"The government has now burnt a lot of its political capital for little gain in "fixing" the budget."
"The government has now burnt a lot of its political capital for little gain in "fixing" the budget." Photo: Alex Ellinghausen







Treasurer Joe Hockey made a meal of his first budget and is making an even bigger meal of settling and selling it.



He was clearly "best on field" in the run up to the budget
but has been near to the worst since, with some now wanting his contract
reviewed. They certainly don't see him as "foreman material".




Hockey (and Prime Minister Tony Abbott) seemed genuinely
surprised that the budget was criticised and rejected so widely. Yet
Hockey waited some 10 weeks before attempting to woo the essential
crossbench senators and was AWOL in the media much of that time, except
for the serious distraction created by the release of his ill-conceived
biography, Hockey: Not Your Average Joe. This only served to further undermine the budget's integrity and to raise questions about his judgment.



This week, he again made himself the issue with his remarks
that "the poorest people either don't have cars or actually don't drive
very far in many cases", in some bizarre attempt to defend his fuel
excise decision. Another dumb error of judgment, especially given the
obvious inequity of his budget, whereby the disposable income of
lower-income earners was cut by some 12 per cent to 15 per cent, while
the income of those at the top was cut by less than 1 per cent.




Don't get me wrong, it is unnervingly easy to make dumb
statements in politics. Often attempts to make points with the best of
intentions fail to strike the desired chord – indeed, they can easily
offend.



One of my classics was to suggest that "you can always tell
the rented house on the street", made towards the end of a very long
speech to the Housing Industry Association in 1992. The line, originally
written by my then press secretary, Tony Abbott, was moved in and out
of the speech by various advisers before being finally reinstated and
was only noticed by one journalist at the time. But that was enough. The
media bushfire was ignited. I was very soon flat out back-pedalling.



In my experience, the best response to such acts of stupidity
is to immediately and openly admit the mistake and set about rectifying
it. To try to defend the indefensible breaches the first "law of
digging holes" – namely, once you reach the bottom, you should stop
digging.



Even though Hockey can find statistics to "prove" that the
rich pay more fuel excise than the poor, it's still making the hole
deeper. To those on low incomes, any additional impost, or benefit cut,
eats into their capacity to survive. They don’t have the luxury of
"choice" as to how to respond.



Behind all this, the Abbott government has shifted its
position on how to deal with the budget's weaknesses and criticism.
Initially, as expounded by Abbott himself, they were simply going to
"tough it out", with even a hint of a potential double dissolution.
Emerging in the aftermath of its successful handling of the MH17
tragedy, the view of the government shifted, sending messages far and
wide that it "would deal" and was capable of doing so. Obviously this
was an attempt to defuse criticism, to get "a" rather than "the" budget
through the Parliament and to reassert some control of the political
agenda.



For example, Health Minister Peter Dutton initiated
discussions with the Australian Medical Association, seemingly
entertaining some possible limiting of the GP co-payment. Similarly,
Education Minister Christopher Pyne seemed willing to contemplate a deal
that would reverse some of the proposed changes to HECS, in order to
preserve the proposed "deregulation of universities".



Selling these health and education decisions were a "big ask"
from the very start, as they were announced without an overarching
health and education policy framework. They appeared as simply
mechanisms to improve the budget bottom line, not as essential elements
of a broader policy in each area.



Much of the inequity of the budget could have been avoided with a full, integrated policy in key areas.



For example, focusing on pensions, just proposing to tighten
income and asset tests, and to lift the retirement age, is an obvious,
inequitable response.



However, if the government also proposed to significantly
increase the pension benefit that, on some measures, is below the
poverty line, and to reduce the near obscene skewing of superannuation
concessions in favour of the wealthy, it would have been seen to have
produced a more comprehensive and equitable overall response to the
budgetary consequences of our ageing population. However, this hasn't
happened and Hockey's misguided comments have only worked to distract
and further compound the difficulties of the budget-selling task.



The government has now burnt a lot of its political capital
for little gain in "fixing" the budget, especially recognising the
massive expenditure commitments still to be addressed.



If growth and budget revenue turn out to be weaker than
forecast, how will the government be able to go back again for another
round of cuts and initiatives?



I recall my time in the Fraser government, when treasurer
Phil Lynch was pilloried for his initial "razor gang" expenditure cuts,
only to see the Fraser cabinet still having to struggle, in every other
year of the government, to "fix" the budget.



Hockey still has it all to do.



Businessman John Hewson was federal leader of the Liberal Party of Australia from 1990 to 1994.