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Aug 15, 2014

Woe is Joe: or, how the budget narrative was lost

Joe Hockey's woes this week reflect how the government's budget narrative barely survived budget night.

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Let’s go back to a happier time for Joe Hockey, to just before the May budget, when he was explaining the government’s proposal for a return to fuel excise indexation.

In a News.com.au article and another one by Laurie Oakes, the excise decision — which the government knew it would cop plenty of stick for — was explained in terms of the need to get a vast infrastructure program rolling; a program that would be, Oakes said, the “cornerstone of the budget”. Hockey and Co even harboured hopes — about which Oakes was rather sceptical — that the indexation would prove popular with voters. Hockey, pictured with sleeves rolled up, all busyness and bustle, declared that getting infrastructure investment moving would create “tens of thousands of new jobs, but most importantly it is going to address the significant drop-off in investment in construction in Australia, associated with mining investment coming off.”

It wasn’t the most coherent argument — the government was trying to claim the budget was a “growth budget” at the same time as it was proclaiming the need to slash and burn to get Labor’s budget emergency under control. But the argument looks positively masterful compared to the staggering ineptitude from Hockey over the last fortnight, and particularly his “poor people don’t drive” comments this week.

Since May, the infrastructure focus of the budget has been hopelessly lost. That’s partly because Anthony Albanese sabotaged it before Warren Truss could start pushing it: Albo assiduously and constantly declared to any journalist who would listen that virtually every item on the Coalition’s infrastructure project list was a Labor project, and regularly made the same point in question time, to the fury of Bronwyn Bishop. It’s partly because Hockey’s pet project — and like fuel excise indexation, an excellent idea — of asset recycling to get state government infrastructure investment flowing has been halted in the Senate and turned into an argument about privatisation, which voters viscerally hate.

“Hockey carefully laid out a minefield and then walked into it. After the cigar picture, the ill-timed holiday and lament that everyone hated him, no wonder colleagues are wondering about his judgement.”

But the bigger problem is that before Hockey had even finished shaking hands after his budget speech, the terms of the ensuing debate had been settled: it would be about fairness, and Hockey and the government were on the wrong side of it. That’s why, on Wednesday, Hockey was trying to justify the excise indexation measure, not in terms of the need to get infrastructure going, not in terms of the need for the budget deficit to be curbed, but in terms of fairness. This is the wider context for his remark:

“I don’t think that a cursory look at the budget is enough for people to understand what we’re really getting at. You have to look at the detail of what people actually receive now, and people are receiving tens of thousands of dollars in payments from other Australians. What we’re asking is for everyone to contribute, including higher-income people. Now, I’ll give you one example: the change to fuel excise, the people that actually pay the most are higher income people, with an increase in fuel excise and yet, the Labor Party and the Greens are opposing it. They say you’ve got to have wealthier people or middle-income people pay more. Well, change to the fuel excise does exactly that; the poorest people either don’t have cars or actually don’t drive very far in many cases.”

Hockey was fighting not on the battlefield of his own choosing — infrastructure and the jobs benefits that would flow from an increase in building stuff throughout the country as mining investment falls — nor even within his broader narrative of budget discipline, but on the battlefield chosen by his opponents: fairness — a battlefield on which Labor has a massive advantage over the Coalition in terms of how voters see the major parties. Even the smaller parties have an advantage over the government on fairness. If Clive Palmer thrashes out a deal to support a heavily modified Medicare co-payment, for example, it’s his Palmer United Party that will get the credit from voters for responsibly ameliorating an unfair measure, not the Coalition.

But worse, in that exchange the presenter hadn’t even asked about fuel excise — Hockey himself chose to use it as an example. Not merely was Hockey fighting the wrong battle, he carefully laid out a minefield and then walked into it. After the cigar picture, the ill-timed holiday and lament that everyone hated him, no wonder colleagues are wondering about his judgement. Even the News Corporation tabloids felt moved to slam Hockey.

Hockey’s latest Incredible Self-Sabotaging Treasurer act has come at a point where the government appeared to be righting itself, courtesy of Tony Abbott’s capable performance in response to MH17. Abbott, unexpectedly, appears on safer ground internationally than domestically; his decision to spend the week visiting the Netherlands and having a whistle-stop tour of the Middle East was politically sensible given that’s where his strength currently is. But he can’t keep the focus international forever. The domestic priority has to be to find a way to reframe the budget argument away from fairness. In opposition, Abbott was brilliant at reframing debate around Labor’s policies in terms that suited him. Now he’s a victim of exactly the same thing.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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59 comments

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59 thoughts on “Woe is Joe: or, how the budget narrative was lost

  1. drsmithy

    I have grudging regard for you lefties and your treatment of “facts” (as opposed to we right of centre mere opinions). Amazing how your wealth distribution “fact” melts like snow in the summer sun under the most cursory challenge.

    The “fact” I was stating is that we have a disproportionate – and increasingly so, due to policy designed for that purpose – distribution of wealth in this country.

