In his budget speech last night, Treasurer Joe Hockey tried to soothe voters with promises of prosperity, competency and fairness. But he also refuted, evaded or reversed pretty much everything he’d said in his first budget last year, and in doing so exposed the government to accusations of economic incompetency.
This year’s budget shows Australia is still heading for a succession of budget deficits over the next five years, at even worse levels than anticipated in last year’s budget.
Yet if one is to believe the Treasurer’s speech, this situation has miraculously transformed from the crisis used to justify one of the harshest budgets ever in 2014, to one that scraps many of the harsh measures but still claims to chart a “credible” path to surplus.
According to the Treasurer, last year’s economic plan is “in place” and has helped Australia navigate “the difficult transition from a mining investment boom, to one of broader based growth across our economy”.
He was unclear however on how this had been achieved, given around $30 billion of the 2014 budget’s savings measures are still stuck in the Senate.
Interestingly, the Treasurer has not only switched his rhetoric on the state of the economy but also changed his mind on who will deliver economic growth.
Last year’s budget acquiesced to the big end of town, relieving them of the carbon and mining taxes while trying to make aged pensioners, the young unemployed and tertiary students pay more.
Yet big business proved to be ungrateful recipients, calling for tax cuts, a GST increase, and workplace relations changes on top of the other budget reforms.
This year the Government has turned to the ever-more-grateful small business community instead. The sector has been given a tax cut and increased tax exemptions in the hope its operators will “invest, grow and create jobs” so the Treasurer’s vaunted path to a surplus becomes less a pipe dream and more a reality.
It’s also worth remembering the two million small business operators are traditionally Coalition voters.
In addition to the $5.5 billion spent on small business, the only other big-ticket item in the budget is $3.5b for new childcare support arrangements. These aim to “make the system simpler, and ensure child care is more affordable, accessible and flexible” for families.
While the Treasurer claimed in his speech that the measure is about giving “parents a choice about work”, in reality it’s to help mothers get back into the workforce so they can resume making a productive contribution to the economy – that is, paying taxes.
The other significant feature of the budget is that the government has gone to considerable lengths to ensure there are minimal losers.
The need for Mr Hockey’s second budget to be seen to be fair is arguably even more pressing than its need to be seen to be in control of the deficit.
That’s why every government minister has intoned over past weeks that the economic statement will be, “measured, responsible, and fair”.
The remaining few barnacles from last year’s budget have been stripped away, with the proposed change to pension indexation dropped, and the planned six-month wait period before young unemployed can access the dole reduced to one month.
The Treasurer also made a commitment that there would be “no new taxes on superannuation under this government”.
It may seem crazy for the Abbott Government to try to portray itself as fair, given the patently unfair cuts it tried to impose on Australians last year.
But voter perceptions are not always logical or straightforward. Back in 2004, Opposition Leader Mark Latham tried to capitalise on voter distrust in then PM John Howard, but Mr Howard turned the issue against Mr Latham by making it about trust in economic competence.
Treasurer Hockey and PM Abbott may try to do the same with voter perceptions of fairness.
For good or ill, Labor still carries the burden of being seen to have imposed an unfair carbon “tax” that contributed to increases in the cost of living. And even after last year’s highly unpopular budget, Treasurer Hockey continues to be seen as more competent than his counterpart, Labor’s Chris Bowen.
Prosperity, competence and fairness are the assurances Treasurer Hockey tried to convey to voters with last night’s budget speech. In reality, he delivered a big spending, big taxing budget that depends on wildly optimistic predictions of future economic growth to bring the deficit under control.
Labor was successful last year in destroying the budget because it was patently unfair.
This time around, with fewer obvious losers, they may be better off focusing on the government’s economic competency and its shonky budget repair job.
Paula Matthewson was media adviser to John Howard in the early 1990s and then worked for almost 25 years in communication, political and industry advocacy roles. She is now a freelance writer and communication strategist. Paula has been tweeting and blogging about politics, the media and social media since 2009 under the pen name @Drag0nista.
The budget in a nutshell: