TONY Abbott’s bizarre 7.30 Report admission that he sometimes gilds the lily to win arguments led off a pretty dismal week for the Opposition.
But with Labor doing so badly at explaining its case, all is far from lost. Liberal MPs shuddered as their ``honest-to-a-fault’’ leader dropped into confessional mode to surrender his singular advantage over the mealy-mouthed Kevin Rudd. ``My jaw just dropped,’’ said one.
Others were similarly mystified. Instead of explaining his volte face on paid parental leave funded by a new company tax he’d previously sworn against, as a change of mind, he went the other way. The original promise on Melbourne radio had come ``in the heat of verbal battle’’ and was therefore not to be taken literally.
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We might as well abandon the budget process as we have known it. Traditionally the budget sets out what can be relied upon to occur in the financial year following its announcement.
But no longer – what we get is a good old socialist planned economy. Where as the forward estimates used to be an indicator of what would flow from the announced budget if nothing is changed in succeeding budgets.
So Mr Swan’s statement that nothing will change to deliver a $1 billion surplus in 2013 is telling us nothing will change before then. So why bother with the Budget façade?
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Have you heard a radio advert lately telling you that the new health reforms are really good for you?
They are hard to miss and there is avalanche to come.
According to the Budget, the Rudd Government will spend $126 million on five campaigns in the next few months. These campaigns cover topics including climate change, tax reform, health reform, broadband and paid parental leave. $33 million will be spent in the next six weeks alone.
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The Rudd Government has arrested its plunge in the polls by convincing Australians that last week’s Budget might not be good for them but it will be in the national interest.
Devoid of the traditional baubles and handouts, the Budget has gone a long way towards neutralising the Liberal Party’s debt offensive that was threatening to drive a stake through Labor’s economic credentials.
In a month of bad news for the government, this has to be classed as a timely victory - despite the problems with the stimulus package and the raging row over the resource rent tax, the majority of Australians think the economy is heading in the right direction.
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For the second time in five days one of the nation’s political leaders has gone MIA in 7.30 Reportland.
It was Kevin Rudd’s turn last week, with the robotic PM overriding his own software with an uncharacteristically human snap at Kerry O’Brien over the failure of the Copenhagen summit: “It might be easy for you to sit in 7.30 Report Land and say that was easy to do,” Rudd spat. “Let me tell you mate, it wasn’t.”
But tonight, it was Tony Abbott who found himself entangled in a protracted and excruciating exchange about “the two Abbotts” over his different positions on new taxes and maternity leave. And if Kevin Rudd lost his cool last week, Tony Abbott simply got lost - and he’s given Labor some great negative material ahead of the campaign.
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Kevin Rudd’s proposed Resource Super Profits Tax on mining companies would raise $12 billion over the next four years, most of it in the fourth year. Pretty handy for a deficit-ravaged bottom-line but its true value is between now and the election. In other words, it’s political.
Wayne Swan’s third Budget and Tony Abbott’s only (he will be either PM or toast) Budget Reply have laid certain things bare.
First, that the Government is back arguing its claim to being fiscally conservative after a damaging, if economically successful multi-billion dollar foray into recession-proofing.
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Royalties and mining taxes are the price mining companies pay to the people of a state and/or country for the right to mine and sell the resources of that state and /or country. Seeing as they can only be sold by the state once, it’s important to make sure that we get the best price we can.
However, if you set the price too high, no-one will buy what you’re selling. The Rudd government’s Resource Super Profit Tax (RSPT), as it is proposed, drives the price too high.
A well designed rent tax is a very efficient and even business friendly tax. With a rent tax, you only pay tax when you are making a decent profit while the government still receives a fair price for its resources. But there is a clear need for three major changes to the RSPT.
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The Budget this week has me thinking about how no one likes their finances meddled with, especially given the prospect of more or increased bills. I’m no exception.
When they arrive in my letter box I’m instantly in a bad mood. I know they’re due but somewhere in the back of my mind I still hope that just once in my lifetime, the “systems” will go down and all the slates will be wiped clean.