    I recalled some numbers for memory and was mistaken. I’m happy to admit that.

    It doesn’t change the fundamental worsening wealth distribution situation, nor that this is the completely predictable outcome of the economic policies of the last couple of decades of Australian Governments.

    You’re doing it again regarding inheritance. I’m talking about that huge group of baby boomers sitting on their $1m plus homes who will one day kick the bucket and pass the wealth on to their kids. You’re talking about the OZ version of the Rockefellers and the Rothschilds. Again.

    No, I’m not. That’s your straw man.

    Can you find a fact? Any fact, that will support the existence of these holders of all the country’s wealth?

    Er, ABS statistics ? Increasing GDP share to capital and decreasing share to labour over the last few decades ?

    I guess it’s possible that 1% of Australia, say, 220,000 people, took 43 overseas holidays each in the last year, but I doubt it. It’s much more likely that about 4 in 10 Australians took an overseas holiday last year.

    Indeed. It’s also quite likely that a non-trivial percentage of those took more than one. For example, I have flown “overseas” three times in the last 12 months.

    So, as I stated, the typical Australian family is not taking an overseas holiday every year.

    Of course, the whole “overseas holiday” comment is just using emotive language to make it seem like everyone is taking exotic holidays to Europe and the like because they’re swimming in money, when in fact most of those “overseas” holidays are to Asia and cost less than travelling within Australia would.

    Basically, the traditional Australian roadtrip has been replaced by a week in Bali, because it’s cheaper.

    This mythical vast pool of poverty Hockey is supposedly persecuting seems quite hard to find. At least, it is at the ABS.

    You mean the “mythical vast pool of poverty” straw man you’ve created ?

    Policy settings for the last couple of decades have _vastly_ favoured the already wealthy, making them even wealthier, to the detriment of typical Australians.

    The current budget seeks to further entrench this trend, by making healthcare more expensive, reducing access to higher education facilities and the resultant benefits, addressing none of the structural problems that continue to favour the wealthy and doing bugger all to actually reduce the deficit.

    In short, it screws a whole bunch of people, many of whom are already doing it tough, and does next to nothing to actually try and fix the “budget emergency” problem.

  2. drsmithy

    I don’t know where you got those wealth distribution numbers from doctor but if it was from your local socialist collective support group seeking to motivate downtrodden and impoverished Australians to man the barricades, I’d look for a better source. I don’t see vast shanty towns of dispossessed people looking hungrily at gated communities around where I live.

    Ad hominem, straw man, false dichotomy. A fallacy trifecta !

    As I thought would have been obvious from the words “if I recall correctly”, I was recalling from memory. Turns out Australia isn’t quite so bad. The top 20% have about 70% of our wealth. Though the richest 7 people (0.00003%) have as much as the poorest ~1.75 million (7.4%).

    So we haven’t quite hit American levels of wealth distribution and inequality, yet, though that’s clearly the objective (and the trend).

    Sadly the ABS doesn’t seem to go down to individual percentile breakdowns, and with the current Government defundung it – likely so we won’t be able to measure how disastrous their policies will be – that breakdown is unlikely to be available any time soon.

    Wealth is concentrated among older people. Younger people tend to have less wealth. So it is likely that as older people die, their wealth will be inherited by their less wealthy children.

    Ah, yes, hereditary family dynasties. Another anachronistic idea neoliberals love. Hence the reason for all those tax lurks targeted at the old and wealthy. Superannuation tax breaks being the most obvious, but CGT concessions also a standout example.

    You seem confused about “poor” and “middle Australia”.

    Well, you tell me what you mean by “middle Australia” and maybe we can discuss it.

    But your 1% view lumps the median Australian home owning family with some super, some home equity and an overseas holiday every year into the “poor” category. They’re the ones Joe is after.

    The typical Australian family makes around $90k, owes around $250k on their mortgage (or rents) and almost certainly doesn’t take an overseas holiday every year.

    Of course Joe is after them. If he went after the people with money to spare, the prime beneficiaries of the last few decades of neoliberal policies, he’d be out of a job in days.

    Of course, that’s why there’s no chance of one.

    Of course not. The Liberals aren’t stupid. They know after spending nearly a year being the most dishonest, unfair, punitive and incompetent Government in decades, they’d be massacred at any election.

  3. David Hand

    I don’t know where you got those wealth distribution numbers from doctor but if it was from your local socialist collective support group seeking to motivate downtrodden and impoverished Australians to man the barricades, I’d look for a better source. I don’t see vast shanty towns of dispossessed people looking hungrily at gated communities around where I live.

    Wealth is concentrated among older people. Younger people tend to have less wealth. So it is likely that as older people die, their wealth will be inherited by their less wealthy children. I doubt your 50% owned by 1% revolutionary propaganda has taken such obvious subtlety into account but if you can point me to it, I would very much like to read it.

    You seem confused about “poor” and “middle Australia”. Well, you’re in good company because that’s exactly the same trap that Joe fell into in that radio interview. But your 1% view lumps the median Australian home owning family with some super, some home equity and an overseas holiday every year into the “poor” category. They’re the ones Joe is after.

