Abbott's still dancing on Labor's grave

The Abbott government is nothing if not ambitious. Day by day, as commentators scratch their heads over the government’s economic plans, a deeper political strategy is emerging that would make Robert Menzies blush. 

The small coterie of MPs and advisers comprising the Abbott leadership team seem to be laying the groundwork for an epic run in office. That strategy begins with an extended period of fixating on the Labor Party rather than the economy. 

This is discernable in cabinet’s response to the predicament of Qantas. As Stephen Bartholomeusz explained yesterday (Abbott leave Qantas with a wing and a prayer, March 4), by denying the struggling airline the short-term fix of a line of cheap credit, and by focusing instead on the long-term fix of allowing greater foreign ownership, the government is effectively doing nothing at all.

Put another way, its solution for Qantas is not a solution, and it can’t pass the Senate anyway due to opposition from Labor, the Greens, Nick Xenophon, John Madigan and the Palmer United Party (after July 1). 

So why put the story out there so forcefully a few weeks ago, with Treasurer Joe Hockey giving journalists his checklist of factors that made Qantas special, and raising hopes of a bailout, only then to say “no, Qantas is just like SPCA, Toyota, Ford, Holden...”.

Well, because though some media commentators point to the Coalition’s cynical plan to wedge Labor on the issue, the plan is still likely to work. When the jobs tumble at Qantas, Labor will probably not be able to sell the message “it’s not our fault”, but Abbott will cut through with the message “we presented our solution to parliament, but Labor voted it down”. Not true, of course, but if past results are a guide to future performance, very likely to work.

Media reports of a split between Hockey and Abbott over Qantas look naive. In terms of political strategy, they are twirling about the corridors of power as smoothly as a latter-day Fred Astaire and Ginger Rogers. 

The aim is to dance on Labor’s grave. 

To win two, three or four terms of government, Abbott needs to make the end of the Labor era look bad. Very bad. And when that is done, to rely on structural forces nobody controls -- plus a few sound reforms to help things along -- to lift things back to good. Very good. 

We have already seen a concerted effort to push out the deficit as much as possible in the May budget (There’s sense in Hockey’s taper caper, December 20 2013), and hence to allow Hockey to borrow copiously and blame Labor for the need to so. 

Then there was Hockey’s magnificent “either you're here or you're not!” to the General Motors auto bosses, made from the floor of parliament to ensure our uncompetitive car industry was wound up as quickly as possible (Holden opens a Pandora’s box for Hockey, December 12 2013). That worked a treat. A two-finger salute could hardly have done more.

And there are the constant long faces and talk of economic gloom from Hockey, when in fact GDP growth is edging back to trend, minerals exports (and tax receipts from company tax and the still-in-place Minerals Resource Rent Tax) have pushed us back to a trade surplus, and there are tentative signs that non-resources firms are once more considering investing in their own businesses. 

Strong buildings approvals data yesterday was loudly applauded by some economists, though that should be treated with some caution. It was dominated by inner-city apartment-building, meaning that each dwelling approval may come with far fewer jobs than in the past (Why the high rise is not a tower of strength, March 4). And a building frenzy does little to address weak investment in other sectors of the economy. Money needs to pour into growth sectors, not into the ‘houses and holes economy’.

Overall, I think the strategy is working at a political level. Australians are now pretty sure things are hopeless, that nothing could fix the federal budget, and that Asia is beating on our door while the domestic economy collapses. 

What a surprise it will be, post-budget, to see tax revenues recovering, exports booming and (hopefully) the unemployment rate peaking in 2015 – coming down nicely for a 2016 election. 

So the plan is watch Labor’s every move, and to wedge and frustrate them at every turn; ignore the job losses sweeping across the nation; talk the economy and federal finances down; and then bask in the sunshine of the economic growth to follow. 

Pretty smart. The only drawbacks are that it might not work, and the lives of hundreds of thousands of Australians will be thrown into turmoil in the meantime. 

As National Australia Bank’s chief economist Alan Oster said yesterday, "You can't have [the unemployment rate] at 6.5 per cent and the government not do anything." 

Want to bet? This strategy is rewriting the political rules.