Tuesday, May 11, 2010

Don’t Hold Your Breath

Can Kevin Rudd lose the election later this year? Yes he can. Can Tony Abbott become the next Prime Minister? Yes he can. Can Wayne Swan rescue the fortunes of the government from the risk of electoral annihilation with his third federal budget to be delivered tonight? Yes, he can. But he probably won’t. After the bucketing taken in the polls over the past two weeks, it would take a budget packed with miracles to arrest the slide, but instead Wayne Swan has promised a budget which will be “no frills” and “boring”. Not exactly the kind of thing to provide a high level of inspiration.

Of course, it is important that tonight’s budget should be responsible, bringing the deficit under control, while delivering on expectations for reform of health, tax and welfare. It is important that the government is seen to be keeping the faith on these matters, and all the more so after the recent policy reversals which triggered the decline in popularity in the first place. Failure to do so would only reinforce the perception that the government has wimped out on its own agenda and has become a “do nothing” administration, bogged down in its own rhetoric.

On the other hand, if the government succumbed to the temptation to use tonight’s budget to try to buy voter support by spending up big, it would destroy any credibility it has left as economic managers. Already the government has been seen to fail as managers of the home insulation program, and the school halls program, but at least the intended purpose of those programs was met, that is propping up the economy while the rest of the world went down the gurgler. But having done that, failure to contain the deficit and begin work on reducing debt now would be seen as an indication that managing the economy was also slipping out of their grasp.

Instead, I expect that Wayne Swan will be true to his word and present a budget which shows the deficit being reined in, while delivering on the health and hospital measures that have already been announced. It is likely that there will be an overhaul of how we handle our personal income taxes, and we might even see some improvements in the way the tax and welfare systems interact. I would even go so far as to suggest that the Treasurer might even wheel out a modest surprise for us all just to provide a juicy headline for tomorrow’s papers. But if I knew what it was, then it wouldn’t be a surprise.

But the bottom line is that even if Wayne Swan’s budget tonight ticks all the boxes, and is a sensible responsible plan which delivers genuine reforms and improvements for everyday Australians, it won’t be enough to restore the government’s popularity overnight. To do that, it would have to be spectacular, and right now the government cannot afford “spectacular”. Instead it needs to be the first step towards regaining the confidence of the public. That can only happen if there are no more mistakes, no more policy reversals, no more stuff ups.

Given the track record, I’m not going to hold my breath.

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