The Abbott Government’s First 200 Days

After 200 days of Abbott Government, the polls were mixed, the new Senate oddly divided and the way ahead full of humps and challenges for Australia’s leaders. Labor faced a difficult period of renewal as the Greens appeared to have captured left of centre votes. Treasurer Joe Hockey had a herculean task in preparing a Budget that could begin decades of prudent financial management for a nation with great expectations. Cuts to government spending were being foreshadowed and more self-reliance was on the cards. To assess the Abbott’s Government’s first 200 days, Jennifer Hewett, National Affairs Columnist with The Australian Financial Review, Patricia Karvelas, Victorian Editor and Bureau Chief for The Australian and Gerard Henderson, columnist with The Australian spoke for The Sydney Institute on Wednesday 23 April 2014.

THE ABBOTT GOVERNMENT’S FIRST 200 DAYS

JENNIFER HEWETT

Clearly winning a big victory at a general election as Tony Abbott did in September 2013 doesn’t mean the political problems are just as suddenly resolved and policies successfully implemented. Despite the rejection of Labor under either Kevin Rudd or Julia Gillard, the community’s hesitation about Tony Abbott is also very real – and the first few months didn’t do much to make people feel more reassured.

Pre-election, I always thoughts the doubts about Tony Abbott were largely misplaced because they were so extreme. That they depicted the caricature rather than the man, even less the politician. For example, all the nonsensical suggestions that he would somehow make abortions illegal or try to convert the public to Catholicism or favour women staying at home rather than going to work. I suspected this meant all he had to do was just show up and sound reasonable and he would get an immediate boost in the polls.

The Liberals were also banking on the fact there would be a big boost to confidence – including the willingness by business to invest and consumers to spend – once Labor was out of the picture.

Clearly it hasn’t turned out quite like that, partly because the government’s message – beyond the now old favourites of getting rid of the carbon tax and the mining tax and stopping the boats – is still evolving.

That’s not just because of the number of commissions and reviews and reports under way. Abbott himself was still finding – is still finding – his sense of direction. And of course a lot of people still have trouble warming to him – particularly when he makes mistakes that do play to the caricature. I put the return of knighthoods in that category and even the clumsy way the attempt to abolish 18c of the racial discrimination act has played out – even though I agree with the principle.

But I still believe that Labor, 200 days on from the election has – once again – continued to underestimate and misinterpret Abbott and his willingness to take on the hard choices facing the country – and to be able to take enough of the country with him on that agenda. That is even though those choices were deliberately not spelt out before the election by both parties.

Abbott jokes that he’s more impressed than ever that Howard managed to stay so relatively calm and sane during his 11 years in office. I presume Abbott still thinks of himself in that category but being in government is like facing into the whirlwind every day. More so now than ever.

Some part of that is due to the relentless media cycle. Abbott did indeed try to move away from government by press release for which he regularly denounced Labor. But the news cycle is ever more voracious and even less controllable or predictable, thanks in part to social media and the power of 24 news like Sky TV. So feeding the beast remains necessary. But Abbott has been less prone to obvious gimmicks than his Labor predecessors and, in the end, gimmicks only work if there is a consistency of policy and principle behind them.

Abbott told the Coalition party room that it was even more important to stick to principle as a sort of lodestar in tough times. And I do think Abbott has been sounding more confident in his direction, certainly in explaining what government shouldn’t and won’t do. I think the anti corporate welfare message and the talk about the limits to government assistance and intervention is a very important part of that. He suggests that B A Santamaria would be not just turning in his grave but imploding given that his behaviour and attitudes in many areas appear so different from his early mentor– and from the expectations of many of his colleagues that he just wasn’t interested in economics and would have to rule in his inner Santamaria.

Abbott and Hockey have largely been in sync on this rather than Hockey having to keep bringing Abbott back into line.

That’s not to say the direction is always clear – as the mixed messages over the budget have shown, in areas like pensions and where the cut off for eligibility should be. And Abbott has certainly made Hockey’s life harder with his pre-election commitments and not touching large areas of expenditure in the first term.

But Abbott still firmly believes that he can’t further undermine the battered community trust in politicians by not sticking to what he promised – pre election. Whether it’s a paid parental leave scheme even most of his colleagues don’t want or no cuts to pensions or education or health or a very limited appetite for changes to industrial relations.

Abbott emphasised again last week that not breaking promises was the key lesson of the Gillard Government in particular. And I think he is right. As an aside, that was another reason that Christopher Pyne’s suddenly changing the rules on school funding was so damaging politically. Abbott was behaving just has he had promised not to. So what else would he do in other areas? It’s why Abbott had to suddenly change course again.

But that makes squaring that circle of still returning the budget to surplus over time an even bigger test of the first budget – particularly when we won’t have the same effortless boost to national income and terms of trade that accompanied the last several years of the resources boom.

It is also why Hockey keeps saying he won’t do anything to damage growth in the short term but the focus is on the medium term – beyond the next election – and that “fiscal consolidation” – don’t you love that term – can enhance growth if money is spent more efficiently.  And why the Treasurer is so keen to encourage private investment or tax breaks for states recycling infrastructure assets and investing more in new infrastructure.

