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

PATRICIA KARVELAS

 On the cusp of defeat both Paul Keating and John Howard warned that, “when you change the government, you change the country.” What both leaders missed was that Australians did want to see not only their national government removed, but their country transformed.

In his first 200 days in power, Prime Minister Tony Abbott has begun to change the country. In a short timeframe, Tony Abbott has embarked on a national transformation, which has had far reaching consequences, both symbolically, socially and economically. He has changed the pace of government, the pace of communications, and altered economic and social policy beyond expectations.

But seven months after the federal election, the Abbott Government’s achievements compared with their bold promises have been mixed. There have been more reviews than expected, particularly after the Coalition mocked Kevin Rudd’s first term in government as hitting the ground reviewing.

On the Prime Minister’s promise to “end the waste”, Tony Abbott and Treasurer Joe Hockey have strongly and convincingly argued for tough austerity measures and made the case for broader fiscal reform. With only a few weeks until the first Federal Budget, the government’s biggest test and most defining moment, the public case for smaller government has been laid out.

A strong and consistent story and program is taking form and it is starting to be clearer what the government hopes to achieve and how they will travel there. After a slow, clumsy and cautious first few months, Tony Abbott and his Cabinet Ministers are articulating a broader vision of how they hope to change Australia.

They are making a robust political and economic case for creating a sustainable Commonwealth Budget, a country that truly lives within its means.

After running a highly risk adverse election campaign and criticised, I believe rightly, for focusing too much on three word slogans and not enough on articulating big policy reform ideas, Tony Abbott in government has taken a different path since the election. The Treasurer’s warning that the “age of entitlement” must end is becoming the enduring story of the new government.

Abbott has stared down big corporates using the threat of company collapse and job losses to seek taxpayer bailouts, and denied Qantas a debt guarantee, which would have been a retrograde step and put taxpayers at risk.

The party that in Opposition promised to deliver a “grown up” government showed it had the intestinal fortitude to stare down a strong and populist campaign to deliver bail out after bail out for unsustainable and dying industries.

The government has taken political hit after hit as job losses have mounted – but has ultimately won the argument that you can’t subsidise jobs forever and rescue packages do nothing but put off the inevitable. Job creation is about finding the jobs of tomorrow not keeping old industries on life support.

At the same time, big changes are underway in the social policy space.

 While we didn’t hear about it during the election, as soon as Cabinet was appointed, new Social Services Minister Kevin Andrews quietly commissioned a major internal review of the country’s welfare system. By appointing former Mission Australia head Patrick McClure to head the government’s review – the Abbott Government has started a necessary process to take control of the Commonwealth welfare budget.

 That about 20 per cent of the population is reliant on taxpayers for at least part of their income, be it the age pension, Newstart Allowance, Disability Support Pension, Carers Allowance or paid parental leave, reflects the failure of recent governments, Labor and Coalition, to embrace reform and end welfare reliance while maintaining a safety net.

A record 832,000 Australians receive the disability support pension at a cost of more than $15 billion a year. The number of recipients with mental illnesses has increased by about 90,000 over the past 10 years. With more than 1000 people being assessed for DSP eligibility every week, the system warrants extensive reform.

Indeed, the government is considering fusing DSP with Newstart and introducing a single welfare payment alongside tightening the requirements for job seekers. Their challenge is to end the perverse system which actively incentivises people to get on the DSP because the Newstart payment is so appallingly low.

The payment gap is far too big. Rather than incremental reforms delivered in Budgets year after year, the Abbott Government must rise to the welfare challenge and create in this term of government a single welfare payment with add-ons.

So far we have been warned that while they believe in the merits of one payment – they are unprepared to immediately put the investment into making this happen. If not in this year’s Budget – broader and lasting welfare reform is needed. Anything less will only extend the patchwork attempts already started by Labor to reign in welfare spending and get people into work.

Several senior ministers have conceded to me that Labor made a huge mistake when it threw single mothers off the pension and onto the dole queue under Julia Gillard’s prime ministership. They say they have learnt from that mistake and don’t plan to replicate it when they deliver their welfare package in coming weeks. Their challenge is to avoid a cheap solution, which pushes more people on to the low paying dole. Welfare reform is necessary but it involves investment not just cuts.

While it is obviously politically risky, the government has correctly placed scrutiny over the ballooning aged pension. Lifting the eligibility rate to 70 is a bold but necessary conversation for us to have. But after flying the kite that the generous pension assets test would be reviewed, and then getting cold feet, the government is missing an opportunity to make our system more equitable.

While Labor is making much of  “broken promises” on this issue and others, it is the job of the government now to make the case for why we need to embark on bigger change and to dump policy timidity that will limit growth and possibility.

The Prime Minister’s pledge that he will not break election promises has locked him into a prism where he now must seek a mandate at the next election.

Social policy – from welfare, childcare, parental leave and aboriginal affairs – are undergoing a major shake-up under this government. Much of it is quiet and behind the scenes as the dominant issues of boats, offshore detention, ICAC claiming competent liberal figures and now the royal commission into unions take centre stage. While the results of the productivity commission’s review into childcare will not be known in time for this year’s Budget, Tony Abbott has rightly grasped that this issue is the new BBQ stopper of this generation.

But we are getting mixed messages on childcare. The government has warned about the unsustainable rise in childcare spending. Even the education department has said, in a recent submission, that child care assistance is one of the government’s “fastest growing major outlays”. At the same time, by floating the idea that he may pay for taxpayer funded nannies through the childcare system, Tony Abbott has lifted the expectations of Australian families who are desperately looking for flexibility.

