A bald razor will shred Abbott’s Government


From the AFR:

Prime Minister Tony Abbott’s signature paid parental leave policy and Labor’s National Disability Insurance Scheme could be scaled back, potentially saving billions but leaving the ­government open to political attack.

The Coalition and the Greens have held discussions about the structure of the parental leave scheme, which is forecast to cost $5.5 billion a year. The Greens want lower payments than the generous rates preferred by Mr Abbott.

The government is also considering modifying the $22 billion disability scheme, following trials in NSW, Victoria, South Australia and Tasmania that have cost 30 per cent more than forecast. The scheme provides personalised support for the disabled, such as physiotherapy.

“It’s a pilot program and at the moment, contrary to what the previous government claimed, the pilot program has blown out massively,” Treasurer Joe Hockey said. “We want to deliver the scheme in full, but we want to do it in an affordable manner, otherwise it won’t be sustainable.”

The likely welfare cuts would be part of deep savings across the entire budget, which is forecast to be in deficit this financial year by $47.6 billion.

Cuts to the parental leave scheme will be politically welcome. But cuts to the NDIS will not.

The Government is making a big blunder here. It is couching the cuts within the old framework of needing to return the Budget to surplus. That’s fine but it is not a strong enough narrative to rally the polity behind painful cuts to vulnerable parts of the community, nor to contain the blow back that will come from every affected interest group.

The Government has plenty of tactical slogans: “budget repair”, “open for business”, “no handouts”, but it has no strategic economic narrative.

Even if it does the right thing, therefore, it will pay a big price  in the polls because there is no sense of shared responsibility and sacrifice. On the contrary, the Government is rapidly lengthening the list of disenfranchised and pissed off people that will get full voice in the media and there is no compass to point to and offer understanding that this is a shared national transition. This failure will also, in the end, kill the policy process.

My guess is that the Libs think their being politically clever by couching their various policy shifts as slogans that implicitly blame Labor. It is ironic that by being so narrowly political that they’re going to lose the politics of their agenda.

The framework the Government should be using is the nation’s failing competitiveness which must be repaired if we are to sustain our standard of living. It is essential that considerations of equity be a part of that shared effort. The PM is already seen as a bovver boy and is hemorrhaging women voters as his recent performance has reinforced that perception.

The Prime Minister or the Treasurer needs to launch a sustained public relations blitz about why these various measures are needed for the country, not for the Budget and not for business.

Houses and Holes


  1. It’s not fine to return the budget to surplus.

    Sectoral analysis shows that, in the absence of offsetting swings in the external sector, a government surplus is highly likely to lead to a recession in the private sector as the surplus of one sector is the deficit of the other.

    I strongly recommend some reading of Bill Mitchell’s Billy blog article:
    The deficit is undermining our welfare – because it is too low!

    I spoke about a year ago about how the major fiscal consolidation by the Labor governemtn would slow growth and, if they got to a surplus, would push the economy into recession.

    It’s the same if the Liberals produce a surplus. The trouble is they have misled the electorate both on whether there was a budget crisis, the effects of returning to a surplus and their oft repeated promise for a surplus in the first term.

    Ask yourself, if the government sector produces a surplus, where does the money come from and if that sector has less money will they be in recession?

    And then you have to look at from whom they will take the money and what the distributive effects will be. Who in particular will feel the pinch under this government?

    • It’s kind of frustrating to hear the Liberal party claiming some sort of economic virtue out of their previous surplusses, which merely arose due the size of the housing bubble they helped create.

      I’m not worried about the deficit, or it’s size, it’s where it is being directed that worries me. If it all goes on propping up rent seekers and vested interests, then it will do nothing to improve employment, equity and quality of life in this country.

      • Easy fix, become a rent seeker or vested interest – your concerns about “where it’s being directed” will immediately go away.

  2. Good article.

    Abbott does not strike me as a man who can set out a compelling vision. He’s trying to hide this weakness by not doing so, and instead focusing on narrow political objectives and spin. He’s borrowing heavily from the US Republican playbook – come up with buzzphrases that resonate with people and conflate and confuse the real issues, so as to avoid the need to address them (Dems guilty here too, just a bit less so, and led by someone with actual vision).

    As an immigrant, I’ll be quite encouraged if this is exposed for the nonsense it is. It will mean Australia has not yet fully descended into pop-politics. Of course the vision is sorely needed at this point in time, so its unfortunate timing for Abbott and the country.

  3. I agree they need a public relations blitz particularly re NDIS…but I sense a change…even from some sections of the media where only a short while ago to question NDIS was to be portrayed as heartless cruelty. Now the dawning realisation that (a) the scheme has potential to economically cripple the nation, and (b) those with disabilities are currently already provided for – NDIS being a change in the provision of services at enormous increasing cost for future generations.

    Even with Gonski there is growing debate on its merits.

    Abbott and need to get out there and get the wheels of communication spinning!

      • Hah. Yes that’s right, the LNP should look to their success during the election.

        They managed to convince all those bogan sheeples to “kick this mob out” and vote against their self interests with some very effective spin.

        Surely there are lessons to draw from that.

        How about dressing up all those pesky unemployed and low income working class in Nazi uniforms? Then it becomes obvious they don’t need welfare.

    • There is only one person I know who I would smile if I found out they had Parkinson.

      Let’s get rid of NG and support those individuals with that money, take from Rent Seekers and give to the impoverished.

  4. “The Government has plenty of tactical slogans: “budget repair”, “open for business”, “no handouts”, but it has no strategic economic narrative.”

    Yes they do. Their strategic economic narrative is all about keeping the housing bubble inflated. Everything else is secondary.

  5. Although what if they kept the same ALP funding envelope, but cut payouts/tightened conditions?

    It really wouldn’t surprise me to find out that the ALP did not fund the NDIS to the level to meet its commitments, and so I would have a lot of sympathy for the Libs, if they did cut payouts/tighten conditions so as to retain the original funding envelope.

    Of course, if they cut the funding envelope, and cut payouts/tighten conditions, that seems cad-ish.