CANBERRA OBSERVED: News Weekly
Rudd Labor Government wobbles for the first time
, June 7, 2008
Prime Minister Rudd has no-one to blame but himself for the problems his new Government finds itself in.For the first time in six months, Kevin Rudd is showing signs of vulnerability and of being on the defensive while the Opposition has stumbled across an issue over which it can fight him at last.
The euphoria of victory and the warm inner-glow from the Sorry Day/ Signing Kyoto/ 2020 Summit trilogy of symbolic gestures is disappearing in the rear-view mirror while the spectre of the rising costs of living and uncertain economic times looms on the horizon.
It will be some time for the impact of the first Swan Budget to be digested and to judge whether it was "tough" enough on spending to be acceptable to the Reserve Bank of Australia.
The initial take does not look good, with forecasts that interest rates are set to go higher over the course of 2008.
If rates do indeed jump again, the Treasurer will have to take the flak for not cutting deeply enough into government outlays.
On the other hand, it is clear there were some strategic miscalculations as the Budget was being set.Pain
It now appears that all the pre-Budget warnings on the pain it would inflict, particularly those coming from Wayne Swan, were overblown.
For months, the Government was preparing voters for the worst. In fact, it turned out to be a whimper of a Budget.
Polls taken afterwards suggest voters believed that means-testing of benefits such as the Baby Bonus should have been even more onerous.
The Government also underestimated the cynicism of the electorate — voter gratitude from various sectors of the electorate for its insistence on "delivering on promises" never eventuated.
Instead, pensioners and carers felt hard done by, while households in general have quickly turned their attention from the once-a-year event to the more immediate problem of their own budgets.
The Government felt it had been generous to pensioners and carers, but was ambushed by pensioner groups that it claims are sympathetic to the conservative side of politics.
It now acknowledges privately that Mr Swan did not sell the Budget message to pensioners and will have to do more to appease this section of the community.
However, it is genuinely alarmed about the growing chorus of people angry about petrol prices.
Dr Brendan Nelson was initially pilloried for his Budget-in-reply speech in which he pledged to cuts five cents a litre from fuel excise.
There was indeed plenty of irony in the call.
It was something the Howard Government had refused to even contemplate, and the only politician who has mentioned cutting excise in recent times has been the lone Family First senator from Victoria, Steve Fielding.
Labor lashed the excise cut as irresponsible and unaffordable, and a leaked memo from shadow Treasurer Malcolm Turnbull suggested that he, along with other senior Coalition MPs including Peter Costello, Greg Hunt and Alexander Downer, were against it too.
But it has turned out to be something of a minor masterstroke for Dr Nelson and a guarantee that he will lead the Opposition for the foreseeable future.
Even Mr Turnbull, with more front than Myers, is now arguing that the Coalition's cut-price petrol policy is vastly superior to the Rudd Government's policy of merely "watching" bowsers via its proposed FuelWatch program.
Prime Minister Rudd has no-one to blame but himself for the problems his new Government finds itself it. The central message of his election campaign was based on promises to ease the cost-of-living pain for working families.
Incredibly, weeks of discussion about rising petrol prices, the effectiveness or ineffectiveness of FuelWatch, Brendan Nelson's excise cut and the Dr Ken Henry review into the GST tax-on-a-tax, overlooked a new tax on fuel which is on its way.
Once Professor Ross Garnaut brings down his recommendations into how Australia should become a world leader in limiting greenhouse gases, the Rudd Government will be obliged to introduce a carbon tax — possibly on top of the GST and the excise.
If the Government is serious about its promise to cut greenhouse gases, fuel will not be allowed to be exempt.
What is needed now is some straight talking from Mr Rudd and Mr Swan.Higher petrol prices
They will need to acknowledge that high petrol prices are likely to remain high (despite ABARE forecasts which claim that petrol will halve in price before 2013), and possibly run higher.
They need to be honest that the coming greenhouse taxes will add to the transport costs of Australian families.
They will need to acknowledge that Australia needs to do everything it can to assist explorers to aggressively search for more gas and oil on-shore and off-shore to help reduce Australia's reliance on overseas fuel sources.
And, finally, they will need to drop completely their ideological opposition to the fledgling ethanol industry.
Ethanol is a potential alternative transport fuel source to petrol. It is plentiful, available in Australia, and environmentally safer than petrol.
Most of all it is cheaper.
Incredibly, the Rudd Government so far has not championed it.