I find I’m actually quite defensive towards them. I sometimes wonder if I were to tear it up, would anyone notice?
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Tony Abbott’s reply to Tuesday’s federal budget was a lot like the man himself. It was at its strongest in attack mode, and at its weakest in carefully and thoughtfully explaining an alternative way forward to return the budget to surplus.
The Opposition Leader had been on his feet for almost 20 minutes of tonight’s half-hour speech to Federal Parliament before he provided any detail of how an Abbott Government would rein in spending. And when he did, it came with an unfortunate “watch this space” promise that Shadow Treasurer Joe Hockey would use his address to the National Press Club next Wednesday to fill in the details.
In attack mode Abbott was powerful and convincing. One of his best lines was that “over-promising, under-delivering politicians are the cause of so much cynicism in public life.” It was a valid shot at Kevin Rudd’s backflips and broken promises, but the problem for Abbott - who has not yet converted Rudd’s poll slump into surging personal support as our alternative PM - is that he went on to again paint himself as something of an under-promiser.
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The genius who first used the word “super” to describe the mining profits targeted by the Rudd government in its plan to return the budget to surplus should be given a promotion and a pay rise. Then the government should go out and hire another half dozen people with a similar flair for plain language.
The Resources Super Profits Tax is a rare example of a self-explanatory policy. It not only accurately describes the nature and spirit of the plan, but is infused with political clout. The underlying message is that “super profits” are somehow morally objectionable, compared to the regular kind. The National Health and Hospitals Network, by contrast, is a vague umbrella term for some health reforms.
But just how rare it is to find clarity in government communication is evident from the federal Budget. It is, as usual, filled with technocratic babble. Things aren’t bought, they are procured. Programs don’t end or stop, they are terminated. There is never a cut, but funding is reduced.
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Kevin Rudd’s fall from grace has been sudden and spectacular. His meltdown on The 7.30 Report on Wednesday night can be seen most charitably as a sign that the bloke has got some ticker. I suspect most people would have seen it as a sign that pressure is getting to him.
When Finance Minister Lindsay Tanner hit the airwaves today to defend his boss as some kind of zen master who is at his calmest and most serene when the pressure is on, he could have chosen his language better. Tanner’s observation that his three-year-old daughter threw bigger tantrums than the PM did with Kerry O’Brien stands as dictionary-definition faint praise.
The next few weeks will be crucial as he tries to use the Federal Budget to restore Labor’s standing in the eyes of voters. In trying to analyse what has gone wrong for the Prime Minister, and whether he can again make things right, there is a consensus across politics as to where the problem lies. The problem lies with the Prime Minister himself.
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As all the cool kids got themselves in a lather over last night’s budget I noticed a distinct void in the chatter. Where were the mums and dads? Turns out that lots of them were watching Masterchef (possibly the people’s new opium) - studiously avoiding the budget telecast.
Political apathy seemed to be the flavour of the day, plated up and served with a side of Couldn’t Give a Shit.
Was it the fault of the no-frills budget? Or have we lost faith in a government which once seemed to promise so much?
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If this Budget is supposed to get Australia doing its part in solving “the greatest moral challenge of our time”, then it is a failure. While there is $652 million over 4 years in new money for clean energy, this pales into insignificance compared with, for example, $27.7 billion over 6 years for roads.
As I said yesterday, this is a very unclear budget, lacking a clear strategy on energy and other resources.
Treasurer Wayne Swan said in his speech that climate change (which he mentioned 4 times) is one of “three key challenges” for the Budget, along with the return to full economic capacity after the GFC and and the costs of an ageing population. But the funding announced fell far short of this rhetoric.
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Ignore the pre-budget spin and the denials to the contrary. The document unveiled by Wayne Swan tonight is every inch a pre-election budget, just not in the traditional sense of the word.
It has none of the handouts and give-aways traditionally used to entice voters in an election year – there’s no money left to pay for that kind of extravagance anyway, and there are plenty of niggly little cuts to offset the impact of the stimulus splurge.
