MYEFO looms


Sometime between now and the end of the year, the Abbott Government is expected to release the Mid Year Economic and Fiscal Outlook, also fondly referred to as MYEFO. December might seem rather late for a ‘mid year’ report, but it in fact refers to the midpoint of the Australian financial year and is an update on the Budget delivered in the previous May.

MYEFO provides an update on the state of the government’s books – whether enough money is being collected through taxation and whether expenditure is under control. It provides governments with the flexibility to respond to a revenue problem by raising taxes or cutting expenditure without having to wait for the next Budget.

It’s all eminently sensible and should be straightforward. But then, nothing in politics is ever straightforward. Then Opposition Leader Tony Abbott made a fuss over the 2011 MYEFO, calling it a ‘crisis mini-budget’ and pushing for parliament to sit an extra week in December to consider it. In 2012 the Gillard Government brought the report forward to October to avoid including data that showed the huge reduction in tax collected from the mining industry. The MYEFO also has the power to affect financial markets and consumer confidence by virtue of it being an official Budget statement.

A recent media report floated the idea of delaying this year’s MYEFO (and the expected bad news contained therein) until January to avoid spooking Christmas shoppers. This was howled down by Labor with reminders of Abbott’s election launch commitment to reveal “the true state of Labor’s books” within 100 days of being elected (by 16 December) and warnings that the delay was hiding huge cuts planned for next year’s budget.

The unfortunate truth is that the best time to release this year’s MYEFO is a nuanced political choice that may be beyond the currently observed limitations of the Abbott Government. Decisions and counter-decisions on matters ranging from Indonesia and Gonski, to the debt ceiling and asylum seekers, suggest a serious shortfall in its political smarts department.

This year’s MYEFO also marks the point at which a change in government normally sees the incoming Treasurer making a face like the kid from Home Alone, wailing about the previous government and the secret interstellar chasm found swirling where the government’s stores of revenue are usually kept. Cue press conferences where the now glum-looking Treasurer regretfully advises the nation that certain election promises cannot be kept: particularly Those Involving Money.

Any half decent government would get away with this, as others have done before, exposing difficult and necessarily unpopular decisions mere hours before the entire nation decamps for the Christmas break. But whether the Abbott Government is ‘half decent enough’ is fast becoming a point of conjecture.

The reversal of the Gonski reversal suggests the Government is starting to feel self-doubt. Faced with opprobrium from even the Murdoch press, Abbott’s retreat was distinguished by the shameless audacity that has characterised all of his Government’s changes of heart since the election. Yet it was swift, and left his key lieutenant, Education Minister Pyne, politically exposed as incompetent.

Despite a wave of sentiment washing through both traditional and social media that the initial breaking of the Gonski commitments was Abbott’s ‘carbon tax moment’ (with some notable exceptions), what should really be occupying the minds of Coalition parliamentarians and strategists is the risk of a growing public perception that the whole government is incompetent.

Chaos and ineptitude were at the heart of the Rudd-Gillard-Rudd Government’s election loss, not a broken promise. If the perception takes root and grows that similar flaws are compounding within the Abbott Government, it could also lead to their eventual demise.

Granted, this will depend ultimately upon the proficiency of Labor, who has not yet worked out how to Opposition. While there are clear improvements in individual opposition MPs’ knowledge of parliamentary procedure, the party’s Question Time tactics remain woeful. And the sooner they sack the wannabe advertising guru who dreams up the corny “Abbott Axe” and “panicked school deal” questions the better.

In the perceived competency stakes, the Coalition has everything to lose: they were elected on the promise of being a team of experienced former ministers with strong track records who would deliver what they promised with ‘no surprises’. Labor on the other hand is starting off a very low base and can only gain in stature.

The MYEFO is the next big test of that potential – for either side. Handled skilfully, the government can settle growing concerns about their capacity to be strong economic and sound policy managers. But if they handle it badly, by continuing to show all the political nous of a potato, they may face the ignominious fate of being a one-term Coalition government.

This post first appeared at The King’s Tribune.