Wayne Swan may lack Peter Costello’s wit but he is nevertheless developing into an effective politician. With last night’s budget, he has positioned himself nicely between Labor’s impatient spending ministers and those commentators demanding higher spending cuts.
The editorialists and economists looking for a tougher budget are romanticising the first Howard budget in 1996. While the spending cuts back then were proportionately larger than those on offer last night, that budget set the stage for a difficult first two terms for Howard. We tend to remember the post-September 11 Howard, with his high approval ratings, and not the government that stumbled from crisis to crisis in its first two terms. The fiscal profligacy of the late Howard years (which even Costello has disowned) was directly related to the politics of that first budget.
In the short term, the community responded well to a tight 1996 budget, buying the Howard/Costello line that “Beazley’s black hole” needed to be filled. Once the cuts were implemented, though, some had to be reversed when their effects became clear to the public. Bonds for nursing home residents to help fund capital upgrades, for example, were never going to be popular.
In the longer term, Howard had to live with his notion of “core commitments” at subsequent elections. The spending cuts across all departments aside from Defence broke a host of election promises. Any tough measure from that point (and there weren’t many) had to be accompanied with enough bribes to overcome the electorate’s suspicion of the government.
According to a recent Roy Morgan Research survey, the Rudd Government’s determination to make modest election promises and keep them all has increased community trust towards politicians. This reservoir of political capital will come in handy if the inflation problem makes another tight budget necessary.
Howard never enjoyed the trust of the electorate. His “who do you trust?” line in 2004 stretched the meaning of the word to breaking point. What he was really saying was, “I’m a craven politician. I’ll do whatever you want.” Even that turned out to be, to use a Ruddism, a bridge too far.
Whatever their shortcomings as fiscal disciplinarians, though, Howard and Costello provided throughout 1995 the most effective opposition seen in the new Parliament House. Nelson and Turnbull can only reflect on their bad luck in being in the right place at the wrong time.
The largest single measure in the budget – cuts in income tax – was authored by John Howard. Those cuts are due to keep coming until after the next election. Howard’s ghost will be with us for a while yet.