At the entrance to the ministerial wing of Parliament House this morning, Treasurer Hockey gave a door-stop interview to a handful of journalists, frosty both in terms of temperature and questions.
“How do you sell a broken promise?” was the first question.
Hockey looked confident enough, ducking such questions and pointing out that “if you look for your own self-interest in the budget, you might be disappointed” but that “if you look for the national interest, you’ll find it there”.
This is not new ground. During the GFC -- which, contrary to an assertion in the Liberal Party booklet ‘Labor’s mess’, was not just a “northern hemisphere” event -- Australians were asked to look to the national interest as the government released two waves of stimulus spending.
Acting on then treasury secretary Ken Henry’s advice to “go early, go hard and go households”, the government rolled out $10 billion after the collapse of Lehman Brothers in late 2008, and topped it up with $42bn more in February 2009 as the shock of that credit crunch was hitting home around the world.
The Coalition voted for the first package and opposed the second, and has spent a considerable amount of time in the past three years pointing out the folly of that second package.
The question is: how did we go from $50bn of debt that was arguably justified to get the economy moving again to a net debt of $184bn today?
Well, much as Treasurer Hockey will refuse to admit it, there are two causes.
Yes, there is a lot of over-spending, including a lot of spending commitments that came to fruition beyond the forward estimates of Wayne Swan’s last budget. Those are the ‘land mines’ that Hockey talks about constantly, though they didn't create the current net debt.
But there were also historic revenue write-downs, particularly in corporate tax and capital gains tax. The last two budgets saw tens of billions of revenue evaporate, and Hockey argued at the time that everyone knew that was going to be the case.
That wasn’t true then, but if it was, then Hockey should have known that revenue in the early part of an Abbott government was going to keep falling. The budget papers today should show this trend continuing, but we shall see.
But back to the national interest.
The real problem for Hockey in asking us to look for the national interest is that his plans involve belt tightening, whereas the Rudd request was easier to sell: ‘let’s borrow and spend in the national interest’.
It’s a bit like a Dad taking a depressed son to a Holden dealer and saying, “Let’s buy a new Monaro on credit to cheer you up!”
Now Mum is knocking on your bedroom door, saying: “The debt collectors are here. Can I have the keys to your car?”
Yes, one was definitely easier to sell.