The no-frills Budget delivered little in the way of excitement for journalists and commentators confined in the Budget lock-up yesterday. By 6pm there were plenty of hacks sitting around staring off into space, conscious they had a further 90 minutes to kill and no escape.

Perhaps the deliberate lack of excitement was the reason for a quite bizarre moment in Wayne Swan’s lock-up press conference when he was assailed by several journalists for producing a cynical pre-election Budget.

The blatant electioneering was obviously in the fact that the Budget had little in the way of handouts and no big new tax or spending announcements, but was based firmly on holding spending down and returning to surplus much more quickly than previous forecast.

I mean, I’ve seen some cynical political stunts in my time, but this fiscal conservatism trick took the cake.

Something changed in 2007. It started with the Howard government’s Budget, which tried to bribe voters back to the coalition. For the briefest moment the old order looked like reasserting itself when Howard and Costello tried to salvage their cause with a pre-emptive tax cut strike at the start of the campaign, which forced Labor to match its opponents. But when Kevin Rudd rose and declared that the reckless spending must stop, he crystallised a change in the Australian political climate. We’ve since learned that Rudd’s declaration was powerful enough to derail what was left of Howard’s election strategy.

And so after years of pre-election budgets being a frenzy of handouts and tax cuts, we’re now a country that regards prudent fiscal management rather than big spending as the most appropriate advertisement for a party’s electoral credentials. And that’s no bad thing at all.

The other bizarre moment was Joe Hockey going onto The 7.30 Report apparently carrying his talking points from 2009. He proceeded to declare Treasury’s forecasts were “based on false assumptions” and too optimistic.

For people with memories longer than five minutes, this was a carbon copy of his initial attack on the 2009 Budget, which he criticised for suggesting the economy would return to trend growth in the out-years.

The “Treasury is too optimistic” line lasted a few weeks before stronger growth and the coalition’s strategy of demonising the stimulus package required a reversal. The opposition began complaining that the Budget was too pessimistic and the government’s economic stimulus should be withdrawn.

While O’Brien let him get away with it, Laurie Oakes didn’t. It wasn’t quite the famous Daryl Melham interview, but it didn’t go well for Hockey:


Hockey: Last year they got it desperately wrong. They were forecasting that there was going to be a recession. Now they’re forecasting that there is going be a massive increase …

Oakes: So you think last year they were too pessimistic?

Hockey: Obviously with the benefit of hindsight, but also …

Oakes: But you said at the time they were too optimistic. You rubbished them and it turns out they were far too conservative.

Hockey: In the out years, obviously we were right. Because in the out years they were projecting above-trend growth and what they’re now projecting is just trend growth. But you know what there are other figures that are really disappointing, Laurie. The government says full employment is 4.75% unemployment. We left them with 4% unemployment. Why are they giving up?

Oakes: You said last year that there was no way the economy would recover as fast as the Treasury said. You said there was no way they could halve the deficit in six years, which is what Mr Swan was saying last year. Now they’re going to knock it off totally in four years?

Hockey: No they’re not.

Oakes: That’s what Treasury says.

Hockey: No, they’re not going to do that.

Oakes: Aren’t you looking a bit silly given what you said last year and now you’re saying the opposite?

Hockey: Not at all Laurie.

In fact, there was a much simpler line of attack on the Budget, one that Andrew Robb seized on and correctly exploited this morning — the return to surplus was dependent not on the hard fiscal yakka of cutting back spending, but of relying on the surge in revenue occasioned by high economic growth.

The opposition’s problem on that issue, however, is that it immediately raises the question of what savings it is planning to achieve, and how, given it doesn’t believe the government’s path back to surplus is credible.

Hockey was questioned on savings after last year’s Budget and assured us we would find out in good time what the opposition had planned for reductions in expenditure. We’re still waiting. Perhaps Tony Abbott will reveal all in tomorrow night’s Budget reply. Don’t count on it.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey