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Apr 19, 2013

Hockey, finally, sees the light on the road to Treasury

The Coalition's acceptance that it won't return immediately to surplus contradicts its silly rhetoric. But it's sensible and realistic, writes Bernard Keane and Glenn Dyer.


So Joe has seen the light on the budget. Amazing how the prospect of actually having to make real decisions rather than sound off from opposition can focus the mind. All sorts of Damascene conversions can happen.

For years the Coalition has been insisting the only reason the budget wasn’t in surplus was Labor’s profligate spending. Only the Coalition could deliver surpluses, and it’d deliver one immediately upon returning to government. Coalition MPs rejected Labor’s argument that revenue was being continually written down through lower corporate tax receipts, reflecting the high dollar and mining companies reinvesting their profits in new capacity. They mocked Treasurer Wayne Swan’s claim that the financial crisis had dramatically undermined revenue. The financial crisis, they insisted, was over years ago.

Now, five months out from an election they look odds on to win, well … not so much. Shadow treasurer Joe Hockey now says “we’re not going to go down the path of austerity simply to bring the budget back to surplus because it would end up being a temporary surplus”. It follows on from comments made by Hockey a few weeks back when he told ABC Brisbane’s Steve Austin he rejected austerity as a policy prescription.

Opposition Leader Tony Abbott, for once on the same songsheet as his shadow treasurer, reinforced this by saying “all bets are off” on a surplus yesterday. He also indicated the Coalition was preparing to dump its 1.5% cut in corporate tax.

This suddenly takes a big chunk out of what we know of the Coalition’s economic plans, which is not very much. Abbott spent much of his National Press Club address in January boasting of the Coalition’s hairy-chestedness on budgets and how important lower taxes were. But the Coalition will now go the election with a rolled-gold commitment to lift business taxes on large companies, in order to fund its rolled-gold paid parental leave scheme for high-income earners, but without a commitment to return to surplus.

Age of entitlement indeed.

“Hockey has shown that, despite the verbiage, on fiscal policy he’s not as dumb as his rhetoric makes him look.”

When Swan, in the face of constant revenue writedowns, abandoned his commitment to surplus in December, Hockey rightly and mercilessly bagged him for the literally hundreds of times Swan and the Prime Minister had insisted, often in the most colourful language, that they’d return to surplus.

But just four months later, Hockey has ended up at the same point as his opponent, although the Coalition surplus rhetoric has been more pedestrian than Labor’s — more about DNA than hell or high water. So much for the boasts about the surpluses delivered by the Howard governments and how that was going to be repeated by an Abbott government. Debt, of course, is now in vogue as well for Joe and Tony. What will opposition finance spokesman Andrew Robb now do for his basic song-and-dance routine? Will Nationals Senate leader Barnaby Joyce rail from the deputy prime ministership against his own government?

Nonetheless, just as it was for Swan, it’s a sensible and realistic submission to fiscal realities. Not just the fiscal reality that revenue is being hammered by a dollar that more and more appears to be a sort of unkillable beast from a horror movie, but the fiscal reality that the last thing Australia needs right now is a surplus fetish. We need sensible moves to make the tax base more sustainable, and less pro-cyclical, in the long-term, rather than short-term slashing that will smash demand, undermine consumer confidence and, if the global environment continues to deteriorate, push us toward recession.

It’s also an acceptance that the budget is a means to an end, not an end in itself: the ALP has, despite the black holes in the budget, given the country solid growth, low unemployment and maintained its AAA credit rating (which is an enormous cross to bear for some parts of the economy because of its impact on the value of the dollar). The Coalition could do exactly the same in its first term.

By explicitly rejecting austerity as a policy, Hockey is demonstrating his awareness that it hasn’t worked in Europe and there’s no need to contemplate it for Australia, especially in the current, precarious global environment. And by rowing back from his surplus commitment, he’s acknowledging the reality of the numbers he’s going to have to work with after September 14.

Hockey and Abbott will continue to bluster about how it’s all Labor’s fault, and the only reason they won’t return to surplus is because of the sheer size of the mess Labor has left them. But Hockey has shown that, despite the verbiage, on fiscal policy he’s not as dumb as his rhetoric makes him look.