    The challenge is quite straightforward in my view. Australia must, over time, live within its means and that will directly affect the vast bulk of middle Australia.

    What we are actually witnessing today is something else entirely. The cross bench senators are sniffing a double dissolution election where their quotas would be halved so they are playing every political game they can to damage the Treasurer.

    Of course, that’s why there’s no chance of one.

  4. drsmithy

    Your belief that Hockey’s budget is “designed to impoverish anyone who is not already wealthy” has within it this absurd assumption that there is a wealthy class who have all the wealth.

    That’s not an assumption, it’s a statement of fact. 50% of the wealth in the country is held by 1% of the population and 80% by 10%, if I remember correctly.

    Most of the wealth is concentrated amongst few hands. Nearly all the budget measures are designed to make it even fewer.

    Though there is a very wealthy group within Australia, their wealth is insignificant in terms of fixing the $230bn debt we have collectively racked up in the last 7 years. Even if you impoverished Gina of her $20bn, it would cover less that 10% of the debt.

    $230 billion of public debt is practically a rounding error compared to the $trillions of private debt weighing down this country.

    Nothing Hockey is doing – or has any intention of doing – is going to make any meaningful impact on public debt. We don’t have an expenditure problem, we have a revenue problem. Eliminating all the tax lurks and rorts primarily aimed at the wealthy, from negative gearing through superannuation concessions to CGT discounts, is where the real money is.

    Oh, and then, as the vast majority of it is in the value of a huge iron ore deposit and not cash in the bank, you’d have to find a buyer – probably from overseas, to give you the money. And you wouldn’t have that enormous taxpaying business either.

    Awww. You think multinational mining corporations pay meaningful amounts of tax. How cute.

    Actually, our wealthy entrepreneurs whose money is tied up in business enterprises are handy people to have around, not rob.

    There are very, very few entrepreneurs in Australia. The rent seekers have chased them all away. Gina, for example, hasn’t got an entrepreneurial bone in her body. She was born into money, just happened to be living at the right time for iron ore prices to go through the roof, and thinks the best way to improve her business is to pay people less.

    It is middle Australia that must do more […]

    Middle Australia bears proportionally the highest burden of all.

    It is the wealthy who have massively and disproportionately benefitted from the tax cuts and policy changes of the last few decades. Hence the reasons none of those things – the real problems with our economy – will be fixed.

    The Henry tax review recommendations have a lot of merit although I don’t get why he should exempt the 830,000 people on the disability support payment from being encouraged into paid employment

    Speaking of absurd assumptions, I see you’re still peddling the company line that people choose to remain unemployed.

    The only “encouragement” people on the dole need to get into paid employment, is for paid employment to be available. Of course, this Government has zero interest in trying to actually fix that problem, as has been made crystal clear by their intention to make welfare even more inadequate and harder to access and open up the floodgates of immigration to drive wages into the dirt.

  5. j.oneill

    Bernard, I was largely in accord with your argument until you got to the point where you said “Abbott’s capable performance in response to MH17” at which point you lost me completely. I acknowledge that he mostly said the right things in the context of reassuring the grieving families that the deceased remains would be repatriated.

    Unfortunately, that was accompanied by extraordinarily ill-judged and plainly ignorant remarks attributing the MH17 disaster to Russia in general and Mr Putin in particular. the evidence available to date (incomplete to be sure) points to MH17 having been shot down by a Ukrainian air force SU25 and both German and Canadian reports have made very clear.

    Abbott has been completely silent about, for example, the US inspired coup d’etat that evicted the legitimately elected Ukrainian president and replaced him with Europe’s first post WW2 nazi government. He is similarly silent about the genocidal attacks on civilians in Eastern Ukraine who voted independently in a referendum for independence from Kiev (not to join Russia as has been persistently misreported.)

    On the basis of no evidence whatsoever he joins the American inspired sanctions against Russia (without telling the Australian people) and when the Russians unsurprisingly respond with sanctions against Australia food exports he accuses Russia of being a “bully”.

    His ham fisted blundering has been matched by our pretend Foreign Minister Julie Bishop whose grasp of geopolitics is an embarrassment.

    The Russians provided detailed evidence as to what actually happened on 21 July 2014. Not only has that been shamefully ignored by Crikey and other media outlets, it has not been rebutted. Neither have the Americans provided the information they must have by virtue of their own spy satellite overhead at the relevant time and the monitoring going on from Operation Sea Breeze in the Baltic Sea.

    It is not too difficult to infer a reason why the information from the “black boxes” has not been released after an extraordinarily long time. An honest transcript would raise too many questions contrary to the drumbeat of western media propaganda.

    If Abbott and Bishop truly cared about the families of the victims and the victims themselves they would be relentless in their pursuit of the truth. Instead we face the very real prospect of Australia blundering into yet another US inspired war. Tell me again how that is in our national interest.

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