Eager to press the reset button after the Coalition’s loss in Victoria and a week he himself admitted was “ragged”, Prime Minister Tony Abbott this morning moved to establish the basis for a better final week in Parliament with a lengthy press conference. He formally announced that (as per a weekend report by News Corp) the government had agreed to restore some of the entitlements it was stripping from Australian Defence Force personnel, although its offer of a 1.5% pay increase remains. Abbott also announced the government was accepting proposals from crossbench senators to reduce the indexation of student loans, in the hope of securing passage of its higher education deregulation reforms this week.

However, the government’s GP co-payment proposal remains on the table, with Abbott implying a junior member of the Prime Minister’s Office staff had been responsible for last week’s confusion about whether it had been abandoned, and he again rejected calls from inside and outside the Coalition to dump or modify his “signature” paid parental leave policy, noting he was already under fire over not keeping promises.

At the media conference — the longest he has given this year and one of the longest of his time as leader — Abbott also finally acknowledged that his cuts to the ABC and SBS, which last week he insisted had not been a broken promise, were “at odds” with his statements before the election that the national broadcasters would not be cut. But Abbott called on Victorian Premier-elect Daniel Andrews to abandon his own high-profile pre-election promise to cancel the Melbourne East West Link, adding yet another contortion to the Prime Minister’s increasingly tangled stance on keeping election commitments.

Whether the concessions are enough to get Senator Jacqui Lambie to end her unilateral complete opposition to government bills — that appears unlikely, judging by her response this morning — and get enough support from other crossbenchers to secure a legislative win by the week’s end remains to be seen. However, Abbott is sticking with the deeply unpopular GP co-payment as an important budget measure, despite the fact that notionally all of the savings from the co-payment in fact won’t go to the budget bottom line but into a medical research fund — and despite the fact that his own office had told journalists last week it was a “barnacle” that was to be removed. That’s now being blamed on a rogue junior staffer; the Prime Minister “stands by all the senior members of my office”, he said this morning, suggesting a non-senior member was in the gun, although Abbott said last week’s problems were all about “atmospherics”, not substance.

Unaddressed but of more significance is the now almost-open backgrounding against a badly weakened Treasurer. One Herald report today revealed that new Prime Minister and Cabinet head Michael Thawley would be charged with fixing the government’s economic strategy — a remarkable statement that directly undermines Joe Hockey and potentially sets Thawley on a collision course both with the Treasurer and with Treasury itself — although the government has yet to formally confirm who will replace Martin Parkinson as Treasury secretary.

Next week looms as the start of a major challenge for Hockey: David Murray, after a week’s delay, is scheduled to give a major address on his financial services inquiry, which is now with Hockey; Phil Coorey in The Australian Financial Review reported today the government’s long-awaited tax white paper — which threatens to cause a number of political problems for the government if poorly handled — will emerge next week, and Hockey must also shortly release what is likely to be a significant deterioration in the budget deficit in the Mid-Year Economic and Fiscal Outlook. The government’s concessions today on higher education will add yet more red ink — around $3 billion — to the deficit, along with the government’s failure to get other key measures through the Senate and a marked deterioration in commodity prices.

The political difficulties that face Hockey spring of course from that disastrous budget in May. The problem about that document wasn’t merely the perceived unfairness of its measures, or the government’s cack-handed attempts to alternately insist it was fair and explain its toughness was justified by the budget situation. It was that Hockey managed to produce a sadistic budget that didn’t actually significantly advance the timetable for a return to surplus. The government was thereby left with the opprobrium of pursuing measures universally recognised as punitive, without the political benefit of being able to point to a fiscal light at the end of the tunnel. Worse, it’s clear now that the tunnel is getting longer. The ensuing six months have wrecked Hockey’s authority — this government began life with Hockey as its chief economic authority and clear heir apparent, but now he is neither — helped kill off a state Coalition government and given the government a seemingly permanent gap in the polls between it and a revitalised Labor Party.

It will take more than a lengthy media conference to fix that.

Peter Fray

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