The misery of good government to come

By all appearances life under an Abbott government will not involve ‘turning back the boats’, sharply lower electricity bills or fixes to structural federal budget problems.

All indicators suggest that by late 2014 Australian voters will be experiencing a bitter irony – that life under a ‘good’ conservative government will feel bad, compared to life under the ‘worst government ever’, which felt pretty good.

And very little of that experience will make sense to Joe Average, who broadly accepts the dominant media narratives of the Gillard years, according to the polls – today’s Newspoll published in The Australian shows no upward movement for Labor’s primary vote (32 per cent) and a fairly insignificant downward move for the Coalition (46 per cent).

That bad feeling will start with the highest profile stories (putting aside the Rudd issue) – carbon pricing and ‘boats’.

Households will be mystified, if an Abbott government is formed, as to why their power bills haven’t come tumbling down. Joe Hockey if often heard accusing Labor of overpromising and under-delivering, but that is exactly what the Coalition will achieve with repeal of the carbon tax. It will not, in itself, do much at all to cut power bills (it adds about 10 per cent to domestic bills). That’s because energy price hikes through the Gillard years were overwhelmingly due to capex catch-up in transmission lines.

Moreover, the revenue the Clean Energy Futures package recycles into the pockets of Australians earning under $80,000 will be diminished, or dry up altogether, if the Coalition follows through with its logic that without a carbon tax, there’s no need for compensation.

Dogged reporting of the carbon issue in line with Abbott’s highly successful “wrecking ball through the economy” metaphor – such as The Daily Telegraph’s recent from page headline ‘Carbon collapse - catastrophe as a firm fails every hour’ – will leave Joe Average scratching his head when firms continue to fail, and be created, at about the same rate. (That story highlighted nearly 11,000 ‘collapses’, without noting the 187,000 businesses created in the same period).

But the carbon story is just the start. The boats narrative, if anything, is more powerful in the minds of working Australians too busy, and too poorly served by journalists, to understand the issues.

The common misconception is that the Howard era policies, which did indeed ‘stop the boats’, will work again.

That is not true. There is fresh evidence today that Indonesia will not accept Tony Abbott’s repeated assertion that he will simply turn boats around in international waters.

Numerous media outlets are today quoting Mahfudz Siddiq, the head of Indonesia's parliamentary commission for foreign affairs, as saying that Abbott “doesn’t understand the problem” and that his plan “disrespects the talks we have already had which have been very productive. With wrong perception, even Indonesia could pull out from these cooperative agreements regarding people smuggling”.

The Coalition has escaped much scrutiny on this issue by saying it will make talking to the Indonesians a priority. Maybe so, but Mahfudz Siddiq’s comments add to a string of similar comments by senior Indonesian government figures suggesting they won't be listening (Abbott’s free boat ride must end, April 2).

It is optimistic to think that most voters have swung away from Labor over more substantial policy failings – particularly the mining tax fiasco, growing federal debt, and the junking of a surplus despite the pledge to deliver one “come hell or high water”.

However, even if that was what kept Joe Average awake at night, there would be little respite under an Abbott government. Had Abbott not promised to repeal the mining tax, it would start to deliver a modest, but not insignificant revenue stream to help shore up the budget as its generous front-loaded asset depreciation concessions expired. It would gradually morph from being Wayne Swan’s barren chook to Joe Hockey’s smallish golden goose.

But it will be repealed. And as the Gillard government lurches from one deficit forecast to the next, it has become apparent to all that the Coalition’s “return the budget to surplus sooner” pledge is about as substantial as the “now 40 per cent better!” claim on a bottle of detergent. The structural problems in the budget, though exacerbated by Labor spending, will only worsen as the mining investment boom tapers off into 2014 (See: Wayne's big forward revenue backfire, April 22)

Power bills still rising... boats still coming... the budget still in deficit. And all that’s before the overdue correction in the Australian dollar that will bring with it imported inflation, Reserve Bank hikes (when at present one more cut is on the cards), and a flow through to interest rates and the housing market.

Just a few reminders to enjoy life under this awful government, ahead of the misery of good government to come.