13 May 2015

Federal budget 2015: Houdini Hockey plots Tony Abbott's great escape

Treasurer Joe Hockey delivers his second budget in front of Prime Minister Tony Abbott, Foreign Minister Julie Bishop and Social Services Minister Scott Morrison.

This is Joe Hockey's Houdini budget, crafted to release the Treasurer and Tony Abbott from the chains, handcuffs and straightjacket they painstakingly donned last year before hurling themselves overboard in front of a hostile and disbelieving audience.

Through a combination of contortion, illusion and downright denial, it is designed to free the Coalition from the odium that flowed from the most unpopular budget in at least a a generation - and it might just work.

The contrast between the speech Hockey delivered on Tuesday evening and the one he gave a year ago is breathtaking. That one declared the age of entitlement was over. This one is replete with offerings for families, tradies and entrepreneurs. The "good news" was everywhere; the nasties well-camouflaged.

Last year's budget was underpinned by a demand that everyone share the pain of budget repair. The centrepiece of this one is an incentive to go out and spend - to "have a go" - operative from the moment Hockey rose to give his speech. Last year's budget was informed by a hard right ideology. This one is targeted very much at the middle ground.

A case in point was the announcement in last year's speech that unemployed under 30s would have to wait for six months before being eligible for unemployment benefits - and then have to work for the dole to be "eligible for income support". Bill Shorten dubbed it "perhaps the single most heartless measure in this brutal budget".

Though there was no mention of it in this year's speech, the policy has finally been junked on page 159 of budget paper No. 2, at a cost of $1.8 billion. Now, a one-month delay will apply only to under-25s.

"What has changed?" you might ask, in just 12 months. As Hockey tells it, the country has "stared down terrorist events in Sydney and Melbourne", dealt with a terrible drought in two states, confronted a collapse in the iron ore price and faced weaker than expected global growth. Oh, yes, and the government very nearly imploded, too. Yet, thanks to the Coalition's careful planning and astute management, we have emerged in terrific shape.

If the narrative stretches credulity, so too do the budget forecasts of higher-than-expected growth and lower-than-expected unemployment, driven party by lower energy prices and interest rates, and a return to an underlying cash surplus in 2019-20.

The Treasurer's tactic to deal with the policy reversals that punctuate his budget is to ignore them. We aren't told, for instance, why the new approach to making the pension system more sustainable is superior to the one announced in last year's budget. Or why spending an extra $3.5 billion to reform the childcare system is a better way to assist mothers back into the workforce than Abbott's "signature" paid parental leave scheme.

The same goes for using cuts in family payments that were announced last year to assist in budget repair to fund the families and childcare package.

The intention is that the common sense of the new approach generally speaks for itself, with targeted measures replacing broadbrush policies that were seen by the electorate as unfair. Indeed, Abbott's determination was to ensure that this budget could not be cast as unfair - and Tuesday's night's presentation went a long way to realising this objective.

To be sure, big contentious policies remain on the books, like the plan for university fee deregulation and the cuts in family payments. But, suddenly, Bill Shorten is confronting a much smaller target.

The Opposition Leader's budget reply last year was one of the best speeches he has given, announcing a "fight for fairness" that forced the Coalition to retreat in several areas, from the GP copayment to pensions. Thursday's reply will be more difficult to craft and Shorten conceded as much when he addressed his caucus on Tuesday, saying 2015 would be about a "fight for the future".

The Coalition's Achilles heel is credibility, and Shorten will be out to paint the new direction as driven by desperation, not conviction. "A leopard cannot change its spots," he told his MPs.

While Abbott's self-described "dull and routine" second budget has boosted his chances of leading the Coalition into the election due late in 2016 (and Hockey's prospects of keeping his job), it is a stretch to cast it as a possible launching pad to an early election. Sections of small business may love it, but a swathe of voters still feel betrayed.

Last year I gave Hockey a 10 for courage, an eight for fiscal responsibility and a three for keeping commitments. This one gets lower marks for courage and fiscal purity, but takes a confident stride toward rebuilding trust.

Like Houdini, Hockey and Abbott have staged a great escape. Whether the audience is applauding, paying attention or simply waiting to see what happens next, we will know soon enough.