Again, the government faces tough decisions in this space. If the productivity commission recommends that the childcare rebate be means tested, the Prime Minister will alienate Australian families – in particular working mothers if he adopts it. There is already evidence showing that once families reach the current cap of $7500 per child of rebate, they are reducing their hours of work to avoid paying full childcare fees.

A senior Labor minister at the end of the Gillard Government’s reign told me off-the-record that the reason they never sent childcare to the PC was they knew it would recommend means testing. If the government does decide a means test is necessary, it must be very generous or it will risk decreasing female participation in work.

Home based care must also become an approved form of childcare that attracts the same subsidies. It is ludicrous that a family can drive down the road to a childcare centre and receive a full rebate but if they pay a nanny to look after children in their own home they receive no help at all to participate in work.

The big disappointment in the reform space, in my view, is Tony Abbott’s paid parental leave scheme. It is inconceivable and, frankly, fiscally mad for a government that has finally got traction convincing the public that tighter spending is necessary; to then deliver what the Labor Party has correctly named a “Rolls Royce” scheme.

I’ll be blunt here; the proposed PPL scheme is dog of a policy. It is at odds with every principle the new Government has advocated and does not address the real needs of new mothers. It is a great disappointment that the Prime Minister took it to a second consecutive election and defends it when it is so blatantly unnecessary.

I am still to meet a new mother with a baby that identifies a strong need to be on full pay at taxpayers’ expense after their baby is born. On the flip side I am overwhelmed with complaints by working mothers about the childcare system that locks them into permanent part time work and inflexibility.

If this government “gets” women as it has been at pains to argue – it would fix childcare and accept that the Labor Party’s PPL scheme is the only economically sustainable option. The PPL scheme limits the money the government can spend on real measures that can lift female labour force participation and productivity. If the Coalition believes Labor’s scheme is too modest it must look at other options to reduce the cost of its proposed scheme. Full pay of $75,000 a year for six months is excessive and silly. The Greens proposal of $100,000 a year is also too excessive in my view.

The Abbott Government cannot leave this to the new Senate to fix so they can save face with the electorate. Defending the scheme over the last seven months when all evidence demonstrates it is a huge policy blunder is a mistake the entire nation will now have to wear. If Tony Abbott goes ahead, as he has promised, it will be up to a future government to scale it back which is nothing short of reprehensible. Good government is always about tough decisions.

If we must live within our means then we cannot allow a new scheme like this to be built into our social welfare spending. One senior government MP described it to me this way “it’s the most expensive policy you could have dreamt up to deal with Tony Abbott’s (so called) woman problem.”

There is a delicate balancing act the government must walk with this budget. There is clearly an appetite for tough decisions. They will be severely punished if Joe Hockey backs down in the face of a popular backlash and doesn’t bring out the knife. But, equally, if they go too hard and hurt the most vulnerable while protecting the rich they will lose mainstream credibility.

On indigenous affairs I think Tony Abbott broadly “gets it.”  In its first 200 days the government has launched a national truancy plan that uses a carrot – not stick  -approach to getting indigenous kids attending school.

Tony Abbott’s personal commitment to acknowledging indigenous Australians in the constitution is another of the symbolic issues he has embraced that has defined him and demonstrates that unlike John Howard he is a conservative leader that wants to deliver genuine reconciliation in this country.

The government has been quietly working away at this pledge and will reveal the wording it would like to put forward by the end of the year. There are high hopes it will deliver this change. There is goodwill and a high pain tolerance from the electorate towards any government after a historic election win.

The government was elected to open Australia “for business” as Tony Abbott put it as he stood on the podium and declared victory last year. It is in this context that I believe the Prime Minister has misfired on two issues that have dominated public discourse and seriously deprived the government of crucial time to make its broader economic case for change.

It has launched some unnecessary wars that have done real damage to its brand.

The first and most obvious was Tony Abbott’s bizarre overreach after he re-introduced knights and dames. Beyond the obvious criticisms that have been made about moving back in time, which I largely agree with, the announcement also demonstrated a government that was going off course and neglecting why it was elected.

It still staggers me that after constructing a powerful narrative about budget excess, being open for business, and slashing red and green tape, the Prime Minister thought the country would tolerate such excessive symbolism when there was no case made for it, and no demand for it. I can understand, not support, but understand a prime minister in his third or fourth term bringing back something that had profound meaning to him, years after the heavy lifting had been done, but in his first 200 days it wreaked of self-importance.

The second decision that has done the new government damage was to pick a fight with every ethnic minority group in Australia over the racial discrimination act. While I certainly accept the government had a mandate to reform 18c and deliver on its free speech agenda, the urgency of delivering it so early in the term and with such a misunderstanding of the need to balance rights and responsibilities displayed a failure to understand the priorities of the electorate.

When the attorney general stood in the Senate and defended the right of Australians to be “bigots” the government risked breaking faith with those who elected it to run a “grown up” government. Real grown-ups don’t tolerate bigotry and real grown-ups don’t let themselves get distracted when they have such a powerful and genuine mandate for change.

Until a government delivers its first Budget it is difficult to fairly assess whether it is on track to be the government it promised it would be.

But if all the kite flying is accurate, it is fair to conclude that they will return to doing what the public elected them to do: create jobs, grow the economy, and stop talking about themselves.