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The Liberals fumbled the ball over the budget

21 May 2009 891 views No Comment

The opposition’s failure to strike has only enhanced the government’s economic standing, says Ross Fitzgerald

As the dust settles from the annual post-Budget brawl, a lot of Liberals will be scratching their heads and wondering just how Malcolm Turnbull and Joe Hockey managed to make such a hash of it.

In short, the global recession provided Mr Turnbull and Mr Hockey with the softest free kick in Australian political history.

Consider the conditions in which this budget was framed. The recession has wiped $210 billion from the budget bottom line, creating the biggest Australian deficit ever. The Budget papers confirmed that one million Australians will be in the dole queue. Never before has a federal opposition had such opportunities to capitalise on a bad economy. And never before has an opposition prosecuted the argument so lazily and so incompetently.

For Joe Hockey in particular, to use an Aussie Rules metaphor, it’s the political equivalent of being substituted on to the ground and straight away being given the ball two metres out from goal. Any shadow treasurer worth their salt should have drilled the ball straight through the middle and would be lapping up their teammates’ praise.

Instead Hockey looks like he’s tripped in taking the free kick, missed the ball completely, and fallen over himself in the process (with apologies to Joe, whom I know is more of a League man).

Take, for example, his insistence that the Liberals would have a deficit at least $25 billion smaller than the government’s. As Prime Minister Rudd pointed out in one of his best Question Time performances since taking office, Hockey was contradicted within the hour by his own leader, who insisted that it wasn’t possible to quantify the difference between a Liberal and Labor deficit.

The Liberals have been politically blessed with arguably the worst set of numbers since the 1930s, yet the debate has focused on strategy and forecast methodology.

Now, Joe is a genial, intelligent, charismatic man. He is genuinely charming as well. But the reality is you can’t charm your way out of a global recession. In hard times, you can’t smile and bluff your way to economic credibility.

Also, there is a growing view that he has a problem with laziness and ill-discipline. Too often he appears to be making things up as he goes along. As Dennis Shanahan pointed out in these pages earlier this year, the Sunrise Kid doesn’t get out of bed early enough for the endurance test that is a senior economic role.

It has long been argued that the job of opposition leader is the hardest in public life. But the treasury role is no cakewalk either, particularly in the eight months since Lehmann Brothers collapsed. Only the tough and the talented survive, on both sides of the despatch box.

That’s why there’s a growing view on the coalition backbench that the federal Liberals would be much better positioned if they were more disciplined and hard-working. They haven’t yet learned that there are no easy gains in opposition, only hard slog.

Conversely, these dark days in the global economy have served only to consolidate the standing of Labor’s economic leadership — in particular, Wayne Swan and Kevin Rudd. Just think of the task they have confronted in framing this Budget, compared with the times of plenty that Peter Costello enjoyed as treasurer.

In each of his last three budgets, Costello found himself with approximately $10 billion more each year to finance new spending. Not surprising, then, that the total savings effort in each of these budgets averaged about $4 billion. The end result was tens of billions of dollars to allow tax cuts for the electorate — the nearer to an election, the better.

Compare this with the situation faced by the treasurer today. In total, something like $210 billion was wiped from the forward estimates this year, flowing directly from a collapse in world growth that saw the IMF revise its forecasts from 4 per cent to -1.3 per cent in a year. There hasn’t been a quicker, deeper deterioration in the global economy in our lifetimes.

Yet on one hand Swan has delivered major (and much needed) investment in infrastructure, some decent structural reforms, and sound medium-term fiscal settings which the ratings agencies have given the tick, while on the other largely keeping faith with Labor’s low- and middle-income heartland.

At worst, this Budget been labelled uninspiring. At best, ‘a nine out of ten budget, a solid effort in the middle of the Great Recession’, according to AMP’s Shane Oliver.

Nobody has ever accused Swan of being a show pony, and nobody has described him as charismatic. He has never dominated Parliament like Paul Keating or Peter Costello, though his recent performances have been very solid. The same goes for his post-budget performance at the Press Club, which had even the most vitriolic critics acknowledging that he has grown into a politician of some substance.

Swan’s strengths lie in his determination, his resilience, his doggedness and his Howard-like perseverance. They are strengths that have built his stature through this Budget, and through the dire economic circumstances in which it was framed.

To conclude, let’s return to a sporting theme, though this time on the high-diving board, where performance is judged not just on the initial score or a simple judgement of the outcome. Competitors are marked on the degree of difficulty. Solid execution of a tougher exercise can trump the flawless execution of an easy one.

As the respected economist Chris Richardson noted, Wayne Swan and Kevin Rudd this year faced the economic equivalent of the triple somersault with pike and double-twist.

Whether through their own solid performances, the Liberals’ incompetence or a combination of both, at this point Swan and Rudd appear to have pulled it off with a reasonable score.

As for Swan, the first words of his speech last Tuesday night spoke of a Budget ‘forged in the fire’ of the global recession. In reality, it is his treasurership that has been forged in that fire. What’s worse for the Liberals is that this is a view of the federal government’s economic management which is gaining widespread currency. And this in the midst of a global recession that everyone in the community understands is the grimmest since the Great Depression.

THE SPECTATOR AUSTRALIA Friday 22 May 2009