THERE is one thing that Tony Abbott is not short of right now. Namely, advice. This is invariably accompanied by a six or four-­letter word — “should” or “must”.

On Lateline last Wednesday, Jeff Kennett went for the six-­letter option. The former Victorian Liberal Party premier told the Prime Minister that immediately after the September 2013 election, he should have increased the rate and widened the base of the GST.

The only problem with Kennett’s advice is that he forgot about another six-letter word. That is, the Senate. To change the GST at any time in the past seven months, the Abbott government would have had to obtain the support of all the premiers and/or got legislation passed in the Senate.

In the lead-up to the elections in South Australia, Tasmania and Victoria in 2013, this would have been impossible. Moreover, any proposed change to the GST would have been defeated in the current Senate by the combined opposition of Labor and the Greens. In other words, Kennett’s advice, enthusiastically delivered and well intentioned, was worthless. And right now, the Prime Minister and his senior cabinet colleagues in the economic portfolios — Joe Hockey and Finance Minister Mathias Cormann — face a difficult task of repairing the budget.

This is not a universal view. On the ABC AM program on Wednesday, Raja Junankar, of the Australian Business School at the University of NSW, provided a rationale for the do-nothing ­option with respect to both the deficit and the debt.

According to Junankar: “If we compare ourselves to the OECD countries, we are doing fantastically well in all sorts of ways.” The problem is that this is not a universally held view.

In its February country report on Australia, the Inter­national Monetary Fund warned that Australia’s good performance relative to many other advanced economies since the global financial crisis has now reached a transition phase. Also, according to the IMF, Australia’s projected increase in expenditure will exceed that of 16 other OECD economies with which the comparison is made.

As a small economy, which trades significantly on world markets, Australia is vulnerable to economic shocks. A sudden slowdown in China would result in a significant external shock. As would another round of financial market volatility among the North Atlantic countries.

Kevin Rudd and his then deputy Julia Gillard were able to respond to the GFC in late 2008 and early 2009 because Labor inherited a budget surplus and no net government debt from the Coalition government led by John Howard and his treasurer Peter Costello.

No such surplus will be available if there is an international crisis in the immediate future.

Australia’s economic predicament was documented by Martin Parkinson, the secretary to the Treasury, in his address to The Sydney Institute on April 2. Parkinson is a glass half-full (not half-empty) kind of guy. Even so, his message on productivity, terms of trade, the ageing of the population and the fiscal position was sobering.

These are the facts.

Labor, with the support of the Greens, was in office for six years and produced six substantial deficits. Labor went to the 2013 election with big-spending policies on the national disability scheme and the Gonski education reforms.

Both were unfunded in the fifth and sixth years of implementation, when most of the expenditure is to fall due.

As Parkinson documented, the 2013-2014 mid-year economic and fiscal outlook forecast a further “underlying cash deficit for the next 10 years” without policy change. That is, the Rudd-Gillard-Rudd governments left a legacy of 16 successive budget deficits. To academics like Junankar, this might be a fantastic outcome, but politicians are elected to address and resolve problems.

It is true that Abbott in opposition went along with too many of Labor’s promises. But the Prime Minister, Treasurer and Cormann now seem intent on ­addressing their unpalatable economic inheritance. Here they deserve support, especially from the business community.

Despite the predictions, it is unlikely the budget, to be delivered on May 13, has been finalised. It is unlikely that the Coalition will accept all or even most of the National Commission of Audit report that was released on Thursday. However, it seems certain that there will be some reforms to scale back on what Hockey has termed the “age of entitlement”.

If this occurs, Abbott and his colleagues will have little option but to ensure that better-off Australians also make a contribution to resolving the budget emergency. Viewed in this light, the concept of a possible temporary deficit levy — to be funded by higher income earners — makes both economic and political sense.

Right now Bill Shorten and Labor are attempting to recover political ground by attacking ­Abbott while leaving the Rudd-Gillard policy approach in place. This seems unwise.

As Bob Hawke and Paul Keating among others have indicated, the essential motivation for the successful Hawke-Keating government was to prove that Labor could run a modern, reformist administration. In short, Hawke and Keating disowned the economic incompetence of Gough Whitlam’s government in the early 1970s.

In an interview conducted by Troy Bramston for his book Rudd, Gillard and Beyond, Hawke criticised Rudd’s “class warfare” obsession while Keating noted that, from early in its term, Labor lacked a “discernible program of change”.

At this stage, Shorten and his colleagues have not distanced themselves from the Rudd-Gillard legacy, but this is the legacy of ongoing deficit and debt that the Prime Minister now seems intent on tackling, presumably without accepting Kennett’s advice.