A victim of his own populism

WITH Kevin Rudd's popularity diving, the budget could decide the government's fate.

Labor has long counted on the Prime Minister’s electoral appeal, but the government is now forced to turn to Treasurer Wayne Swan’s budget to arrest its slide in the polls. Picture: Kym Smith

TODAY'S federal budget could turn out to be the most important moment in the government's first term. If it is well received, it gives the Labor Party an opportunity to put the past fortnight behind it and focus on the policy debates it wants to engage in between now and the next election.

But if the budget doesn't strike a chord with the electorate, the impression that the government is in trouble and the Prime Minister is under pressure will intensify.

Kevin Rudd, long dominant in the opinion polls, has seen his popularity wane in a relatively short period of time.

Last week's Newspoll put the Coalition in front on the two-party preferred vote for the first time in four years. This week another poll had the main parties level pegging on 50 per cent.

At the same time Rudd's personal approval ratings have also dropped, to just 39 per cent according to Newspoll, meaning that he is fast becoming a drag on the Labor Party vote.

Once touted as the most popular prime minister in our history because of his sustained good personal ratings, commentators are starting to question if Rudd can ever regain the confidence of the electorate after a series of recent backflips and attempts at populism gone wrong.

It started with the emissions trading scheme, and Rudd's climbdown from his commitment to introduce it by 2011.

Fighting an election on the issue would have been difficult. Opposition Leader Tony Abbott signalled his intentions early after winning the Liberal Party leadership to characterise the scheme as "a great big new tax".

Rudd had no real choice but to react to the barb, given his strong rhetoric about the importance of timely action on climate change, but he instead chose what he thought would be the path of least resistance: to shelve the scheme so that it wouldn't be a political issue at the next election.

Rudd tried to preserve his polling numbers in the wake of internal party polling that suggested Abbott's scare campaign might work. The public reaction suggests it was a bad call.

Rudd quickly looked to move attention on to his tax hike on cigarettes. Going to war with the tobacco companies seemed like an easy play, but in fact the 25 per cent increase in cigarette prices is more of an attack on working-class voters who smoke than the tobacco industry itself. He was trying to make a populist move against one of the most unpopular industries in town, but in fact he put a financial squeeze on many families just ahead of another interest rate rise.

The resources super-profit tax was an attempt to cherry-pick the biggest windfall for the budget projections out of the Ken Henry tax review while delivering the message that "working families" would benefit from the tax proceeds with more money going in to the budget for service delivery.

But the timing couldn't have been worse, with economic conditions globally worsening on the back of Greece's debt crisis.

Mining company share prices dropped sharply, feeding into the opposition's view that far from guaranteeing a fairer distribution of the profits of the mining boom, the government was risking proceeds from the mining sector.

And the government's timidity in committing only to a handful of Henry's 138 recommendations fed into the impression that it was putting election caution ahead of what Treasurer Wayne Swan and the Prime Minister have often described as much needed reform to the Australian taxation system.

Rudd tried to target his mining tax rhetoric at the idea that the resources are owned by all Australians and the mining companies are largely foreign owned - a clear play at populism - when he would have been better off focusing on the substance of why Henry considered a resource profit tax the right way to go in the first place (wrapped up tax concessions for exploration and the value in taxing profits instead of royalties).

Sections of the Labor Party are aghast with the way Rudd's rhetoric is "killing our ability to win this debate" as one source tells The Australian.

The risk for Rudd is that a decline in his popularity is quickly followed by a decline in his authority. The Prime Minister has never had strong factional backing in the way previous Labor leaders have. His support has always been predicated on his electoral appeal.

This is a potential concern for Labor strategists who know how important discipline will be at the next election. It is also one of the reasons Rudd has sometimes shied away from tough decisions.

Coalition MPs have long made the point that when the public finally starts to question what it is about Rudd that appeals to them, his fall from grace will be quick.

Microphones captured Abbott leaving a radio studio last week making the point that if Rudd is successful at the next election, he will only survive three months before his own party does what the electorate didn't.

