Bouncing off Labor's rock bottom

For the first time since it formed minority government in September 2010, Labor yesterday looked like it might win the next election.

Okay, that's a big call. But there's the same feeling in this columnist's waters as occurred on August 10 last year. On that day, after some extraordinary price action on both the ASX and NYSE, I asked: "Was that the bottom?"

Equities had gone into a sharp nose dive, followed by an equally sharp rebound that gave the impression of a natural limit having been reached. Capital has to go somewhere, and it looked like it would have to flow back into equities.

As it happened, August 10 wasn't the bottom – the major bourses, after a week or two of gains, hit the real bottom (for now at least) in early October 2011. Okay, so nobody's perfect.

In Parliament House yesterday, it was easy to form the impression that political capital, having drained out of the Gillard government for so long, might be coming back – particularly following the four-point rise in Labor's primary vote seen in the Nielsen poll at the start of the week.

The first sign was a distinct change in the PM's demeanour. At a joint press conference with Communications Minister Stephen Conroy to announce NBN Co's $620 million satellite purchase, Gillard ripped into journalists for asking stupid questions (the nerve!) on the auto industry.

She told one "you completely misunderstand everything we've done in the car industry", and another "you've got a wrong view about what the car industry's about". There had been, she said tersely, too much "lazy talk" around the issue.

Interestingly, she took the fight back to Fairfax and broadcast reporters as much as to the News Ltd journalists – that portion of the press pack that Senator Conroy a little over a year ago accused of being hell bent on "regime change".

Enough is enough, Gillard seemed to be saying – all you journos better lift your bloody game.

Later, in question time, Gillard almost shook with anger as she condemned Tony Abbott's "disgusting approach" in linking Alcoa job losses to the impending carbon tax/ETS, and she maintained the same fiery tone for most of her responses until Christopher Pyne rose to move a censure motion.

And that, in itself, was telling. Both Pyne and shadow immigration minister Scott Morrison put in impressively theatrical performances in their censure-motion speeches.

But beyond all the bluster, there was very little substance to either tirade. Both were effectively railing against an abstraction: the 'stench' of corrupt Labor, that they both argued emanated from the Australia Day riot sparked by the actions of recently resigned Gillard staffer Tony Hodges.

Pyne read out a great list of questions that he demanded the PM answer about the affair and said: "While the prime minister refuses to answer these questions, a rotten stench lingers over the prime minister and her office that saps the very confidence of the Australian people in the office of the prime minister and those who work for her."

In seconding the motion, Morrison said: "There is a stench about this government that grows stronger every single day. It is the smell of distrust, the smell of division, the smell of disloyalty and the smell of incompetence, arrogance, dirty tricks and cover-up. Above all, it is the smell of the decay that is eating into the very fabric of this government and that is affecting its very culture under the leadership of this prime minister."

Yes, there is a smell. But to focus such energy on the Australia Day riot in the first week back in the chamber seems desperate. There are big issues to be decided this year, and big choices to be made by voters at the next poll.

And it looks increasingly as if voters will go to the ballot box with the issues, not the smell, front of mind – Labor is doing everything it can to bring the debate back to our economy which, despite the layoffs in manufacturing and finance sectors, is still in robust shape overall.

Labor's asking voters to look at the government in the way home buyers would inspect a house that has the right number of bedrooms and good-sized yard – look at the potential, and ignore the fact that the previous owner had a smelly dog and smoked incessantly.

Coalition MPs tell me the policy review being led by Andrew Robb, and covering all portfolios, is close enough to complete that, were a snap election called, "we'd be ready".

But it is the substance of those policies that will take Tony Abbott to power, if he wins – not just a stench of dodgy political culture on the other side of the house.

The NBN plan, which shadow communications minister Malcolm Turnbull yesterday attacked as wasteful and expensive, is nonetheless a popular policy. How the Coalition will outflank Conroy on broadband is not at all clear at this stage.

Then Joe Hockey and Andrew Robb must detail, close to the election, how they can slash 'around' $70 billion from the budget without treading on anybody's toes. A big ask.

The tax breaks and pension increases that come with the Clean Energy Future package need to be replaced somehow. And the across-the-board increase in the super guarantee, partly paid for by the MRRT, must be made up somehow if Abbott takes power and dismantles both the carbon and mining taxes.

Jobs need to be protected in the steel and aluminium sectors, in automotive manufacturing and elsewhere.

On all these issues, I am not making an economic argument, only a political one. Namely, that the NBN, the carbon-tax compensation, super increase, saving jobs and so on play well with voters. So does relatively low unemployment, decent GDP growth and contained inflation.

In short, yesterday was characterised by an insubstantial attack on the 'stench' of Labor, while a newly emboldened PM came out fighting on the big issues that must be fought at the next poll.

So was that the bottom for Labor? It sure felt like it yesterday.

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