But this budget provides a clear rhetorical blueprint for the looming election campaign. And it’s framed around a sense of pride, almost cockiness, at the performance of the Australian economy versus the rest of the western world.
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4pm: Wrapping up. Following Question Time and other incidents during the day, we’ve seen the opposition is going to query the assumptions that the government has made in the Budget, but also question if the Prime Minister can be trusted to maintain spending discipline. (Tony Abbott asked him today to explain why he only became an economic conservative at election time.) For its part the Government wants to know where the opposition will find savings to return the budget to surplus, and will be hammering the line that Australia has outperformed the rest of the developed world in handling the GFC.
Boring budget papers maybe, but not a boring Budget.
12.34pm: Question Time is back and now that we’ve been freed from the clutches of Treasury officials we’ll be covering Parliament proceedings live from 2pm today. Be there and be square.
12.24pm: Scientists found it boring too! No mistaking the take from Australian Life Scientist, which has a story headlined Budget 2010: Not much for science or biotech.
12.03pm:From ABC News:
Federal Treasurer Wayne Swan has disputed claims by Premier Anna Bligh the super-profits mining tax will adversely affect job creation in Queensland.
10.08am: You say tomato…
9.58am: No backdown, says Swan.
9.52am: Chinese news agency Xinhua focuses on spending on troops in Afghanistan. What, no mention of the mining tax?
9.15am: Some commentary highlights from around the blocks:
Paul Kelly in The Australian: Accounts deliver an election narrative
Swan was correct in his budget night boast that he wanted a set of numbers that made Australia “the envy of the world in recovery”. It is an arrow in the heart of the Coalition’s debt and deficits election theme.
Barrie Cassidy at The Drum: Nothing wrong with a boring budget
The trick will be in the marketing. This was one of the tightest spending budgets in a generation - certainly the tightest pre-election budget. Presumably not a lot was wasted on speech writers.
John Durie, The Australian - Canberra backs corporate bonds
In some respects it’s a business-friendly budget if you ignore the super tax on the resources industry.
Peter Hartcher in the SMH: Back in the black with a touch of restraint
The truth is that the natural recovery in the economy has done all the hard work for the Rudd government. Its attempts at cutting spending are embarrassingly feeble. From total outlays of more than one-third of a trillion dollars, it has cut spending by just $1.4 billion.
9.05am: Shadow treasurer Joe Hockey has a video statement giving his verdict, characterising the Budget as “a shameless con”.
9.03am: High praise from David Koch:
THE wimps of 10 days ago have found some courage.
This is exactly the type of Federal Budget we needed and, if they can pull off what they’ve promised, it will ease the pressure on future interest rate increases and keep inflation under control.
More here: Budget 2010: Government finds some courage
8.18am: Tony Abbott says the government can’t “change it’s nature from Paris Hilton to Uncle Scrooge”, arguing it is a big ask for voters to believe Rudd can now put the brakes on spending. And here’s a picture.
8.14am: Rudd’s been on the phone to the new British PM David Cameron. They’ve been talking about Cameron coming out, perhaps during the cricket. We’ve got more on the new British PM here.
8.08am: Kevin Rudd on ABC Radio, outlining his economic beliefs. Says he believes in expanding the role of government in the economy when the private sector is in retreat. “Now with the private sector expanding it’s time for the role of government to retreat,” he says. He mentions getting back in the black.
Penbo mentioned in his piece The Smartest Guys in the Room that Swan and Rudd might have been listening to Queen’s We Are The Champions when putting the finishing touches to the Budget. This might also have been on high rotation:
6.57am: Treasurer Wayne Swan will be taking questions live at the Herald Sun online from 10am AEDT here.
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While the Government’s new taxes on the mining sector and tobacco are central to bringing the budget back into deficit over the next few years, there are a lot of nasties in this budget in both cuts and taxes that will bring in a tidy sum for Wayne Swan. Here’s the top 10 with a few bonus ones at the end.
