Canberra's fiscal man of mystery will have to show his true colours

The polls suggest this election is the Coalition's to lose — and they don't look like losing it. If Opposition Leader Tony Abbott plays it safe from here on, he will be prime minister next month, and we will have a very different government.

The polls suggest this election is the Coalition's to lose — and they don't look like losing it. If Opposition Leader Tony Abbott plays it safe from here on, he will be prime minister next month, and we will have a very different government.

Abbott's decision to leave it until the final days to reveal how he will pay for his promises reflects his confidence. Everything is going well for him. Why take a risk by unveiling decisions that could be unpopular, and reverse that momentum?

But his reluctance to come clean adds to the question marks. What kind of government will the new team be? How will it change the economy? And how will it handle the challenge of leading Australia through the bust of the biggest mining boom since the 1850s?

To Treasury and the Reserve Bank, that is the question ahead. Between 2001 and 2012, if you believe the national accounts, real business investment in Australia trebled. As a share of gross domestic product, it doubled from 9 per cent to 18 per cent. And most of that growth was in mining and mining-related investment.

But it peaked last year, and is falling. China's growth has slowed, and become less resource-intensive. Global growth is much lower than a decade ago. Rival suppliers have emerged, and prices have fallen. The cycle has turned, and as Reserve Bank governor Glenn Stevens noted cryptically last month, "it could be quite a big fall in due course".

That is one key reason shadow Treasurer Joe Hockey, after an endless campaign against debt and deficits, refuses to set a deadline for getting the federal budget back into surplus. And it's why he's told us a Coalition government would provide economic stimulus if required "should a downturn in the private sector become more protracted".

But despite a widespread community belief that governments control the economy, once parties take office, they often find themselves at the mercy of events they cannot control, and are forced to respond to them rather than stick to the agenda they planned.

The Whitlam government was overwhelmed by, among many things, the doubling of oil prices and consequent global recession. The Fraser government found little worked for it as it hoped, and left the economy in no better shape than it inherited. The Hawke government had to jettison much of its platform to get the budget back in surplus. The Howard government had a charmed run but the Rudd government was immediately hit by the global financial crisis.

Who knows what will dominate the economy under an Abbott government?

Some things we can confidently predict. We know that in coming months, the Coalition will "discover" that the budget is in worse shape than it thought. It will make spending cuts it had not flagged, and renege on campaign promises, saying it can no longer afford them. And it will try to blame it all on Labor.

We know this will happen, because it always happens under new Coalition governments. Unless the numbers deteriorate badly in coming weeks, it will begin by administering nasty medicine to narrow the deficit, and blame it on Labor.

This will hurt the economy and employment but Hockey will try to hold firm against all the inevitable protests and administer a second dose in the budget, by which time he hopes to have a report from its commission of audit on government spending - one of numerous reviews planned for their first term.

Among others, the Coalition promises a review of the tax system — probably including the GST, despite Abbott's denial that there will be any change to it. The review, "by a distinguished Australian", would report well before the next election, giving the Coalition time to craft a tax reform package to put to the voters for their endorsement, just as John Howard did in 1998 with the GST.

But what those changes might be is unclear. There is support from business and economists for raising the GST rate and/or extending it to areas now untaxed - which would dovetail nicely with opposition finance spokesman Andrew Robb's plans to push more responsibilities back to the states.

But Abbott will be wary of changing the GST without generous compensation. While business wants the states to use extra GST money to scrap taxes on transactions, there will be many hands out for that money.

Hockey is also keen for a "son of Wallis" inquiry into the financial system, with an eye to asking how well the banking oligopoly is working in Australia's interests. Hockey's family was in small business, and it has shaped his thinking as much as it shaped Howard's.

Another inquiry will look into competition policy, with the Productivity Commission asked whether it needs beefing up. The commission, out in the cold under Labor, will be busy under the Coalition, inquiring into the car industry and industrial relations as well.

First of all, however, Abbott and Hockey will sit down with the heads of Holden and Toyota to work out the industry's future — if any. Many believe the Coalition's policy to cut $500 million from subsidies and give no new aid would make local manufacturing unviable.

Whether he gives priority to keeping his policy or keeping the industry will be the first test of how Abbott will govern.

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