Budget 2015: Is The Absence Of Catastrophe A Victory For Hockey?

One week on from the 2015 budget, how goes the bounce?

We’re not talking about ball sports or trampolines here, but rather those all-encompassing arbiters of modern politics: opinion polls. Will the budget give the government a boost in popularity? Will it lay the foundations for the next election? Is the Abbott government on the way back to public favour?

The semi-mythical “bounce” in opinion polls has always featured in post-budget journalistic discussions, and it has almost always turned out to be a chimera. Governments generally don’t receive poll bounces from budgets, as Wayne Swan can attest. Indeed, budgets generally don’t move opinion polls much at all.

Last year’s budget was the exception, and the exception was negative. Newspoll rated it as the second-most unpopular in history, just ahead of John Dawkins’ dismal 1993 effort (where the Keating government broke its election promise to deliver the “L-A-W” tax cuts).

After it spooked voters with last year’s austerity, the government’s popularity collapsed. A minor pre-Christmas recovery was then wiped out by the Coalition’s disastrous summer (much of which was budget-related too). The dismal polling was so bad that the Coalition narrowly avoided a leadership spill; speculation commenced about the future of Joe Hockey as Treasurer.

For all of these reasons, therefore, there has been plenty of poll-gazing in the wake of last week’s budget. The Abbott government’s second budget was framed, carefully and deliberately, to avoid the disastrous unpopularity of 2014. On the face of things, it has succeeded in that goal: this year’s fiscal statement has so far not proved itself calamitous.

Consider Newspoll. On the all-important question of whether the budget was good for the economy, Newspoll gave the budget a small triumph, with a total of 46 per cent of respondents saying it would be good, against 28 per cent saying it would be bad.

That’s the best result since Wayne Swan’s first budget, back in the salad days before the fall of Lehman Brothers.

At least in some polls, that approval seems to have filtered through to broader voting preferences. While Newspoll held steady at 53-47 for Labor, a Fairfax-Ipsos poll had the two major parties at level pegging. Roy Morgan also showed a slight improvement for the government.

It’s too early to say if this is anything substantial. The Ipsos poll, which has shown itself to be volatile, could be a rogue result. Or, the bounce could be real, but transitory.

In 2014, support for the Coalition plunged even before the budget, on the back of disquiet over the Commission of Audit; the rot set in when voters realised Hockey would be adopting many of the Audit’s recommendations.

So is it a bounce? Probably not. Even if it is a bounce, it’s a small bounce. Call it a “mini-bounce”, if you like.

And yet, however we read the polls, the government will be delighted.

For one of the less popular first-term governments in modern history, the absence of catastrophe is a victory in itself. At the very least, Hockey’s immediate political future seems safeguarded, while in the Prime Minister’s Office, thoughts will turn to the strategy for next year’s election.

History should caution the government against too much celebration. The Gillard government, also dogged by seemingly permanent unpopularity, was always on the look out for poll bounces.

While there were occasional bumps of support from time to time, the climb back to electoral competiveness never materialised. Once voters turn against a government, it can be very difficult to entice them back.

And even if the budget has avoided disaster, there are plenty of lurking misfortunes that could yet engulf Abbott and his team.

The budget contains a number of nasties that could sap the government’s popularity in the medium term. Prime Minister Abbott has already copped plenty of flak for his government's decision to exempt parents receiving employer-funded parental leave from the public scheme. The parental leave debate will run and run, helped along by the disconnect between the decision to punish working mothers and the budget’s rather masculine language of “Tony’s tradies”.

Health is another problem for this government. There are $1.7 billion in cuts in this budget, plus the huge cuts to the states for public hospitals announced last year. The Coalition’s relationship with doctors is on the rocks, with the AMA and the government in open warfare over a range of health policy decisions. Even with the GP co-payment abandoned, new Health Minister Sussan Ley will have her work cut out hosing down the spotfires.

Education is a third dilemma. Christopher Pyne appears resolute in his insistence on university deregulation, despite the manifest unpopularity of the policy.

Every time Pyne tries to force deregulation through the Senate, Labor MPs get on the airwaves and hammer home their slogan of “$100,000 degrees”. It’s a message that is clearly resonating with middle-class parents of school children. Despite this, the government seems to determined to press on.

The government’s biggest worry is the state of the economy. It is stagnating. With mining investment falling off a cliff, consumers wary and the Aussie dollar still too expensive, there are few drivers of domestic economic growth. Hockey’s own budget papers say unemployment will be above 6 per cent when the Coalition goes to voters next year.

Then there are the wild cards and black swans. The alarm bells warning about Sydney and Melbourne’s property bubble are clanging loudly. Even analysts formerly sanguine about the future of Australia’s housing market, like Michael Pascoe and Christopher Joye, are now deeply concerned about the over-valued prices of homes in our two biggest capital cities. 

A housing crash in Australia would quickly take the country into recession, and possibly challenge the solvency of one of the major banks. No doubt Hockey would try and throw money at the problem to try and stem the bloodbath, but you’d have to question the credentials of this government when it comes to fiscal stimulus in an asset price bust.

The risk might be that the government, terrified of a further deterioration of the budget bottom line, sits on its hands while the property market implodes.

Of course, things can get better as well as worse. All forecasts have an upside, and there is chance that the government’s rosy budget predictions could come good. If economic growth returns to trend, if tradies start spending, if employment growth resumes, the government will have the makings of a persuasive narrative.

This is the sort of thing that must keep Bill Shorten awake at night. In recent years, voters have shown that they hate austerity, but that they quite like “Labor-lite” fiscal and social policy in the style of Mike Baird.

A strong economic recovery plus a healthy round of middle-class tax cuts in next year’s budget would stand Tony Abbott and Joe Hockey in good stead to attempt re-election. Of course, that’s assuming they are still the prime minister and treasurer in late 2016.