The Commission of Audit delivers its massive 900-page report this afternoon. Set up by Prime Minister Tony Abbott in the early days of his government, the commission is touted as “as an independent body to review and report on the performance, functions and roles of the Commonwealth government.”
That’s rubbish, of course. Headed by a well-known conservative in business executive Tony Shepherd, and also featuring Howard minister Amanda Vanstone, the Commission is a highly political exercise.
Its function is less about recommending fiscal policy reforms, and more about shifting public opinion in favour of radical austerity. There will be few surprises if the report recommends massive cuts to the size of government, huge reductions in spending, and the delegation of many federal services to the states.
That’s exactly what the various leaks detailing the report in today’s newspapers suggest. According to Lenore Taylor in the Guardian, the report “concentrates on longer term measures to bridge the widening gap between forecast spending and revenue over coming years, so the budget can reach a surplus of 1 per cent of GDP by 2024”.
The Australian’s David Crowe tells a similar story. He says the report is “a searing assessment of federal finances that also calls for the family home to be included in the asset test for the age pension”.
New Matilda will examine the policy particulars of the Commission of Audit next week. But for now, the most interesting thing about it remains the Abbott government’s surprisingly poor performance in the run up to the audit's release.
The commission’s report lands just as the government is trying to hose down the fires of dissent in its own base, over mooted increases to income taxes. The Abbott Government’s proposal to introduce a special levy to help pay down federal debt — labelled variously as a “deficit levy” or a “deceit tax” — has enraged Coalition supporters and dismayed Liberal backbenchers.
A Jonathan Swan report from earlier this week talks about “incredulous” backbenchers and a “febrile” mood in the marginal seats. Even Andrew Bolt has turned against the government, attacking the tax rise in his column today.
There’s no getting around it: a new tax is a broken promise. If Tony Abbott stood for anything in opposition, it was lower taxes. His relentless attack on the carbon tax destroyed Julia Gillard’s administration. Voters have heard his sound bites railing against “big, new taxes on everything” many times.
Any tax rise will come at a very real cost to Abbott’s credibility. It hasn’t taken long for media organisations and various Labor spin doctors to dig out quotes from Tony Abbott from before the election, in which he promises no new taxes, and no tax increases. Matters haven’t been helped by the mealy-mouthed attempt to spin the tax rise as a temporary levy. After all, Abbott opposed the one-off natural disaster levy imposed by the Gillard government in 2011, to help with flood and cyclone reconstruction in Queensland.
Despite the backlash, the government appears to be pushing ahead with the tax hikes. Finance Minister Mathias Cormann was out giving interviews this morning in which he openly discussed“sensible, well targeted, time-limited adjustments we might be able to make through the tax system.” In other words, a tax rise.
Not to put too fine a point on it, the government has been all over the shop in the run up to the budget. Key messages have been absent or confused. Carefully timed budget leaks have been overwhelmed by apparently genuine leaks, such as the deficit levy proposal. Big-ticket spending decisions have been announced even as belt-tightening has been threatened.
The evolving mess of paid parental leave is a case in point. Abbott this week decided to wind back the most generous bits of the government’s paid parental leave scheme. Instead of paying parents earning up to $150,000 as much as $75,000 after the birth of a child, the new figures will be $100,000 and $50,000.
The move may assuage the doubts held by the Greens about the largesse of the scheme, but Labor continues to attack it as absurdly generous, particularly at a time when the government is supposedly ending the age of entitlement.
The decision may have headed off dissent inside the Coalition party room, at least for now, but it’s another confused and hasty adjustment that has all the hallmarks of policy on the run. Predictably, some in the Coalition are now complaining about the decision to wind back the largesse, such as NSW MP Sharman Stone, while others, such as Nationals Senator John “Wacka” Williams, continue to oppose the parental leave scheme altogether.
Into this mess drops the Commission of Audit, with its hardline recommendations to chop off whole limbs of the body politic. The government has had the report for some time now, but has held it back, in order to secure maximal political effect in the run up to the budget.
Unfortunately, the bungled preparation of the last fortnight has meant the report is likely to add to the confusion, rather than reinforce the government’s austerity message. Abbott and Hockey may now be wishing they had released it earlier, giving some of the more controversial proposals time to play out.
For instance, recommending that the family home be included in the assets test for the aged pension will almost certainly alarm many older voters, who are already concerned about Hockey’s talk of raising the pension age. At a time when the government is not in control of the media cycle, big and scary government reports can start to generate a momentum of their own.
Perhaps that’s the idea. If the Treasurer can deliver a relatively mild budget on May 13, the pre-budget controversy will help it seem less severe, smoothing its reception in middle Australia.
If so, Hockey and Abbott are playing a dangerous game. As both Rudd and Gillard discovered, political capital can dissipate quickly once ordinary voters lose faith in a government to keep its word. In Rudd’s case, the turning point was his backflip on the Carbon Pollution Reduction Scheme, which he’d championed as the “great moral challenge” of his government. In Gillard’s case, it was her decision to change tack on a carbon price, after saying in the 2010 election that “there will be no carbon tax under a government I lead”.
A lot has been staked on this budget. Behind in the polls and with any electoral honeymoon apparently permanently postponed, the Coalition has plenty to fear should voters turn against it on the issue of economic management. Raising taxes, in particular, represents a huge political gamble. If the conservative base turns against Tony Abbott on a signature issue like taxes, he may find that a certain amount of his credibility has vanished — forever.