A scandalous surplus? A surplus of scandal? A battlers’ budget? You can’t move in Parliament House this morning without being hit by a shitty alliterative narrative. The opposition, which you may recall couldn’t balance its books before the last election and is still looking for tens of billions of dollars in savings, has accused the government of “cooking the books” — indeed, it’s a “a cooked-books surplus based on fiddled figures”, according to Tony Abbott, to which he added that the Prime Minister was “living on borrowed time as well as borrowed money”. Nice line.

Wayne Swan, inevitably to the contrary, insists the surplus is quite real but that the budget reflects Labor values — indeed, as Swan said this morning, this will be a “battlers’ budget”. That’s a phrase, coincidentally, was last used by Peter Costello about the 2007 budget, and clearly worked a treat. Whether any battlers are actually listening to the budget is an interesting question, likely to be answered in the negative.

That’s before you get to Craig Thomson, in whom the Prime Minister had full faith up until last Sunday morning when he was conveniently escorted to the crossbenches. There’s talk from the Coalition of disowning his vote, because they disown the votes of Coalition MPs charged with offences (yes, sarcasm) and of course because they’d reject Thomson’s vote if he happened to support the opposition. While contemplating that ethical flexibility, don’t trip over the ever-expanding cast of Coalition frontbenchers who are only now remembering they dealt with James Ashby, a weird sort of cover-up of no apparent crime beyond aggressively pursuing a political enemy, which is what these people get paid for.

Then there’s the media, tempted or even expected to discuss the budget in detail before it’s announced, an idea once innately absurd but now standard given this government’s penchant for leaking news ahead of announcements — a penchant now extended to the budget surplus figure itself.

Just trying to keep track of the government’s budget rhetoric over time is something of an exercise in futility. In 2008 and 2009, it was all about fiscal policy and monetary policy working together, indeed “moving very strongly in the same direction” as Swan put in Parliament in 2009. Now it’s about fiscal policy counterbalancing monetary policy, the government pulling back on spending so that the Reserve Bank can reduce interest rates. What’s changed? Well, the government’s commitment to a surplus next year, which locked it out of any sort of fiscal flexibility.

The rhetorical confusion extends to the budget itself, which will apparently be simultaneously austere and yet generous to battlers, although not single-mother battlers, or foreign battlers. Luckily, however, it will be generous to middle-income battlers, particularly via the the revamped education rebate, to which all Family Tax Benefit A recipients will be entitled, a bad policy made worse in 2010 and made even worse now, courtesy of removing even the effort of having to bother to claim the rebate — Australians now expect that they won’t even have to make any effort to get their middle-class welfare.

In truth, everyone’s right, but some are right in more important ways than others. Joe Hockey is right — there’ll be more fiscal sleight of hand in the budget, with spending again brought forward or pushed back to achieve a surplus, and various tax measures disguised as “savings”. But that doesn’t alter the fact that the government is engaged in a large-scale fiscal contraction, and doing so at an economically uncertain time — all the more so given the weekend results from Europe. And if the situation in Europe deteriorates, the budget will turn out to be anything but a battlers’, given its contractionary nature and the limited stimulus capacity of monetary policy (because out of the fraction of people with mortgages, only a small fraction of those reduce their mortgage repayments).

Nonetheless, the government has figured if it is going to turn around its fortunes, it will have to start by throwing money at voters — something the Howard government managed with eventual success in 2001.

Of course, if there’s anyone within Labor’s ranks with a fraction of John Howard’s political skills, they’re yet to reveal themselves.

In any event, the whole budget will be overshadowed by Craig Thomson and Peter Slipper. The Labor hope that an effective selling of the budget would mark a turnaround in the government’s fortunes was always forlorn: the budget media cycle is shrinking rapidly and now barely lasts until Thursday evening when Tony Abbott will give his response, compared to the old days of two weeks of budget salesmanship. But the Fair Work Australia report, its savage findings about Craig Thomson, and the continuing ruckus around Peter Slipper will see the budget barely disrupt a deeply damaging period for Labor.

Peter Fray

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