Much rides on the next few weeks of parliamentary sittings: the government’s capacity to negotiate effectively with the Senate crossbenches will not merely determine whether key elements of its fiscal and broader economic strategy pass in some form, but perceptions of its competence in delivering outcomes, after a bungled budget process that has brought almost weekly changes in direction and communication.
But while the colour and movement of the Palmer United Party and the government’s stumbles make for entertaining political theatre, the economic and fiscal challenge is outside Parliament.
Australia’s resilient exchange rate, falling commodity prices, a potentially higher-than-expected unemployment rate and an end to the mining investment boom all threaten to undermine the government’s tax revenue, in the same way an overvalued dollar and low inflation undermined its predecessor’s revenue, year after year. Treasurer Joe Hockey proudly boasted that he would be taking a more cautious line on revenue than Labor to make sure that, under him, Treasury’s revenue mistakes would be on the downside, not the upside. But the broader condition of the economy, which has deteriorated again after a strong March quarter, is the real issue that should be the focus of policymakers. The government has a narrative of deregulation, tax abolition and infrastructure investment that it argues will drive jobs growth. It is, however, one that we never hear because of the incessant focus on the budget measures that have yet to pass.
The political theatre will tell us much, but ultimately what’s happening to the jobs of ordinary Australians outside the Canberra bubble is of critical importance.