Opposition Leader Tony Abbott has made the Government’s new mining tax the centerpiece of his election strategy, and avoided the task of revealing substantial savings in his Budget Reply, preferring to spend most of it savaging the Government’s plans for a super-profits-based tax in the mining sector.
Rather than use the reply to outline the Coalition’s fiscal strategy, Abbott instead made it about the Government’s response to the Henry Review, aiming to convince voters that the RSPT will seriously damage the Australian economy.
Abbott has committed only to returning to surplus “at least as quickly as the government proposes”, ending the endless debt’n’deficits rhetoric of returning to surplus more quickly than Labor. His only savings initiatives are the previously announced proposals to abandon the National Broadband Network and sell Medibank Private, the cancellation of the Government’s $650m increase to its renewable energy fund announced in the Budget, a suspension of Public Sector recruitment to save $4b and reduce government advertising by 25%, saving around $28m.
The real work of savings initiatives will be left to Joe Hockey, who will unveil more expenditure cuts in his Budget response at the National Press Club next week.
Instead, Abbott chose to focus on making the Government’s RSPT a key part of the forthcoming election, declaring its defeat to be critical to the future of the economy and saying the only way it could be defeated would be via a Liberal victory, placing the mining tax front and centre in the Coalition’s bid to make Kevin Rudd a one-term Prime Minister.
Abbott also indicated that the Coalition was intent on running the gauntlet of another trade union campaign by going to the election with a plan to re-impose some aspects of Workchoices, including individual contracts, unfair dismissal exemptions and greater flexibility.
Abbott’s tactic of making the RSPT the centerpiece of his election strategy is bold but risky, given evidence that at worst Australians are relatively equally split on the issue. Nevertheless, it will energise his troops, particularly Western Australian MPs, and should generate a flood of donations from cashed-up mining companies that will happily fund his anti-RSPT campaign. Given Budget Replies are partly about geeing up backbenchers and generating political momentum, Abbott’s effort will be a success.
More problematic, though, is that the Government’s effort to neutralize the debt’n’deficits attack has clearly started working, forcing the Coalition away to switch away from its long-term tactic of trying to paint Labor as profligate. Unwilling to embrace the sort of serious cuts that would propel the Budget back to surplus sooner than Labor has forecast, Abbott has decided to make a specific tax his theme.
Moreover, the lack of content in the speech will do nothing to dispel perceptions that Abbott is an economic lightweight, propped up by Joe Hockey and Andrew Robb who are needed to provide the sort of reassurance about economic competence that voters look for at election time.
Even so, Abbott clearly feels he is on a winner with the RSPT. Given how poorly Kevin Rudd has sold the proposal so far, events may yet turn out to justify Abbott’s tactics.