Since the high-profile Commission of Audit was announced last year, federal treasurer Joe Hockey has lead Coalition MPs in making the case for a tough budget come May 13. Calling the “unsustainable” spending during the last government “a recipe for disaster”, last week Hockey delivered his strongest speech yet, stressing the “moral imperative” of returning the budget to a sustainable path.

On Monday night, prime minister Tony Abbott dropped more pre-budget bombshells, flagging an end to several cash transfer programs, the abandonment of the prior government’s school funding plans and longer-term pension reform.

The electorate is being primed to see painful cuts delivered in just a fortnight’s time, yet so far the opposition have failed to respond with anything more than kneejerk condemnation.

The ALP’s furious response to the idea of a "debt levy" or temporary tax is instructive. Many might be at a loss as to why a progressive party is campaigning hard against a tax that spares anyone below $80,000 pa, which is a full $23,000 a year more than the median Australian worker earns. Of course the Coalition might be owed some payback after pursuing Julia Gillard over her no carbon tax promise, but channeling this venom back won’t win the ALP economic credibility in the long-run.

Similarly, just as the carbon tax was not a “wrecking ball through the economy”, GP co-payments are not a "GP tax that will hit families who can afford it the least”, Bill Shorten claims. The idea’s dubious merits aside, an exemption for pensioners and concession cardholders is part of the plan.

There’s a disturbing trend here – lashing out on progressively targeted budget cuts, while failing to offer substantive savings measures. Though good ideas, dumping the universally panned paid parental leave scheme and retaining a carbon price won’t come close to tackling Australia’s real long-run budget problems.

Coalition rhetoric aside, even without the Rudd government’s global financial crisis stimulus, budgeting for an inevitably scarcer future would need to happen. Reports from the federal treasury and the Grattan Institute are unambiguous: rising health care costs and changing demographics will eventually leave us in perpetual deficit territory. Even the modest improvement between the 2007 and 2010 treasury projections below only deferred the point at which budget deficits become inevitable.

The projected fiscal gap. Photograph: daniel carr

For progressive voters who want to see Australia remain a prosperous and egalitarian country, confronting the stark reality of the budget is a necessary task. Despite the Coalition’s assurances that cuts will fall on the “entire community”, the refusal to touch superannuation and commitment to gold-plated paid parental leave stretches the credulity of Hockey’s "we’re all in this together" narrative.



For Bill Shorten to become prime minister in 2016 he’ll need a credible economic plan, and that means confronting the Coalition head-on with a series of budget proposals that protect the most needy while addressing our short and long-term budget problems. The long-standing perception of the Coalition as a better economic manager allowed them to coast into office last election with economic policies so poorly developed The Economist recommended voting Rudd to send the conservatives back to the drawing books. Labor will not be so lucky. The unwillingness of successive ALP leaders since Keating to make the case for economic reform has left the party at a natural disadvantage on economic credibility that only a show of fiscal resolve can fix.

Where can the ALP find the progressive spending cuts needed to build a credible alternative to Hockey’s budget? The options are bountiful.

Australians can claim a pension while living in multi-million dollar homes: bring place of residence into the asset test. The wealthiest 10% of superannuation contributors reap over 36% of the policy’s benefits: reform superannuation to stop favouring the rich. The most affluent groups in society benefit disproportionally from generously subsidised university education enabling graduates to earn on average an extra $1 million during their lifetimes: raise deferred contribution fees. The practice of handing out corporate bailouts to politically well-connected businesses distorts business incentives and costs us billions: end them now.

On 13 May, Hockey will hand down a budget that may shape our nation’s future. The ALP will have to choose between the simple comforts of blanket opposition, risking irrelevance, or decide to articulate a bold plan for progressively balancing the budget in order to win back the trust of voters.

For the sake of having a real battle of ideas in this country, we should hope for the latter.