Whatever the accuracy in Abbott's observation (while Rudd might not last the full term if re-elected, three months is wishful thinking), Labor strategists are more concerned about ensuring the government has an aftermath to worry about.

Internal trend lines from party polling reflect what the published polls are saying. The election could be tighter than the published polls from the past two years have suggested, largely due to tight marginal seat contests where issues such as immigration and refugees play out more significantly than in some other electorates.

In 1984, Bob Hawke caused damage to his personal popularity by calling an early election in a bid to capitalise on disarray in the opposition ranks. Hawke went on to win the election, but not by the margin that had been widely anticipated. Only leadership problems in the opposition and the ill-fated Joh-for-PM campaign gave Hawke the opportunity to recover.

Former West Australian premier Alan Carpenter made the same mistake of going to the polls early in late 2008, the difference being that decision coupled with a disastrous campaign cost Labor government in the west, ending wall-to-wall Labor governments in the states and territories.

Rudd avoided the temptation to call a snap election in the aftermath of the Copenhagen climate change conference at the beginning of the year, shortly after Abbott took over the Liberal leadership. But in a sign of how bad things have become for the government since then, a senior minister tells The Australian he regrets that the government didn't take that opportunity when it had the numbers to ensure victory.

Months later, with Swan due to deliver the government's third budget this evening, the political temperature has changed considerably. Instead of the government looking to its popular Prime Minister to pull it back from the political abyss, it is the Treasurer, once considered the weak link in the leadership team, who will need to do the heavy lifting with what is expected to be an austere budget with few giveaways.

Budget leaks have revealed some large spending increases in the area of health, to go with the reforms negotiated at Council of Australian Governments meeting last month, as well as some token savings in areas such as politicians' travel.

But the need for the government to present itself as committed to a return to surplus in the wake of its big spending to combat the global financial crisis means the budget won't contain too many election goodies, making Swan's (and the government's) sales job all the more difficult in the weeks ahead. If Rudd needs a circuit breaker to get his messaging right, the budget may not have enough political capital to do it.

The more likely scenario in the weeks to come is debate about Labor's super-profits tax on the mining industry, coupled with continued grumbling in sections of the community about its tobacco tax hike and backflip on emissions trading.

Rudd's political problems are entirely of his own making.

While Abbott's elevation to the opposition leadership gave the conservatives stability, and his down-to-earth style helped to highlight some of Rudd's less appealing characteristics as a leader, it is the Prime Minister's inability to sell his political messages that is bringing him undone.

The positive for the government is that while voters are now underwhelmed by Labor, there is no evidence they are looking at the Coalition as a ready-made alternative.

Rudd's messaging problems have come about because of a dangerous mixture of populism, over promising and political timidity. Achievements from the government's first two years in office have been overshadowed by promises which weren't kept (260 new childcare centres for example) or misguided attempts to appeal to populist sentiments (such as the foreign-ownership rhetoric attached to the mining tax debate).

The timidity of the government shying away from an ETS, shelving the planned starting time until 2013 at the earliest, has left voters wondering what, if anything, Rudd feels strongly enough about to risk his political mortality.

In an age where voter cynicism towards political elites is high, giving the public a chance to look on Rudd as poll-driven saps his ability to win them over with whatever other policies he might try to sell.

The change in the public mood towards Rudd means that when the Prime Minister opens his mouth he no longer gets the benefit of the doubt from his audience. He is wearing battle scars normally only inflicted on long-term leaders, not someone a mere 2 1/2 years in the job. It is a dangerous position to be in ahead of an election campaign.

The media narrative about Rudd has largely focused on his strength of leadership: the concentration of power in his office, his micro-management of ministers and bureaucrats as well as his strong work ethic.

But, as The Australian's Editor-at-large Paul Kelly observed several months ago in what we now know were prophetic words, it is not how strong Rudd is that should be at issue, it is how weak his prime ministership could become. The weakness of Rudd's prime ministership is his addiction to popularity. While the government has attempted to talk itself into the idea that it takes hard decisions in the national interest, the problems it now faces have come about from a desire to avoid difficult situations.