of this situation. “Assurance and empathy,” she replied.

The risk is an embattled politician could be tempted to overplay his hand. And make no mistake, Mr Abbott is embattled.

Hostages hold a black and white flag in the window of Sydney’s Lindt cafe. Photo: Twitter

The last Newspoll for 2014 confirmed the government is on the nose with voters – as it has been all year.

And for the second poll running, he trails Labor’s Bill Shorten as preferred prime minister. Remarkable for a first term PM in his first year of office.

A sombre Mr Abbott stepped into the warm sunlight of his Parliament House courtyard. He struck the right balance. Kept his remarks brief and deferred to the New South Wales police, “who are in operational charge of this incident”.

The politician who customarily prefers a sledgehammer to crack the smallest nut resisted the habit of a life time.

“We don’t know whether this is politically motivated, although, obviously there are some indications that it could be,” he said.

Images from the scene showed a black Islamic flag displayed in the window and a gunman wearing a matching bandanna.

The prime minister, unlike the Daily Telegraph in a special afternoon edition, did not use the term he had coined to describe the terrorist Islamic State.

The paper’s front page screamed “Death Cult – takes 13 hostages”.

The announcement of MYEFO was delayed by about 90 minutes by events unfolding in Sydney. Photo: AAP

Instead, there was assurance. The National Security Committee of cabinet had convened. Full co-operation was offered to NSW. He urged all Australians to go about their business as usual and lead the way by saying the Budget update would be released as scheduled.

Many could easily identify with Mr Abbott’s closing sentiments.

“I can think of nothing more distressing, more terrifying, than to be caught up in such a situation, and our hearts go out to these people,” he said.

Forgotten, at least for the day was the open wound of the government’s infighting over his chief of staff Peta Credlin.

There was another extraordinary story in the Murdoch tabloid’s naming senior ministers Julie Bishop and Malcolm Turnbull as part of a small group of malcontents behind a whispering campaign targeting Ms Credlin. Five backbenchers were also outed.

Mr Turnbull was furious. He threatened legal action and told the ABC the paper had expunged his name in later editions.

If the government is to make 2015 “even better than 2014” as the prime minister claims, he cannot allow this imbroglio to fester. One minister has told friends he would lead a walkout from cabinet if Ms Credlin continues to participate as if she were one of them.

The economy is going to be challenge enough next year without the head wind of squabbling ministers locked in a Siamese catfight.

Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with 40 years’ experience covering Australian politics. He is Contributing Editor for Network Ten, appears on Radio National Breakfast and writes a weekly column on national affairs for The New Daily. He tweets at @PaulBongiorno