When Liberal MPs gave the Prime Minister, Tony Abbott, more time to “prove himself” after the failed spill motion in early February, the May budget signified the outer boundary of that time limit.
If Mike Baird’s Coalition manages to prevail in the NSW election this weekend, Abbott will be considered to have “passed” that test, leaving the federal budget’s reception by voters as the ultimate indicator of his favour in the community.
Realising the success of the budget is inextricably linked with his own tenure, the PM last week reversed five years of shrill warnings about the dire state of the budget to unexpectedly announce that most of the hard lifting on the budget was done.
What made this declaration such a surprise was that its foundations in truth were flimsy at best, given that much of the budget’s savings have either been rejected or held up by the Senate.
Yet the PM brandished a chart published in the Intergenerational Report to claim the budget would “broadly” (read, almost) be balanced in five years’ time. However, this balance is mostly achieved by reducing funding to the states and territories by $80 billion, and is fleeting. Treasury officials have confirmed that without additional cuts there will be no budget surplus in the next 40 years.
The Prime Minister’s declared preference for a “glass half full” approach to the budget – focusing on what has been achieved instead of what has not – has been depicted in the media as complacency. In fact, Abbott is doing anything but resting on his laurels; he is positioning the budget to put himself in the best light once it has been delivered.
Traditionally, federal budgets don’t give the government of the day an opinion poll boost. There are exceptions of course, with one analysis of post-budget polls in 2010 concluding the only bounces in the previous two decades were for Howard in 2000 and Rudd in 2009. No such bounces have occurred since that analysis was undertaken.
However, Abbott can’t afford not to get a poll boost from this year’s budget. His detractors will depict any voter antipathy towards the May economic statement as failure on the PM’s part (and that of his Treasurer), and use it as a springboard for the next leadership challenge.
Abbott’s strategy is to lower voter expectations about the budget so far that it is ultimately anticipated to be a non-event; in the words of the PM, a “dull” budget due to the Government having “got the budget situation from out of control to manageable”.
Then when the budget sweeteners are unveiled, including new childcare initiatives and a tax cut for small business, Abbott is counting on voters being pleasantly surprised, with an attendant uptick in the opinion polls.
The risk for the PM is that engaged voters may have already “banked” these initiatives, which have been widely telegraphed in media commentary on the budget, and give the Government no further credit for their confirmation on budget night.
The secondary risk is that PM Abbott’s seeming abandonment of the reform agenda is causing serious consternation among his supporters in the Liberal Party, the business community and the conservative commentariat.
Not unsurprisingly, Abbott’s still undeclared rivals for the leadership continue to spruik their own reform credentials. A leak to the media from last week’s meeting of the Government’s full ministry disclosed Foreign Minister Julie Bishop had raised concerns about the communication of last year’s budget and stressed the importance of an overarching budget narrative, such as those employed in the Howard era.
The week before, Communications Minister Malcolm Turnbull noted in an address that “governments delivering good economic and fiscal outcomes are very rarely ejected” but “governments judged to be inept economic managers … seldom survive the next election”.
Turnbull’s point has particular resonance today, with a new opinion poll finding the economy and finances has become the second most important issue to voters (at 67 per cent) after health (at 80 per cent). Only 19 per cent of those surveyed rated the Government as doing a good job on the economy.
Quality of government is now rated as the fourth most important issue, with 13 per cent of respondents rating the Coalition as doing a good job in upholding quality of government. The Gillard government was rated at 15 per cent on this measure during its darkest days in June 2013.
The survey raises yet another troubling conundrum for the PM, in finding immigration, border security and defence to be middle-tier issues that are of less concern to voters than health, the economy and education. The survey analysis concludes “a strategy of focusing on defence and immigration-related issues, although it does play to the Government’s relative strengths, is unlikely to meaningfully change opinions about performance.”
Government backbenchers will be thrilled at this revelation, given they’ve been told to reverse years of rhetoric on fighting debt and deficit to focus instead on “actual” achievements of the Government such as cracking down on foreign investment in real estate and introducing country of origin labelling for food.
Granted, the optimal way to sell the federal budget may well become a moot point if the NSW election sees the defeat of Mike Baird’s Coalition government. It is possible, as NSW Opposition Leader Luke Foley declared on the weekend, that “if Mr Baird goes next Saturday, Mr Abbott goes on the Monday.”
However if Baird survives, Abbott will too, at least to fight on until the federal budget. If the PM’s “nothing to see here” approach to the budget pays dividends, and he gets a poll boost from appreciative voters who have the memory spans of goldfish, Abbott may even make it to the end of the year.
But where does the Government go from there? Abbott is sacrificing the Coalition’s single greatest strength – its reputation as a sound economic manager – just to save his leadership.
If the PM’s colleagues allow him to do so, the Government will find itself in an intractably losing position at the beginning of the 2016 election year. Without economic credibility as its foundation capability, not even Bishop or Turnbull will be able to save it.