25
May
2014

What can Abbott do now?

As Parliament resumes tomorrow, the Abbott government will find many Senators (and others) geared to opposing many of the budget measures on the ground they are “unfair” and in the expectation that bargaining will “force” changes. Unsurprisingly, The Age is claiming Liberal “sources” (unnamed) support that.

This situation arises because of the many failures in handling the strategy needed to “sell” reforms not only in the budget but in other areas too. The editorial in the Weekend Australian (“Abbott and Hockey fluff the budget repair pitch”, below) well outlines what has happened.

But that is water under the bridge and the question is whether the Coalition can get back on the right track. The lead story in Weekend Australian (“Budget hit to families not so severe, government analysis shows”, below) indicates a small start has been made by publishing an analysis suggesting the proposed changes to Family Tax benefits on various income levels would be more moderate than suggested in some quarters.

But, perhaps because it does not want to acknowledge that it is a soft budget, there is precious little available on the overall effect on income levels, including those on higher income levels who will be adversely affected by the effects of bracket creep. Nor has there been any reminder of the earlier indication that, drawing on the Audit Commission report, the scope for further spending reductions will be examined. As Ergas points out below (“Apocalyptic claims need to be put into perspective”) the budget proposals provide for a continued large rise in total real spending (3.6% pa) and in real welfare spending (2.5% pa) until 2017-18.

As I have already suggested, the Coalition needs to publish a brief paper setting out the case for reduced spending both generally and in particular areas. That should be published with some acknowledgement of past mistakes, including the claim that the budget is “tough”. But above all it needs to get across the messages that, first, the need for government assistance has been much reduced by the large increase in real incomes in the last 20 years and, second, that the proportion of the population who are net recipients of government assistance is clearly too high.