How effective all this will prove is still ahead of us. And of course, we are still in the phoney war period ahead of that budget. Hockey and Abbott have only just been able to agree on when to release the findings of the commission of audit as a way of preparing public opinion. That demonstrates how hard it has been – and will be – to persuade the community about the gap between what taxpayers can afford or are willing to pay for longer term in terms of the constantly expanding spending commitments and the lack of tax reform so far.

There is a tendency in Australia not just to blame governments but also to believe they can miraculously fix everything too – as if the economy could be neatly controlled by adept use of Paul Keating’s levers. Certainly Abbott’s commitment to be a no surprises government was always going to be highly selective given the inevitability of nasty surprises and shocks visited on any economy and any government. That’s already challenging his initial view that real reform can wait until a second term and after Labor’s messes have been cleaned up.

But even without unexpected problems, this second term approach requires an optimistic view of how government works in terms of both timing and outcome given the economic challenges Australia faces – and the fast pace of change in the rest of the world.

In that context, however, I think Abbott’s recent trip to North Asia and his success in negotiating a free trade agreement with Japan and South Korea and the very real prospect of one with China by year’s end was a great success in terms of projecting the potential of the future rather than feeling squeezed by the past. As an aside, business leaders who accompanied Abbott were particularly impressed with his style and his inclusiveness. That is another important marker for the government.

And it is a useful counter to the campaign run by Labor – and followed by many in the media – that Abbott just wouldn’t be sophisticated enough to cope with international relationships. Certainly, Abbott’s initial reaction to Indonesian outrage at the phone tapping was a little clumsy but was quickly righted – and despite the inevitable pitfalls in the relationship, it is going relatively well – especially given the sensitivity of the issue of turning back boats to Indonesian waters.

Both Julie Bishop and Andrew Robb are working effectively, as well, despite the early criticisms of Bishop in particular. Nor do I think that Australia has to “choose” – as some have suggested – between China and the US. But there’s no doubt that the allowing for nuances in China relationship is critical, especially given the tensions with our other big trading partners like Japan. Abbott’s trip was a good start.

Global economic shocks and power shifts have also only underscored the need for major structural changes to the domestic economy and to the steady and long term shift of jobs away from manufacturing and fact that this will continue to accelerate.

So far, Abbott is yet to make the necessity of that shift and the possibilities of future growth consistently and persuasively enough. It’s part of still growing into the job.

It was also pretty quickly apparent that much of the government’s limited pre-election agenda would not go according to plan thanks to the idiosyncracies of the Senate voting system and now, unfortunately, the appalling Clive Palmer from 1 July and his constant gamesmanship. This will certainly get worse – as will the government’s inevitable frustration.

Abbott also sincerely believed that Shorten and Labor would fold on the carbon tax, for example, once the election was over and perhaps they might have – save for what I consider Kevin Rudd’s last gift. That was to make sure the Leader of the Opposition had to appeal to the party members – around 40,000 of them – who tend to be well to the left of the population and of the majority of the caucus. Shorten’s need to appeal to them mean promising to stick absolutely to Labor’s rather threadbare claims to adhering to principle and to what it considered an achievement – like a price on carbon. That need will continue.

Despite the rather vague agenda of “party reform” announced by Shorten yesterday and the belated enthusiasm for the Hawke Keating era, the Labor Party still believes that the lesson of the 1980s and 1990s was that an opposition that goes along with economic reforms of a government means the government gets the credit and the opposition gets to spend longer in opposition. Thus they compare that with Abbott’s success in opposing the Labor government and getting back to power relatively quickly. This may be a really bad misreading of why the Liberals were elected and Labor defeated last September. But it means that Labor won’t be helping the Liberals get any of their agenda passed either before or after 1 July.

The Royal Commission into union governance will be very useful for the Abbott Government in embarrassing and discrediting Labor and the unions – if slightly unpredictable in the addresses of some of its other targets. Nor do I think Labor post election has been able to free itself from its own old fashioned image of lousy spending and jobs of the past which will also help the Liberals position themselves as the party of the future if they are smart enough in their rhetoric as well as their policy.

The real risk to the government is the prospect the economy will stay sluggish indefinitely. To counter that, the Liberals will have to constantly link the political game of attacking everything from the unions to corporate welfare with the need to improve jobs prospects, economic efficiency and Australians’ chance at a better future – to use adversity as the lever for the community’s acceptance of change.

In response to Labor’s attacks, Abbott is trying to be more nuanced with his language about pay for example – though subtlety has never been his style. That is both a weakness and strength. The question is whether the government can offer a large and positive enough vision for the country beyond the need to reduce regulation and red tape and costs and free business to find its own opportunities and to create new jobs. For all the talk on education and training, for example, I think that is still a big black hole for policy.

So, based on the first 200 days, I would give the government a decent passing grade overall with occasional fails such as the Graincorp decision. But the government will still need to do much better than that to cope well with the challenges of the next 200 days and beyond.