The floodgates opened on the weekend. As if mortified by press complaints that there had been minimal leaking of Budget news, the Government let pretty much everyone have a scoop. And Wayne Swan was everywhere, too, complete with family photos and casual attire as he put the inevitable finishing touches on the Budget.

But the mixed messages remain. The rich will cop it, but the Medicare surcharge goes. The global financial crunch will hit revenues hard, but an assault on tax expenditures will yield billions. The taxation and transfer system will be fundamentally reviewed, but the GST and super are sacrosanct.

If the Government’s expectations-management goal was to keep us guessing, it’s worked brilliantly.

And has there ever been a Budget more laden with expectations? Tomorrow has been built up into an unprecedented political and economic turning point on which hang the fortunes of the nation and the five and a half month old Rudd Government. Politics, not to mention national economies, don’t really work on such simple terms, but it’s convenient for the media – not excluding us here at Crikey – to simplify the narrative and suggest that they do.

True, the Budget will go a long way toward answering the question of whether this Government is one of substance or of State Labor-style spin, stunts and policy cowardice. It’s a policy test, of the hardest kind, and there’s no ducking it.

And it’s critical to Wayne Swan’s future as Treasurer. The mutterings about Swan started pretty much the first day in Parliament of the new Government. They’ve receded as he’s fronted the media during Budget preparations, but the question still remains of whether Julia Gillard or Lindsay Tanner would make for a more aggressive Treasurer, of the kind we’ve been used to.

But the question is as much one for Kevin Rudd as it is for Wayne Swan.

Successful Governments need strong Treasurers, who will form a partnership with their Prime Ministers but have their own policy agenda. Poor Governments, conversely, have relatively weak Treasurers. The Hawke-Keating model was immensely successful for the ALP in the 1980s. But Keating as Prime Minister struggled once John Dawkins left. John Howard, whose domination by Fraser led to policy somnambulism in the early 1980s, benefitted from Peter Costello’s aggression in his first term. But as Costello proved incapable of restraining Howard’s political instincts and fell to sookery, that Government’s capacity for economic reform and restraint vanished.

As that simplistic summary indicates, the strong-Treasurer model tends to instability. In fact, it must necessarily do so. Two powerful figures within a Government will lead to tension including, probably, leadership tension. But it can be managed for a period, and there are enormous benefits of dynamism and a willingness to take hard decisions if the tension can be redirected into creativity and good policy.

But regardless of whether Wayne Swan has a leadership baton tucked into his knapsack, the evidence so far suggests that the Prime Minister will not tolerate a Rudd-Swan Government – or, should it come to it, a Rudd-Gillard or Rudd-Tanner Government. Only Keating after 1993 was such a dominant and controlling Prime Minister as Rudd is, and even he only maintained that for eighteen months before checking out and going part-time. The Prime Minister’s Office exerts a strict control over the Government’s policies and messages, and the maintenance of such dominance, while politically beneficial in minimising capacity for mistakes, will only be harmful for good policy in the long run.

The Hawke Government was at its strongest in its first two terms when strong, talented personalities like Button, Walsh, Dawkins, Young and Evans were allowed to operate with freedom under a Hawke style more presidential than managerial. It’s impossible at this point to see Kevin Rudd allowing similar freedom to his Ministers. Moreover, some of the most talented MPs – Combet, Shorten, Gray, McKew, McMullan – will languish in the obscurity of Parliamentary Secretaryships for some time to come.

Rudd and his team at some point will need to start to let go. The Budget – both its announcement tomorrow night, and the sales job for the next week – will be an important indicator of whether he is ready to do that yet and let Wayne Swan play the sort of role Australia’s long-term interests require him to.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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