Dollars count, but the election will be about trust

Scott Morrison and Josh Frydenberg arrive for Question Time yesterday. Picture: Kym Smith

There is no mystery surrounding the greatest negative plaguing the Abbott-Turnbull-Morrison government. It is there for all to see, with research on both sides confirming that the No 1 impediment to its re-election is disunity.

A by-product of that, after years of what focus groups describe as clusters, with the F-bomb attached — one after the other after another — is the deep resistance of voters to efforts to woo them back.

Cynicism flourishes. The challenge for Scott Morrison and Josh Frydenberg on Tuesday night was to get people to forget the Coali­tion’s ritual disembowellings, to regain their trust and to get them to focus on its record of delivery on the economy — solid, measurable achievements — including the first surplus in 12 years as living proof of fiscal responsibility.

Except there isn’t one. Despite the drum rolls, the hype and the ramped-up expectations, there is no surplus. Not yet. Saying, as they had been, that they would hand down a budget surplus was, strictly speaking, untrue. It was spinful, something of which the voters have had a gutful.

Credible though it may be, there is still only the promise of one. Not that an actual one would have won all that many votes, but its absence, or its presence in theory only, has undermined the thing they wanted to inspire: trust.

They mocked Wayne Swan for seven years for pretending to deliver a surplus when he hadn’t, then they went and copied him. The rationale behind copying the worst of Labor’s ideas (budget fudges, serial prime ministerial assas­sinations) is inexplicable.

They should have tried harder to make the surplus real on Tuesday night, or else been fully upfront about its status as a forecast. All they had to do was make clear it was coming, not act as if it had arrived. The best budgets have clear, clean, credible messages. Instead, the Prime Minister and Treasurer clouded theirs when they were forced to spend the first couple of minutes of almost every post-budget interview explaining why they had claimed the budget was in the black when it was still in the red. They had been counting on the surplus to frame the budget, and so it did, but not necessarily in the most positive way.

Because there is such a long gestation period, bragging rights for any surplus will go to whoever is treasurer come September next year, when the final budget outcome is produced. If they are still in office, Morrison and Frydenberg will of course claim the credit. But by then, if Labor wins the election next month, Chris Bowen will have delivered a mini-budget and then a full-blown one, so he will say it’s his work and that of his fin­ance minister, Jim Chalmers. They can say their predecessors might have promised, but they were the ones who nailed it down and banked it.

The red ink weakened what was otherwise a good budget. It was not the best ever, as the old hands are wont to say, it was far from the most exciting, a long way from the bravest and certainly not the one guaranteed to win the next election, but it did plug some gaps and was well delivered by a confident Frydenberg.

It had everything. Tax cuts, tax breaks, spending on infrastructure in the cities and regions, money for cancer research and medications, new apprenticeships, carparks at railway stations, cash handouts to help with power bills and even a $3 billion-plus secret kitty for the election campaign that Morrison could announce as early as Friday.

Putting money in people’s pockets was the smart way to go, not only to neutralise Labor’s plans to increase wages and expand income tax cuts, but particularly because of the expected softening of the economy. The surest way to provide a quick stimulus, as Peter Costello discovered way back, is to give a wad of dollars to pensioners and welfare recipients, as the government has done with a one-off Energy Assistance Payment of $75 for singles and $125 for couples. They do not set it aside, they spend it almost right away. It gets pumped back into the economy as soon as it lands in the bank account.

Unfortunately, within a matter of hours the government was forced to execute its first major backflip. Until very late on Tuesday night the Prime Minister had not wanted to touch the Newstart allowance. That was until they realised that to rebut Labor’s arguments on fairness, because of the media’s persistence on the question, and knowing that if they didn’t act the issue would continue to dog them, Morrison, Frydenberg and Mathias Cormann decided to spend an additional $80 million to extend the energy bonus to Newstart recipients. It was short and messy as opposed to drawn out and messy, and completely avoidable.

The challenge for Bill Shorten tonight in his budget reply speech — and if history is any guide it will be a cracker — is to drill into voters’ brains the images of chaos, dysfunction and instability. He has to draw them to the conclusion that if Coalition MPs can’t trust one another, there is no way the voters can trust them.

The Opposition Leader, singing the familiar tune that anything the government does he can do better, was practising his lines yesterday. He would provide bigger and better surpluses, bigger and better tax cuts, and bigger and better health and education spending.

All funded, of course, by bigger and better tax increases — which he did not mention — although Shorten had an answer for that too, saying this government had collected $126bn more in taxes than Labor had in 2013, “more taxes from business and individuals than any government in the history of Australia”, while cutting funding for schools and hospitals.

Strap yourself in for the duelling scare campaigns on fairness, on tax and on climate change too.

Shorten’s release of the bones of his climate change policy on Monday was clever, coming as it did in the wake of Coalition infighting over One Nation preferences. Governments crave clear air in the pre-budget period to set the scene, so Shorten not only polluted the atmosphere for the government on an important day, it also meant his package escaped close scrutiny. It will come back.

The battle lines are clearer, but the election is unlikely to be decided by dollars and cents, by who is promising the biggest surplus or the lowest taxes. Whoever wins the contest on trust and unity wins the election.