Friday, 17 May 2013 15:44

The Budget Reply Reply

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Mr Abbott’s Budget reply speech last night was a tremendous challenge for me. Although I have for many years had difficulty listening to Mr Abbott without getting angry, I tried to listen as I might imagine his Party Faithful; with some faith in his genuineness and intelligence.

 

But, of course, his sound bites and disingenuous distortions of the Labor Governments fiscal management got the better of me. There are several points which trouble me that I would like to discuss.

Mr Abbott came into Federal politics as the protégée of John Howard. Mr Howard is a master rhetorician who can present details, which are of dubious credibility, in such a manner that people believe him. Examples of this are the “children overboard affair”, Saddam Hussein’s weapons of mass destruction and particularly his “We will decide who comes into this country…” speech.

Mr Howard also practiced the art of enticing voters with the baby bonus, ostensibly to encourage an increase in the national birthrate. This one policy worked sublimely and secured another term during an election that all pundits said that he couldn’t possibly win.

But the mentor generally has superior knowledge and skill to the student, and Mr Abbott has shown himself to be an excellent student, but a very poor practitioner of Mr Howard’s art.

Lets start with the state of the economy. The Opposition has made statements when the interest rates were reduced by the RBA that interest rates were at “emergency levels” (Mssrs Abbott, Hockey and Pyne). Last night Mr Abbott furthered this point saying that the need for Opposition cost-cutting policies were "thanks to Labor's poor management over five years, there is now a budget emergency" (http://www.abc.net.au/news/2013-05-16/abbott-vows-to-keep-tax-cuts/4694860).

So where is there the emergency? The last time interest rates were this low was in the 50s-60s when the economic climate was in an absolute boom and prosperity was everywhere. Our nation is among the most affluent in the world and many national and international political and business leaders have been praising Labor’s economic management. Even our bankers are lending freely and seeking new business to unsecured debtors. In budget terms, our deficit is minor compared with OECD nations. So too, our national debt is very small. I can only surmise from this that Mr Abbott is lying about the state of the economy in order to undermine confidence in the Government. This is what he has been constantly doing since the 2010 election.

Mr Abbott’s savings also seem dubious. One of the programs that he said he would cut last night is the Labor Government’s Green Loans Program. This was established to enable those who wanted to address their carbon footprint by installing photovoltaic panels. The Green Loans Program was discontinued in February 2011 (http://www.climatechange.gov.au/~/media/government/initiatives/GreenLoans-Review-20111231-PDF.pdf) therefore Mr Abbott’s $400m saving will be nil!

Another important spending cut which was strongly alluded to rather stated clearly is the Gonski reforms. This was linked with a suggestion that an Abbott Govt would let the States and Territories manage education without Federal influence. I doubt that Mr O’Farrell, who has signed on to the Gonski reforms, would feel very happy about losing the support that he agrees is necessary.

Mr Abbott’s speech last night was heavy on rhetoric and exceedingly light on detail. When a budget reply is made, as related during a number of interviews with economists and political pundits last night, it is an opportunity for the Opposition to find faults, errors or mistakes in the Budget. Apart from his “budget emergency” comments, he had nothing adverse to say about the Labor budget.

The other use for the budget reply is to outline the Opposition’s alternative plan. This is especially important in an election year so that voters can decide who are the best economic managers. Apart from the Paid Parental Leave plan and his IR reforms (don’t let me get started on his commitment to Workchoices (see T Abbott, “Battlelines”)) there was no real attempt to present an alternative spending plan.

A final point I would like to make concerns last nights 7:30 interview with John Hewson. Mr Hewson was formerly a critic of the Abbott Opposition and has now turned salesman for the Budget Reply. He talked of broadening the GST, increasing the rate, and of having “discussions” with the State and Territories about  greater independence from Federal interference in the funding and management of health and education.

In sum, I found the budget reply to be an attempt to follow his mentor’s example. He did go one better though. I couldn’t help noticing that the Liberal Party faithful were in the gallery to lend a round of applause: to add to the theatre of the speech. This wasn’t a budget reply, it was a Presidential Launch.

PS This morning (Friday 17th May) Barrie Cassidy of the ABC’s The Drum, found similarities with the Tory’s strategy in the British 2005 election. Citing journalist Fraser Nelson in 2006, Nelson wrote: "The task (according to the policy maker) is to create an aroma around the Conservatives so people naturally imagine our policies are the right ones without necessarily knowing what they are.” (http://www.abc.net.au/news/2013-05-16/cassidy---budget-2013-reply/4694256). Cassidy draws the conclusion that “the Coalition's strategy, underlined by Abbott's address in his reply speech, is to hold its nerve and allow the aroma produced over the past two-and-a-half years to continue to "waft through the country".” Sound familiar?

 

 

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