Child care rebate cap reduced: This is going to mean tens of thousands of families around Australia will be paying more for childcare - it’s that simple. The Government is set to reduce the cap on the annual Child Care Rebate from its current rate of $7778 to $7500. They will also pause of the indexation of the maximum that can be claim. This cut will save the Government a whopping $86.3 million in tax.
Increased fuel tax on ethanol: In the truly indecipherable language of the Rudd Government this has been named “an energy content-based fuel excise system.” This entails an excise on ethanol fuel of 25 cents per litre from 1 July, and will bring in a tidy $276.5 million over the next four years. The Government claims that this is to off-set the grant payment to domestic ethanol producers, which is to be reduced from 22.5 cents per litre from July 2011 to nothing by 2015. But interestingly this doesn’t mean that the tax will be abolished by 2015, with tax only go down to 12.5 cents over the same time period.
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It was never going to be a bread-and-circuses affair but Wayne Swan’s third budget offers a little showbag of policy trinkets everyone gets to keep.
Just like the rise in cigarette tax, they are the kind of concrete changes that can make a government a real talking point in offices and over dinner tables. While not multi-billion-dollar headline initiatives, they offer voters little improvements that are, it has to be said, broadly agreeable.
First is the eHealth initiative. If you sign up it will put an end to the usual round of 20 questions about your medical history any time you see a new doctor. It’s totally optional and you can manage it yourself, so there’s little ground for the typical privacy objections raised against this kind of initiative.
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So Kevin and Wayne have found themselves in another precarious position. The latest two polls show Kevin is about as popular as ugg boots in Darwin. The election is so close that even that sweaty, bike riding wing-nut Tony Abbott could win the thing.
The Budget will be delivered tonight and the Treasurer has suggested that this will be a no frills budget with no election year spending to win votes, but hey, it’s already been the year of the political back flip and desperate times call for desperate measures.
I’m sure that the Prime Minister and the Treasurer got together yesterday to thrash out what they could possibly come up with to stimulate the polling. Never mind stimulating the economy, it’s the voting that needs vigorous stimulation.
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Well, I hope you all feel comfortable that you now owe $140 billion. If you take our population as approximately 22 million, that means you owe in excess of $6300 for each man, woman and child in Australia.
I will keep talking about debt until people realise the dangerous position it puts us in. We are borrowing in excess of $1 billion each week. We see every night on the news the problems of other countries that have not dealt with their debt but have waited for the inevitable when the debt deals with you. How could we be so foolish as a nation to be mounting up debt the way we are?
Then, to all intents and purposes, nationalise half of the sector of our economy which has actually kept us from the jaws of recession – the mining sector. This is something that would be more appropriate for Hugo Chavez or Evo Morales or Castro in Cuba. Australia hasn’t experienced this sort of insanity since the failed approach by the Labor party when they decided to nationalise the banking industry in 1949.
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“If you had asked me seven months ago if Rudd could lose, I would have asked you how much you’d had to drink,” says 65-year-old electrical engineer Robert Brown of North Ryde. “But now it is a real possibility.”
So it is. The assessment of Mr Brown is in keeping with the majority of the people we spoke to in our Punch street survey of voter sentiment going into this Federal Budget week. It’s a worrying trend for the PM, one which was born out by last week’s Newspoll, and today’s Nielsen poll in the Fairfax papers.
After looking set to coast to second term victory, Mr Rudd has taken a hammering in the polls. The disturbing thing for the PM is that many of the voters we met have a keen grasp of his backflips on the ETS, the insulation scheme, the school stimulus projects, and are now parrotting the Tony Abbott line that he is “all talk and no action.”
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Spare a thought for Wayne Swan and Lindsay Tanner as they ferret away on Labor’s pre-election budget. At a time when they should be doling out the goodies, the public is telling them it’s time to stop spending our money.
The last few years have been a good time to be in control of the Treasury coffers – after all a successful economic rescue plan based on giving people money while interest rates remained low was sure to meet with public acclaim.
But now the party is coming to an end and the pressure is on to rein spending without causing an uproar in core Labor constituencies. As this week’s Essential Report
shows, the answer may lie in giving closer scrutiny to the Defence budget.
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