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43 thoughts on “Hockey, finally, sees the light on the road to Treasury

  1. mikehilliard

    What, they can’t provide a budget surplus! But..but they promised! I’m devastated, that would mean Tony lied. Please Bernard & Glenn, please tell me it can’t be true.

  2. drovers cat

    Hockey must have been reading today’s Guardian, which reports the IMF has told UK Chancellor Osborne not to comntinue his austerity program as it’s causing the recession.

  3. Achmed

    Abbott and Hockeys constant and regular claims that they would bring the budget into surplus in the first term were misleading rhetoric and no more “sensible” than Swan making the budget surplus claim.

    And look at how the MSM and Abbott/Hockey tore the Labor Govt to bits over it.

    All quiet about the back peddle by Hockey though.

  4. David Hand

    This is encouraging. We are going to get sensible economic leadership when the coalition takes power in September. No election promises are to be immediately broken by a future treasurer who actually understands that people remember what you have said.

    This is in sharp contrast to the incumbant.

  5. zut alors

    “…Hockey has shown that…he’s not as dumb as his rhetoric makes him look.”

    But there’s a sporting chance he could be even dumber.

    The surplus ghost has been stalking Abbott & Hockey for many months, it’s finally caught up and given them a well deserved fright.

  6. Achmed


    Explain this as good economic management-
    Repeal the CT. Keep the $4.4 billion a year in tax cuts. Introduce Direct Action at the cost of $3.2 billion.

    nearly $16 billion over 3 years

    Then add the promised tax cuts to business, another couple of billion

    Yet nothing to replace the “income” provided by the CT yet fund the other promises.

  7. klewso

    Sunset in Bernardi Valley?

  8. Achmed

    Promises to remove the super $500 contribution to lowest paid workers, but no promise to remove 15% tax on super earnings over $100,000. No promise to reinstate the cuts to the baby bonus. Looks like Labor are making the unpopular decisions, then condemed by Abbott who is deceptively not telling the people that he really agrees with the changes but….knows it would damage his chances of election to the top job. He is NOT about Australians – he is about Tony being PM

  9. Achmed

    Abbotts policy is to sell Medibank Private that adds over $300 million a year to Govt coffers. Better to sell and get a one off payment, just Like Howard did with Telstra, airports, gold bullion etc.

  10. zut alors

    mikehilliard, they’ve pulled the the pea and thimble trick – now promising there won’t be a surplus.

  11. David Hand

    The Coalition’s economic policy approach is beginning to emerge and there is no promise of a quick return to surplus. Bernard and Glenn grudgingly acknowledge this with the term “More about DNA than hell or high water”.

    Squeal all you like but Hockey is too smart to be made to look the fool that Swan is. After the glorious free kick over this that Wayne Swan gave Joe Hockey before Christmas, you’d expect no less.

  12. Achmed

    So what we had right until efectively today the Opposition promising a surplus. And only Liberal sycophants can’t see the lie that has been prepetuated by the Libs and supporters

  13. Achmed

    zut alors – nice one

  14. Achmed

    Previously Mr Abbott has said he believed budget surpluses could be delivered in each year of the first term of a coalition government.

    Promise one that will not be delivered. What will be number 2??

  15. David Hand

    That’s a pretty poor pea and thimble trick. If they learned from the masters across the chamber, the trick is to set the schmucks up before the election and expose that you’ve dudded them after the election.

    Oh the naivety of Joe Hockey, making a promise that there will not be a return to surplus before the voters have voted.

    What was he thinking??

  16. Frank Birchall

    Abbott, Hockey, Robb & Joyce are thick as two planks on matters economic. They make Peter Costello look like JM Keynes. Let’s hope the Treasury tells them what to do.

  17. Achmed

    Suppose Abbott/Hockey see it as good politics to break promises they have made, knowing right from the get-go they could never keep.

    They just kept up the fascade for as long as they could and are now breaking them as we closer to the election and greater scrutiny.

    They have achieved their purpose to mis-inform and deceive the public in order to gain popularity. More interested in being PM and in govt than they are in the people

  18. BSA Bob

    They’ll steal a basically sound economy, take credit for it & lay the blame for any niggles on Labor. And they’ll be allowed to get away with it as this article shows.

  19. klewso

    I thought Abbott was talking about delivering surplices, after he’d washed them?

