It was a funny old budget week. The Morrison government staged a revolution in Coalition terms, dropping billions in desperately important but completely unfunded spending on social services, abruptly changing all the rules of engagement.
In dollar terms, the size of the investments were epic, yet the whole pitch felt oddly undercooked.
The government didn’t back up Tuesday’s shape shift by storming into parliament on the Wednesday with a new Aged Care Act for example, which would have put Labor absolutely on the spot.
Normally the prime minister and the treasurer would also venture out with a media posse and the cameras on Wednesday or Thursday to ensure beneficiaries of various budget measures were smiling in the television packages of budget week. But that didn’t happen either.
Perhaps this reflects exhaustion from the ceaseless grind of the last 12 months, politicians being humans. (Controversial, I know.) Perhaps heading to a local aged care facility felt fraught in Covid times, when the vaccination program is running behind schedule.
But budget week is normally the most hectic week of the political year, and after Tuesday, the tempo lapsed into listlessness. From my vantage point, this was all pretty interesting, like a punch had been thrown, and then pulled.
But ultimately it doesn’t matter how it all felt. What matters is what it was, and what it was, was the beginning of the election campaign. Both sides put themselves on the warm up track, and started jogging.
I can’t tell you the election date, obviously. I can only tell you that it currently feels more like October or November than next May.
Given that’s the current reality, let’s map the terrain.
The Australian National University has been surveying a large group of Australians throughout the pandemic. The latest instalment in their work suggests the Morrison government took a statistically significant hit in the first quarter of this year. The ANU work also suggests that Australian voters aren’t as satisfied with the direction of the country as they were late last year.
But if you look at the trend, confidence in government has bounced around. Last January, when the country was battling the worst bushfires in a century, only 27.3% of the ANU sample expressed confidence in the government. By last May, in the opening six months of Covid-19, that was up to 60.6%.
By this January, it was down to 54.3%. By April 2021, it was 45.4% – certainly a fair slide off the peak, but we aren’t in bushfires territory.
Now let’s consider satisfaction with the direction of the country.
Between January and April, satisfaction went from 78.9% to 75.7%, a drop, self-evidently, but any incumbent prime minister would be happy to see that number with an election in sight. Satisfaction with the direction of the country is higher now than it was at the start of the pandemic.
So here comes a statement of the obvious. If you are Labor, making the case for change is extremely hard in this environment, when the bulk of the country thinks the current direction is broadly ok. You are pushing against gravity.
But the government, through its own missteps, has come off the peak of satisfaction that it achieved last year, and more bark was lost during the Brittany Higgins furore. The contest is currently competitive if the two party preferred measures in our Guardian Essential poll and Newspoll remain a reliable guide.
The government was also nervous enough to narrow the empathy gap with its opponents when it comes to funding important social services. That’s what happened this week. That was the Coalition’s first significant strike in the election campaign – neutralising differences that are potentially potent as Labor starts to build its change case. The spend was backed in with content in the message frames the government likes best – economic recovery, sovereignty and security.
Let’s move now from framing to substance. The government created the impression through some of the credulous pre-publicity it generated prior to the budget that it would deliver on the totality of the aged care royal commission recommendations.
But the hype didn’t align with the substance. There are some significant divergences and fudges on important things. I catalogued some of these earlier in the week.
Some in Labor wonder whether the government’s hedging on key things was deliberate and tactical: whether they are, in essence, picking a fight, daring Labor to promise to deepen the current expenditure commitments. If Labor outbids the government, then the Coalition reheats the standard profligacy attack in the lead up to the election.
Related to all this, the government is absolutely itching for a fight on the stage three tax cuts, a package that benefits high income earners predominantly. The government was so keen to stage this battle it elevated that desire over backing in the specifics of this week’s budget.
Labor hasn’t made a final decision yet on what to say about stage three ahead of the election. But I think it’s reasonably likely they will adjust the government’s proposal, maintaining a tax cut for workers earning below $180,000 and maintain a higher tax rate for people earning above that.
If that’s where Labor ultimately lands, that decision could create some fiscal head room for an additional spend on aged care, or for another priority.
But the government will use any spending as evidence that Labor will always tax people more to spend more.
It seems extraordinary that the Coalition could be contemplating blasting Labor for spending too much when its own spending as a share of GDP has hit at record levels, and after it baked in significant structural spending with no accompanying offsets into the budget on Tuesday night.
Bear in mind the government is accompanying this spending (important as it is) with the stage three tax cuts package. Stage three was very obviously fiscally unsustainable before the spend outlined on Tuesday night, and it certainly is now.
But despite the inconveniences of its own record and choices, the government is looking for a viable way to dust off the old script about Labor spending all the money and taxing all the things. Sadly we can also count on loyal amplification about Labor’s tax and spend insanity from the media voices who live to amplify, no matter how preposterous the pitch.
But if we tether ourselves briefly in a world where facts inform coverage, and if Labor ultimately narrows the difference between itself and the government on the deeply silly stage three Kabuki play to a tax on high income earners, how does the government of the deficit levy then strenuously object to that landing point? In the world of facts?
Sticking with the deficit levy comparison, what if Labor says its extra tax on higher income earners will be temporary, just as the deficit levy introduced by Tony Abbott and Joe Hockey was? What does the government say then? “It’s bad when Labor proposes this, but ok when we do it?” Insert head scratching emoji.
So there are some significant chess moves ahead. But ultimately, if we pull out of the various acts of micro-aggression, and hoist ourselves above the fray, the Coalition won’t want to fight a social policy election. That is traditional Labor turf. Morrison will ultimately want the election to be about what the Coalition always wants elections to be about: the economy and security.
As the government jogs around the warm up track, it is assembling its messaging. I’m sure you are catching it. The world is a scary place. Many uncertainties linger domestically. The pandemic isn’t over, so you need us, the tested incumbents, at the helm, protecting Australia’s safety, prosperity and sovereignty.
Have you noticed the pep in Peter Dutton’s step? Australia’s new defence minister (who was almost invisible during the election contest in 2019 outside of Queensland) has a new lease on life, and is currently trialling a transfer of his sonic boom, made-for-Ray Hadley home affairs rhetoric, to the uncertain geo-strategic environment.
Have you heard things might go bad with China? Have you heard that? I’m sure I heard that somewhere.
I suspect we’ll be hearing more of it.
Poor old Marise Payne must be thrilled.