Abbott pulls the headlines
The first reaction to the budget was ho, and the second was hum – which was exactly the way Kevin Rudd and Wayne Swan wanted it. The headline they were hoping for might have read: “Very quiet budget, not many hurt.”
If the populace had poured into the streets laughing, cheering and weeping with delight they would know that something was wrong, that they had been populist and irresponsible. Their ambition was for the budget to be seen as firm but fair, and by and large they succeeded.
The declaration that the surplus would be restored three years earlier than predicted was undoubtedly good news, but it was never going to be the occasion for spontaneous expressions of joy and gratitude by the voters; and nor should it, because it was much more the result of accident than careful economic planning. The accident was last year’s forward estimates, which were so wildly wrong as to suggest that it might be an idea if Julia Gillard extended her NAPLAN numeracy testing to include the boffins of Treasury.
The 2009 figures were derided at the time as making heroic assumptions about the speed of Australia’s recovery from the Global Financial Crisis; they have now been revealed as pessimistic and petty to the point of absurdity. Certainly the rivers of gold from China helped, but it also turned out that the government’s stimulus measures were far more successful in arresting unemployment than had been predicted, and the government was also able to defy the cynics by restricting, if not actually cutting, its spending.
In other words a lot of things that Treasury thought likely to go wrong actually went right. For once, Murphy’s law broke down. Which of course raises the question: if the estimates were so hopelessly awry last year, why should we believe them this year?
Well, partly because things appear to be a bit more predictable; in spite of the turmoil in Greece and the risk of it spreading around Europe, the recovery is now unambiguously under way and Australia is at the head of the pack, with government debt and deficit figures miniscule by international standards. And the prognosis for revenue seems soundly based; while there is always a chance something disastrous will happen to the Chinese economy, demand from India is steadily increasing and global reliance on coal and iron ore is not going to fall away any time soon.
In this context it should be noted that in spite of Tony Abbott’s claims to the contrary, eliminating the deficit does not depend on the new Resources Super Profits Tax; assuming that this passed through the senate after the election, it still does not start to phase in until 2012-2013, the year of the first projected surplus. Perhaps by then the hysteria will have subsided.
It should, because the miners, like the government, have been making huge unexpected gains not through good management but good luck. Their skyrocketing profits are due entirely to the upsurge in world commodity prices, driven by demand from China and now from India as well. As they point out, they pay their normal taxes on this bonanza, but it seems only reasonable to expect them to share their windfall with the country that provides it.
Their reluctance to do so is understandable, but more alarming from the government’s standpoint is the fact that their campaign of bluff and bluster seems to have considerable support among the general public. The real shock of last week’s Nielsen poll was the finding that more voters oppose the new tax than support it, a statistic so contrary to the normal Australian tradition of cutting down the tall poppies that it seems hard to credit.
Obviously, Rudd was hoping for a boost, but it appears that Abbott, with his knee-jerk opposition to the great big new tax which will kill the goose that lays the golden eggs will be the one to get it. Certainly he emerged last week from his talks with BHP Billiton boss Marius Kloppers and Rio Tinto boss David Peever with the satisfied expression of a party leader who has put all his funding worries behind him for the foreseeable future. And in his budget reply speech he delivered in spades, that being the miner’s preferred suit.
It is a peculiar Australian convention that although the real treasurer delivers the budget, the shadow treasurer does not reply to it: the starring role is usurped by the opposition leader. In 2010 this was a pity, because not only would Joe Hockey have been funnier, but we would have been spared the spectacle of Tony Abbott trying to be statesmanlike; disappointingly, he did not appear in his budget smugglers.
His diatribes against what fanciers of exotic wildlife interpret as the Grey Pig Newt Axe were, of course predictable, but the only new lines were promises to freeze the public service (actually the Canberra winters are already quite cold enough) and to reduce government advertising; given that the present government had already cut this to half what it was under John Howard, the pledge was somewhat underwhelming.
Government ministers, especially Lindsay Tanner, who has apparently appointed himself as Abbott’s nemesis, criticised the effort as a meaningless collection of negativity, slogans and sound bites, which was not quite fair: certainly it was a bit thin on content, but Abbott came across if not quite as a statesman, at least as a coherent and articulate campaigner. The relief on his own side was obvious.
Many years ago a radio pundit named Eric Baume was famous for delivering passionate denunciations of just about everything. After one such effort Baume asked his producer what he thought of the speech. Well, replied the producer, it was bullshit. Baume gleamed through his spectacles.
“Ah, yes, “ he chortled. “But it was good bullshit.” Tony Abbott is emerging as a demagogue in the same mould.
Readers will recall that a couple of weeks ago I compared Kevin Rudd with Groucho Marx. Interestingly, Baume in his heyday bore a disturbing resemblance to Groucho. Indeed, the same spectacles nose and moustache set would do for either.