Politics trumps policy? Budget 2015

Judith Sloan said the budget was “a classic case of politics trumping policy”, with a focus on the Coalition’s core constituency. Paul Kelly is on a similar theme:

    This budget aims to revive the ­Abbott government’s political ­fortunes, entrench the Coalition base vote with small business, ­families and farmers and give ­priority to growth and jobs over budget repair.

    The second Hockey budget is driven by two forces: the need to counter the onslaught on the 2014 budget that almost destroyed the government and the $52 billion revenue downgrade since last year.

    The bottom line estimates conceal the policy reversal at work. This budget’s real purpose is to save the Abbott government. The second related purpose is to boost economic activity in the teeth of faltering growth.

(Kelly’s article is paywalled, but if you type into Google his name and the first phrase…)

Ian Verrender reverses the emphasis on those two purposes:

    This was supposed to be a boring budget. It is anything but. It is a radical shift from Hockey’s maiden effort; a sudden lurch from austerity to big spending stimulus that bears all the hallmarks of a government desperately hoping to resuscitate a flagging economy and its own credibility.

It’s just that Verrender can’t see the stimulus working as it’s based on above average GDP growth magically reappearing. And on India coming good, should China falter.

Quite a few commenters shared my reaction that the budget speech felt like there was an election coming. Barrie Cassidy puts the chances of an early election at 50:50. The purpose, he said was to get back into the political game after a miserable 12 months, and it might just work.

Greg Jericho uses a movie analogy of a sequel. Treasurers like to see their second budget as a sequel to the first, building on the strategy laid down in the first.

Keating and Costello could do this with some credibility. Swan found himself in an alternative reality, courtesy of the GFC. Hockey and Abbott are pretending that the second is building on the first, but it doesn’t wash. The budget is a reboot rather than a sequel.

    It makes for an odd reboot – a bigger government, one worried about fairness rather than budget emergencies and across the board expenditure cuts.

    Such a radical change of narrative may be too much for voters. Certainly it is unlikely to make them feel like they know what this government stands for.

    Both Joe Hockey and Tony Abbott will hope voters like the reboot. For if not, it is very likely that the third budget in the trilogy will see a much different cast performing the key roles.

The voters, it would appear, are pessimistic about Australia and sceptical as to whether the political class can provide the required leadership, according to Jonathon Green. Writing last week, he said the budget will be a true test of authenticity:

    Next week’s budget is a challenge to the Government to convince that growing body of the population who doubt the capacity of our political system to deliver outcomes that are in the national interest.

The narrative constructed around the budget needs to be based on economics rather than politics and needs to be believable.

Budget 2015 sprays goodies around, mainly to the LNP core constituency, and seeks to minimise the losers, although this handy ABC explainer shows the losers to be quite widespread. But electors can’t necessarily be bought, as the recent Queensland election showed. People want the chance of a decent life, and if they lack confidence in the political leadership they might just change it.

See also Joe’s big-spending budget.

Update: Mark Bahnisch has an insightful piece at Social democratic directions.

8 thoughts on “Politics trumps policy? Budget 2015”

  1. The ABC coverage is excellent.

    Looking at the newsletter from my accountant there are some useful common sense changes for small business, which would seem generous comparec to the general Australian Governments over time attitude to small business.

    My comment would be that I do not see anything structural in this budget or government attitudes or policy in general to address an economy being steadily bled of strength in a competitive and changing world.

    First up, of course is there is no reintroduction of the Carbon Price. There is no thinking on how to make home ownership accessible for those who must be the builders of the future. considering the recent brain awakening that Australia needs to consider a near future with a more than doubled population there is no mention of regional investment incentives or planning rethink.

    We are heading into another year of national numbness, which is an extension of Abbotts intellectual vacuum. He got elected with the aid of a captive media delivering saturation missinformation while denigrating every positive action taken by the government at hand (the identity of that government is irrelevent) and smashing everything he could get his hands on. Now in government, he has no clue as to what to do. Abbotts mindset is not suitable for building a nation.

    The casualties of this ideologically locked executive bunch are first the alternative energy industry. Second the automotive industry. Third is industry in general as trade agreements generally favour the bigger economy (and that is not Australia) or very specific business sectors, the general trend for industry is a wind down of variety, skill and agility. Fourth is the agricultural sector over the long term, for whereas trade agreements help give access to markets and Australia has a solid history of agricultural productivity improvement, that improvement has slowed to just 1%, and for the future climate instability will become a major limit to output, and Tony Abbotts participation in Climate Change denial with very real international impact goes back a decade or more . Fifth is the resources sector, as Abbott’s destructive tactics against the mineral resources rent tax gave lisense to the major players to export their profits and allowed an anti Australian combative attitude to develop in that sector which is now playing out as an aggressive “last man standing takes all” resources market war.

    Life goes on of course, but the national mood, I believe, is not a positive one. The is no sense of “going somewhere”. We are a nation in stagnation, waiting for something to happen, but it just isn’t.

  2. A triumph of hope over reality.

    Just make sure you are well prepared for a flood or cyclone: a few days supply of water and food, fresh batteries in your torches and radios. adequate reserves of the absolute necessities of life. These same precautions will help you get through the inevitable strike and civil commotion …. when reality does bite.

    I was glad the ideology-driven fanaticism of the first Abbott-Hockey Bludget had been modified – but what on earth induced them to follow it up with inaction as well as a bit of niceness to small businesses and a silly mixture decisions on cuts and handouts that could only have come from shuffling playing cards?

    We needed a “strong(TM)” budget and we got Budget Lite instead.

  3. I meant to add that Laura Tingle reckons that Hockey and co have given up on changing anything fundamentally much at all. So it was a bits and pieces budget. Some of the bits, like a cut of almost a billion to foreign aid, were quite nasty. Ben Eltham at New Matilda said much the same.

    Hewson on the radio the other day said they should have started with the notion of doubling productivity by 2025 and worked back from there.

    Whether the public pick up on the fact that this mob don’t know what they are doing is now the question.

  4. Increasing productivity isn’t going to help if all it does is reduce employment and the amount of money in the hands of those who want to consume more.

  5. The government really hates scientists, particularly the bright ones

    The Federal Government has more than halved the number of fellowships on offer to mid-career researchers, sparking fears talented innovators could be forced to leave Australia’s shores.

    The Future Fellowships program, which gives four years of funding to researchers in critical fields, has been slashed from 200 spaces two years ago to just 50 this year.

    I guess smartarse scientists that uncover truths that undermine governments are a real threat to the stupid.

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