Voters brace for tough budgets

The WA and federal budgets will test the political resolve of the governments to make the hard decisions.

All the signs point to taxpayers’ pockets being raided twice when the federal and state governments introduce their budgets in the coming weeks.

A hit in the opinion polls is likely to follow. What is unknown is the size of that hit.

A strong case has been made for belt tightening in both Canberra and Perth. Nothing unusual about that. It’s all part of the traditional softening up of the electorate to expect the worst.

When a budget does not live up to the dire predictions, the government of the day usually gets a small tick. But, this year things are different – for two reasons.

The first is that both budgets are in real trouble. Federal Treasurer Joe Hockey was left with several time bombs by the previous Labor government, including the National Disability Insurance Scheme and the Gonski education initiatives.

Although the coalition has distanced itself from the specifics of the Gonski reforms, it remains committed to change. And that, with the NDIS, will add billions of dollars to government spending.

But expected revenue growth is falling way behind spending commitments. That is why Mr Hockey has been dangling the prospect of increasing the retirement age, reducing entitlements for seniors and proposing an upfront charge to visit GPs, as part of his tough medicine.

Or to use his own words, more Australians need to be involved in the “heavy lifting”, to help repair the budget.

It’s a similar story from new state Treasurer Mike Nahan, despite the fact that his budget is still in surplus – just.

One driving force underlining the state position is the 2008 election undertaking by Premier Colin Barnett to never knowingly preside over a budget deficit.

So, even though factors beyond his government’s control, such as the iron ore price and exchange rates, are crucial to the budget position, Mr Barnett has plenty of political capital riding on honouring that undertaking.

The second factor is the political timetable.

Dr Nahan will be introducing the Liberal-National alliance’s second budget of its second term. He still has time to dispense some tough measures, absorb a hit in the opinion polls and present a much stronger financial picture by the time of the next state election.

And if the much-vaunted AAA credit rating has been restored by ratings agency Standard & Poor’s, then voters might just be forgiving when they go to the ballot box.

If anything, the pressure on Mr Hockey to deliver at the national level is even greater. After bold predictions by Labor treasurer Wayne Swan just two years ago that the budget would be quickly returned to surplus – that’s before he succumbed to the almost universal view that this would be impossible – predictions have become increasingly dire.

Economic rationalists are telling the treasurer that nothing but tough – read unpopular – measures will achieve the desired result over the medium term.

So if both governments do what is increasingly expected, they will get a strong backlash from vested interests and voters generally.

Their hope, however, will be for healthier balance sheets that will earn a tick of approval from voters when they go to the polls.

What would be worrying coalition supporters, both federally and in Western Australia, is that their parties currently enjoy wafer thin margins in voter support on a two-party preferred basis. 

For example, the latest Newspoll in The Australian has the coalition leading Labor by 51 per cent to 49 per cent, two-party preferred. This is helped by the fact that Mr Abbott enjoys a healthy eight-point lead over Labor’s Bill Shorten as preferred prime minister.

But the coalition’s support will almost certainly dwindle after a tough budget. And, if Mr Shorten hits his straps or is replaced by a leader who strikes a stronger rapport with voters, many Liberals will start getting nervous.

It’s a similar story at the state level. Although both the Liberals and Labor lost ground at the recent half-Senate by-election, it’s impossible to know what role local factors played in that result.

But in the latest Newspoll on state voting intentions, published in December, the Liberal-National alliance also held a marginal 51 per cent to 49 per cent lead on a two-party preferred basis.

However, Labor’s Mark McGowan led Mr Barnett as preferred premier by 43 per cent to 37 per cent, with the rest uncommitted.

So coalition supporters will be holding their breath when the budgets are delivered, in Perth on May 8 and five days later in Canberra.

The question will then be: how hard will voters mark the governments down, initially, for dispensing tough medicine?

More importantly, will the patients have recovered in time for the federal poll in 2016, and the state poll in 2017? That is the great imponderable.