Upside-Down-Swing

Federal politics has gone all topsy-turvy and I’m having trouble hanging on. It’s an upside-down-world where night is day, black is white, and cats bark at cars driving people.

At least that’s how it seems, with the Prime Minister and his government insisting that things are the opposite of reality.

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What Hockey learnt from Gillard. Pre-budget post for The Hoopla.

The gap between political observers and mainstream voters is never more obvious than during election campaigns and at budget time.

In the lead-up to a budget, political pundits obsess over pet issues and project their reactions onto everyday Australians. Yet most voters’ interaction with the Budget will be little more than a scan of the news on Wednesday to find out if cigarettes are up or family benefits are down.

Much of the rhetoric will simply pass them by, despite Christine Milne’s best efforts to suggest the Budget will contain Tony Abbott’s JuLIAR moment and Bill Shorten’s line about the trust deficit.

These voters’ attention deficit won’t change even if 100 talking-head economists were wheeled out across the different media platforms to intone that Australia really doesn’t have a budget emergency.

This is because these voters still believe the Liberals are better economic managers than the other lot. They believe a changed position (or broken promise) is justified if it’s in the interests of good economic management. And they’ll give Tony Abbott and Joe Hockey the benefit of the doubt until proven otherwise.

The Essential Poll did a good job last week of dissecting this view. The poll found respondents rated Labor as being better than the Liberals in representing the interests of working families, standing up for the middle class, and being more concerned about the interests of working families than those of business.

Yet 40 per cent of the same respondents judged the Liberals to be better at handling the economy overall, compared with 26 per cent for Labor. This has barely changed from the 15-point difference between the two parties when voters were asked who they trusted most to manage the economy just before the election last year.

One of the strongest drivers of Coalition support at the 2013 election was this perception of economic competence. When asked just before the election what would be their main reason for voting for a certain party, 69 per cent of Coalition voters said they would vote Liberal or National because these parties were better at handling the economy.

This focus remains, with 75 per cent of Coalition voters stating last month that economic competence was one of the three most important issues that would decide their vote.

While the Coalition is being jostled by opinion poll turbulence as it exposes potential budget nasties to gauge public reaction, a strong majority of Coalition supporters appear to be nevertheless keeping the faith: only 24 per cent of them see Abbott’s proposed deficit tax as a broken promise, and 61 per cent consider it is more important to reduce the deficit than stick to pre-election promises. This is mostly unchanged from the 62 per cent of Coalition voters who said in December it was reasonable for politicians to change their positions as situations change.

This is in contrast to the people who didn’t vote for the Coalition – they’re protesting loudly about broken promises but essentially preaching to the choir. This was never going to be a Budget that they would support, and the Government is essentially sidelining them from the debate by communicating only with the Coalition heartland.

As long as Abbott and Hockey can continue to convince Coalition supporters that the shared pain is for the good of the economy, they will suffer little long-term damage from the cuts inflicted in this year’s Budget. The real test will be in how Coalition voters choose to measure “good economic management”.

In his long campaign to subvert Julia Gillard, Abbott managed to form a connection in voters’ minds between the rising cost of living and perceived economic mismanagement. These days, while most voters may have little time for the CPI, GDP, current account deficit or cash rate, they’re quick to blame government incompetence for interest rate hikes, utility bill increases and their burgeoning grocery bills.

Cost of living remains the economic issue that most worries voters (56 per cent), with the second highest concern being unemployment (11 per cent).

This could be a problem for Abbott if the Government reintroduces indexation of the fuel excise. Although the increase will mostly be hidden within the ebb and flow of daily petrol pricing, it will also raise the price of any goods that are transported by road and push up the overall cost of living.

In order to neutralise this weakness, the Government appears to be attempting to reframe voters’ measure of economic management from being about the cost of living to being about job creation.

This ties in with Abbott’s strategy of reinvigorating the economy, left languishing by the end of the mining investment boom, with a bonanza of infrastructure projects and associated jobs. By assuaging the 57 per cent of voters concerned about job losses in the next year or so, Abbott hopes to retain the mantle of good economic manager and keep the Coalition voter base loyal.

