PRE-BUDGET REVIEW: Where There's Smoke, There's Treasurer Joe Hockey

The leaves in Canberra are turning brown, the nights are getting chillier. Photos of the Treasurer with a pen and notebook are appearing. The government is rolling out a coordinated series of leaks.

It’s budget time.

The 2015 federal budget arrives at an intriguing time in the life of the Abbott government. We are now past the midpoint of this term of Parliament – closer to the next election than the last. Politically, a difficult 2014 has given way to an uncertain 2015, as the Prime Minister feels his way forward from the near-death experience of February.

Last year’s budget was a disaster. It remains both the emblem and one of the main causes of the government’s unpopularity. The public image that has crystallised for the Abbott government – that it is a mean-spirited, narrow minded and hardline administration – was in large part cemented by the 2014 budget. Opinion polls rated it one of the most unpopular budgets ever.

The story of the Abbott government’s budget misfortunes is now reasonably well known. Disorganisation and perhaps malice held back the release of the government’s Commission of Audit until just a fortnight before the budget. The savagery of that report’s recommendations were enough to give many voters a bad fright.

However, the budget itself was the real problem. The measures it proposed were wildly unpopular: the GP fee, the family payment cuts, pension indexation, university deregulation, no dole for the under 30s, cuts to the ABC … the list goes on.

Matters weren’t helped by tone deaf performances from Joe Hockey and his partner-in-crime Mathias Cormann. The Treasurer and his economic team genuinely failed to predict that voters would assess the budget on the grounds of equity, and find it wanting. Australians had seen austere budgets before, but they hadn’t seen one quite as honest in its intention to punish the poor.

The Abbott government was badly wounded by the 2014 budget. In response, its approach in 2015 has been different.

Instead of chest-beating rhetoric about the end of the age of entitlement, the government has been using each and every opportunity to champion a kinder, gentler budget strategy. Instead of the unpopular Treasurer, Social Services Minister Scott Morrison has been consciously used by the government as its spokesman for a new philosophy of budget munificence. The government has even been trying to adopt the language of fairness, not very convincingly.

In particular, the government has spent time and effort developing a families package that it could use as the central plank of its 2015 budget. Commentators have taken to calling the approach “Labor-lite.”

The superficially astute tactic came to grief over the weekend, however, as the government bungled both the substance and the messaging of its much vaunted families package.

On first glances, the package has a reassuringly Howardian ring to it: a payment to families with children, a top line funding figure of $3.5 billion, and a warm and fuzzy title of “Jobs for Families”. The aim is “a simpler, more affordable, more flexible, and more accessible child care system” and the government boasts that families on middle incomes will be $30 a week better off.

There are some genuinely welcome aspects to the package, such as $843 million over the forward estimates for preschool education. There will be subsidies for up to 100 hours a fortnight for each child.

But the government badly mismanaged its communication strategy. It dropped the package to sympathetic Murdoch tabloids, but gagged Joe Hockey from discussing it until the media conference, which Hockey didn’t go to. Instead the announcement was made by Abbott and Scott Morrison, leading to entirely understandable questions about whether Joe Hockey gets any say in his own budget.

Most astonishingly, the government made a great show of linking the package to Mother’s Day. That turned out to be a rather foolish connection when the package itself was revealed to include cuts to parental leave for working mothers.

The families package also includes a nasty surprise: a radical tightening of the Rudd-Gillard government’s paid parental leave scheme. Mothers with existing paid parental leave packages provided by their employer will be denied the government-funded parental leave benefit. To make matters worse, the government justified its decision by accusing such working mothers of “double dipping.”

Understandably, the reaction has been sharp and discontented. At a stroke, the universal nature of the existing paid parental leave scheme will be abolished. Worse, the business lobby promptly warned that many businesses might respond by abandoning their leave schemes altogether.

For Tony Abbott, it’s difficult to imagine a more humiliating backflip in policy terms. Paid parental leave was famously Abbott’s signature policy. As opposition leader and then as prime minister, he spent years defending an extremely generous paid parental leave scheme that would have delivered six months of a parent’s full wage, not as a benefit, but as a workplace entitlement.

Now Abbott is presiding over the strangling of the existing parental leave entitlement in its infancy.

In a slashing piece at Women’s Agenda, editor Georgina Dent wrote yesterday that “I can't determine what is worse: that we were hoaxed to this extent or that the government expects the women of Australia to tolerate this hoax.” The ACTU’s Ged Kearney called the hypocrisy “hard to imagine, let alone deal with”.

The battle for a public parental leave entitlement in Australia was hard won. It was postponed repeatedly in the Rudd years before finally being instituted in 2010. Tony Abbott’s six-months-at-full-pay scheme was intended to be a far more generous entitlement. Abbott championed it as simply what working mothers deserved.

This particular cut back has little real justification in policy terms. It contradicts the stated aim of the government’s families package, which is to encourage workforce participation. Cutting back on parental leave is almost guaranteed to negatively effect workforce participation, by making it harder for working parents to stay in work. Parents looking to combine their work and public leave entitlements to get more time with their newborn will be punished.

Additionally, the government’s package is directly linked to the passage of last year’s budget cuts to family tax benefits. It’s hard to imagine the Senate cross-benchers passing cuts this year that they voted against last year.

The government’s mealy-mouthed explanations that the cut is all about “fairness” is only compounding matters.

“The way we see it is it's an equity and fairness measure, it's an integrity measure,” Mathias Cormann said on ABC radio yesterday morning. “It's a matter of making sure that the opportunity available to all women is the same.”

This doesn’t even make sense: the government is in fact removing an opportunity currently available to every woman in the same way.

As a result, the government’s families package is dead on arrival. The implosion of the package has compromised the budget’s media cycle. What should have been a centre-piece announcement on the night becomes the focus of a sudden flare-up of media controversy, in a policy area where the government is weakest.

That leaves Joe Hockey further exposed to what is almost likely to be a hostile media reaction to whatever he hands down.

It’s not hard to sniff the wind in such matters: Hockey’s standing within the Coalition is seriously eroded. It’s going to be a fascinating night, as Hockey fights for his political survival.