  20. floorer

    This country is riddled with small minds.

  21. Achmed

    I think that light Hockey sees is the train of broken promises that will run him and the Libs over

  22. AR

    Given that we can’t expect anything in the way of rigour from the MSM in giving the tories hard questions, the only hope is that MM & his unlovely cohort of leftovers, reheats & rejects will just keep falling over their own feet, at least when they can get the wounded extremities out of their lying mouths.

  23. colin skene

    Too true BSA Bob. There is no doubt mainstream and, dare I say, alternative media want an Abbott victory as it’s a certainty that he will not deliver on anything that he’s promised, hence an easy target (at least for the alternative media) to lambaste him in columns like this. What a disgrace that the critical mass of aussie voters seem convinced that he will lead a better government than the incumbent. Today’s COAG non-agreement by Premiers on Gonski funding is nothing short of trying to get their mate Tony over the line in September for their own vested interests and to perpetuate the inequities that exist now in education funding. A shocking disgrace to good governance in this country.

  24. mattsui

    Hockey has set the tone on coming clean, vis-a-vis economic policy. Turnbull has made the case for the NBN rollout to continue (Half an arse is better than none).
    Coalition revealing their sensible side….. at last!
    After half a decace of economic nonsense and downright lying, the coalition – yes, with complacent media amplification – have an otherwise quite efficient governmnet mortally wounded.
    Now they can just “shake the etch-a-sketch” and start talking sensibly about the real economic and social challenges?
    We’ll see how long it lasts. Sadly, though, I think they’ve hoodwinked enough of the populace to take the bikkies in September.

  25. CML

    Good one, colin skene. The PM just might get the Labor premiers and chief minister over the line on Gonski by June 30, but I predict the other lot will not sign up for purely political reasons.
    If Abbott does not honour these Labor state agreements, as he has already said, there are a few state elections coming up within twelve months of the Feds, which might be interesting. Also, makes you wonder what Victorians might think about their current government if they miss out on ANY increased funding for schools, through sheer bloody-mindedness!!

  26. klewso

    re 19?
    References – the usual form/proviso for “Honest” John Howard (re his “Non-core Promises”) : “What I said/meant when I said that was ………….. (fill in as applicable)”; and
    “Tergiversate” Tony Abbott – “The Case of the Misspoken Word”, co-starring Kerry O’Brien, 7:30 Report (circa May 17 2010).

  27. Hamis Hill

    It is good to see that people, Joe, Bernard and Glenn, are prepared to acknowledge “Fiscal Realities” pushing us towards recession.
    And “Austerity” is finally recognised, months and years after the “Austerity” policies of Joe’s east coast state colleagues have caused just a little bit of a recession of their own, reducing commonwealth tax receipts and increasing welfare payments and thus dooming both Swan and Hockey to budget deficits. Fiscal reality or Fiscal Sabotage? How ironic for Joe to have to swallow his own poison.
    Big question for commentators, writers and voters; if Fiscal Reality dictates that nothing is going to get better with a change of government, why bother?
    Fiscal Realities, Recession, Austerity.
    You forgot Global Financial Crisis, it has a permanent entry visa all signed up by the Coalition for some time after September.
    Don’t wait too long to start talking about that GFC Fiscal Reality and Howard’s trillion dollar mortgage debt time bomb, just exactly like the ones which blew up those other economies, remember, the Fiscal Reality behind the GFC?
    Unsustainable speculation on housing?
    GFC, the last of the previously “unmentionable” fiscal realities.
    Some progress towards fiscal reality at last.

  28. Achmed

    UK are now being advised to wind back their Austerity Program as it is damaging the economy and precventing growth

  29. David Hand

    Take more notice of Hockey. He’s effectively developing Australia’s economic policy from here on.

    If any of you want to see what a lame duck government looks like, take a look at Gillard’s team. No substantive legislation will be passed for the rest of its term.

  30. floorer

    “He’s effectively developing Australia’s economic policy from here on.” The comedy festival is that way <-

  31. Achmed

    David Hand – we’ve already seen the Liberal state Premiers doing there best to derail COAG. We will see more sabotage by the Liberals and more propaganda printed in the right wing media disguised as news reporting.