Abbott and Hockey’s first budget will undoubtedly be the biggest political test either man has faced; it is not, however, the test of truth that their opponents claim it will be. The budget will instead fulfil both men’s promise to Coalition supporters to be superior economic managers. And this oath has pre-eminence over everything else.

My very first weekly column for ABC’s The Drum.

Not one but three messages reverberated from the Abbott government’s cabinet decision yesterday to reject a request from iconic Australian fruit-processing company SPC Ardmona for $25 million assistance.*

Both Prime Minister Tony Abbott and Industry Minister Ian Macfarlane stated in no uncertain terms that the decision was a message for business that the days of government being a crutch for business were over. Labeled “an important marker” by Abbott and a “defining point” by Macfarlane, the rebuff signaled that industry restructuring should be led (and, by extension, resourced) by business alone.

Doing as much as possible to deflect any inferred responsibility for jobs lost through the decision, Abbott made a big play on the size, profitability and social conscience of SPC’s parent company, Coca-Cola Amatil. He expressed confidence that the multinational would do the right thing by the canning company and its workers.

And for the second time this week, the government also drew attention to the responsibility of companiesto strike wage agreements with unions that do not threaten their business’s sustainability over time. This is part of a strengthening government homily that companies must take more responsibility for their actions.

However, the big dose of tough love for the ever-demanding Australian business community will likely give little comfort to the recipients of the second message. Taken together, the Cadbury and SPC Ardmona decisions starkly tell voters one thing: some jobs are more equal than others.

Yesterday the Prime Minister rationalised the Coalition’s 2013 election campaign decision to support Cadbury with $16 million in assistance as development of “regional tourism infrastructure” and not simply propping up another struggling business. But at the time he seemed particularly focused on the continuing viability of Cadbury in Tasmania and the 200 jobs that the factory upgrade would add to state’s depressed economy.

The key to this apparent contradiction lies in votes – or more precisely seats in the federal parliament. The SPC Ardmona facility is nestled in the very safe Liberal seat of Murray, which Sharman Stone holds with a whopping two party preferred vote of 70.87 per cent. This healthy margin gives Stone some latitude to be a rebel at times, but it also means the Coalition can treat Murray’s voters with impunity without risking a backlash that bites. In fact the Abbott government could probably slay every first male child in the electorate and still retain the seat.

In contrast, the Cadbury factory is located in Andrew Wilkie’s Tasmanian seat of Denison, and is supplied by the dairy industry in the adjacent seat of Lyons. Not coincidentally, Liberal candidate Eric Hutchinson went on to take Lyons at the 2013 election from Labor’s big man Dick Adams with an almost 14 per cent (two party preferred) swing in his favour.

So the SPC Ardmona decision revealed that if you live in a marginal seat or one represented by a potentially influential independent MP, your job is important to the Coalition. Otherwise, not so much.

Finally, the decision not to protect the jobs of canners and, by extension, their fruit-producing suppliers, sent a decisive message to the Nationals: you can’t always get what you want.

Even though it remains perennially puzzling why this rural rump of agrarian socialists wields greater influence on Coalition decisions than its total vote or number of seats in parliament, they continue to do so. Most recently they were successful in convincing Treasurer Hockey to reject the $3.4 billion foreign takeover bid by US agriculture giant Archer Daniels Midland for local grain-handler GrainCorp. The “national interest” grounds on which he did so were spurious at best and sent a ripple of unease through the business community.

But now a similar public campaign in support of assistance for SPC Ardmona by Agriculture Minister (and deputy leader of the Nationals) Barnaby Joyce has failed. It may be that the Nationals expended their political capital on keeping the Yanks’ hands off our grain-handling infrastructure, or that any preparedness by the free traders in Cabinet to countenance further protectionist assistance for Australian businesses was consumed entirely by the GrainCorp decision. Perhaps it was simply because there are more marginal votes in the grain belts of rural Australia than in Murray.

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