  32. Achmed

    Around 5% unemployment, productivity rising every year, around 3% growth every year, low official interest rates, low inflation around 2%, Triple A credit rating achieved (Howard never got this), one of the lowest GDP to debt ratios in the world. The only people who see this as bad are Abbott supporters.

    Abbott plans to repeal the CT legislation. But keep the tax cuts and compensation paid from the “income” of the CT worth $4.5billion. And he plans to introduce his Direct Action carbon plan at a cost of $3.2billion. Over three years this will cost the budget over $16 billion and he hasn’t/can’t explain where the money will come from to pay for this. Only Liberal supporters see this as good.

  33. Interrobanging On

    I don’t believe that the claims of the ALP have been greater that the LNPs. The bragging and jeering are just excused when by the Coalition for some bizarre and dangerous reason.

    This is all broken promises. When the election comes and they weasel out of the budget surplus bragging, there will broken pre-election promises regardless of what is said from now.

    They were quite specific in the ‘surplus every year’ BS. Pyne recently said that they would have run surpluses through the GFC. Hockey has repeatedly spun the ‘surplus every year’ line. Abbott has shot his mouth off as normal. And Hockey and Robb fronted in August (?) last year with specific numbers saying that they would have ‘double the Labor surplus’ if they were in government this very year.

    It is Abbott that runs a campaign on ‘trust’, but then his side has these contradictory messes of specific claims that they never intend to deliver. Why not call him out for the hypocrite that he is?

    And the lauding of Hockey or at least saying he isn’t the buffoon he has appeared to be ignores some specifics, including the horrorshow pre-election costings from the last election. People mention Medibank Private here, but did you know that according to Abbott/Hockey/Robb you can sell it but still continue to get the receipts from it after it is sold?

    Why is that forgotten?: http://www.petermartin.com.au/2010/09/coalition-costings-inexcusable.html

    And the mess continues too whenever they actually try to deal with real numbers: http://www.petermartin.com.au/2011/02/abbott-needs-our-help-we-need-to-help.html

    And finally, do we really believe this latest turn? Abbott is serially mendacious on a daily basis, of course, and remember Hockey repeated lied that the 2010 pre-election costings had been audited, when the firm concerned was specifically asked for a squizz of a ‘non-audit nature’. Trust them at our peril.

    There is a strong ideological push for ‘austerity’ via attacking public health and education spending, environmental protection etc. Expect the slash and burn a la Qld, despite whatever the rhetoric is this week.

  34. Roy Inglis

    Will Tony be the next Malcolm Fraser (or uncharitably, Julia Gillard)? Much sound and fury about balancing the budget by reducing expenditure but each cut replaced by new expenditures albeit re-balancing benefits more towards those of more wealth?

    Will he like Fraser be so reluctant to contain over generous tax benefits he opens up late 70’s to early 80’s unsustainable levels of rorts? Meaning the rorts will be even more unsustainable that they are at present.

    Without being rescued by another resources boom like the Howard government was, Abbott will seriously have to reduce the Howard Handout Machine’s seriously unsustainable legacy, or he will fail as an economic leader and be Fraser MkII.

  35. mikehilliard

    Roy@32 – I’m not sure who would be more insulted in being compared to Abbott, Fraser or Gillard?

  36. Achmed

    For those who are choosing to support Abbott. Read his manifesto “Real Solutions for all Australians”

    A lot of “mother care” and touchy feely statements – plenty of rhetoric. No solutions. No comment on how they will be funded.

    LOts of words but no substance

  37. john willoughby

    the unravelling begins..

  38. klewso

    Achmed – more of “Abbott’s Verbal Gerbils”?

    [(Cute, cuddly, furry critters that wouldn’t hurt a fly)]

  39. Achmed

    Klewso – you have a great turn of phrase

  40. Achmed

    Roy – from the right wind Institute of Public Affairs

    If Tony Abbott wants to leave a lasting impact – and secure his place in history – he needs to take his inspiration from Australia’s most left-wing prime minister.
    They are referring to Gough Whitlam

  41. Achmed

    AR – not even the Liberal supporters who comment on these type of blogs can effectively explain the Liberal policies or defend the economic minnows the Liberals are

  42. Hamis Hill

    The Global Financial Crisis is coming to Australia…

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