In that special way that Australian politics can be truly, madly, deeply silly, about a week ago the treasurer wanted it known that he was n-o-t Santa Claus.



We spent 48 hours analysing whether Scott Morrison was or wasn’t Santa Claus because the Nationals leader, Michael McCormack, in a fit of new-boy ebullience, had gushed about his Liberal colleague, characterising him as “Scott ‘Santa Claus’ Morrison” poised to sail forth on budget night with a sack laden with “goodies”.

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Not so, harrumphed the non-plussed treasurer. This would be a serious budget, delivered by serious people. Hashtag serious. Hashtag shut up new boy, the grown-ups are talking. Poor old McCormack, mildly shell-shocked, was dispatched to the naughty corner to ponder his thought crimes.

Just a hop skip and a jump later, the artist formerly known as Santa Claus confirmed that a proposed tax increase (worth $8.2bn) that the Coalition had spent 12 months insisting was necessary to help fund the national disability insurance scheme wasn’t actually necessary at all.

Deep economy magic had kicked in. Tax receipts were up, and up sufficiently for the Coalition to abandon its proposed 0.5% hike in the Medicare levy.

NDIS funding backflip: Coalition warned not to use people with disabilities 'as pawns' Read more

Ho ho ho. Meeerrryyy Christmas. Sorry, I will stop this soon.

The why of this story is fairly simple. The Coalition wants to deliver income tax cuts in the budget on 8 May. It wants to offer a fistful of dollars (reportedly with a slow start and baked in for a decade according to doubtless well-sourced speculation) because the government has to assume this coming budget is an election budget.

No one knows whether there will be another economic statement before we stagger off to the polls. We are in use-it-or-lose-it territory, and everyone knows it.

A fistful of dollars, even a modest one, is a straightforward political story. It’s best told without complications.

One complication was the proposed Medicare levy increase, which hit all workers earning more than $21,000. If it stood, the government would be giving with one hand, and taking away with the other. Given Labor had spent a solid 12 months seeding that very argument, neutralising it was a priority. So bye-bye levy increase.

A couple of news cycles worth of confusion sparked by how the NDIS could have had a funding shortfall serious enough to warrant a structural fix, then not have one because everything is suddenly fine, would have seemed a small price to pay, given the larger objective.

Flexibility in politics tends to correlate with adversity. The Coalition has been behind in the polls since it almost lost the last federal election. Despite its significant collective talent for political misjudgment and self-sabotage, the government thinks that, with the right reset, it can remain in the fight.

That is certainly possible. Politics is a dynamic business as we all know, and given how stagnant wages growth has been, and how inflation keeps nudging people into higher tax brackets, any hip-pocket relief will doubtless be welcome in households around the country.

But there are a couple of obvious wrinkles with project reset.

Central to the mission is the compare-and-contrast fight the Coalition wants to have with its opponents. The government wants to sharpen the differences with the ALP. It wants, as Malcolm Turnbull said on Friday, perhaps more in hope than in certainty, the next election to be a “very, very stark choice”.

But it’s a bit hard to punch on with your political opponent, heaping soundbite upon soundbite, if they point-blank refuse to enter your chosen arena. Labor has been happy to defend its progressive tax measures unveiled during this period of opposition, and will either match the coming personal tax cuts, or craft a comparable package of its own. That’s currently the safest bet in Canberra. Labor has been working to create fiscal room.

There another potential quirk here when it comes to emphasising points of difference. While no meaningful judgment can be made until we see the final numbers on 8 May, and Labor’s ultimate riposte, it’s possible that under the cover of “very, very stark” differences, the fiscal stories of the major parties are also beginning to converge.

At the last election contest, there was a $16bn deficit gap between the Coalition and Labor over the forward estimates. Labor’s medium-term picture was healthier because of policies like negative gearing and capital gains tax reforms, but their four-year cycle was a complete blow out.

The Coalition pursuing its own reset, doing things like dumping a revenue measure forecast to raise $8.2bn, potentially helps to narrow the fiscal gap over the forward estimates, which helps Labor tell a more positive economic management story over the short as well as the medium term.

Labor to match Coalition in dumping Medicare levy rise as tax battle lines redrawn Read more

There would be another way for the Coalition to approach its current political difficulties of course, other than lobbing the obvious fistful of dollars pre-election budget, and that would be to dig deep, and chart a budget course quantifiably different from the cycles of the past.

Instead of waiting for the economic tide to turn, and then spending the proceeds – a zero-sum Canberra game Australians are entirely familiar with – there could be some thought given to a different approach.

Some in the government would argue that Tony Abbott tried to chart a different course back in the halcyon days of the budget emergency and the debt and deficit disaster (what a time that was) and look how that one panned out – but that’s rather missing the point.

The first Abbott budget was a dog because it was disgracefully and indefensibly unfair, and it broke a bunch of election promises, not because it pursued the objective of budget sustainability per se.

What’s been lacking in the story of the Turnbull government all along has been a clear sense of what the government stands for, and a steady projection of where it sees Australia a decade from now.

Mostly we get patch up jobs and crisis management in between bouts of open warfare – not a national project with some coherence that voters can identify with and buy into in an age where cynicism and disaffection is rife, and people are losing trust in institutions.

The lack of trust in the system becomes a vicious cycle, where it becomes harder and harder for governments to pursue any meaningful reform in the national interest that involves creating winners and losers. This is an existential problem for politics, and too often this government is entirely tone deaf about it.

It’s been a long time since any budget has saved a government, and that line of thinking is one of the more vacuous lines of punditry doing the rounds, but it is possible to use an economic statement to tell a story about yourself as a government, and a story about the direction of the country, that more or less makes sense, and is more or less focused on the needs of ordinary people as opposed to the revered “base”, or the rent seekers, or the institutional interests, or the incoherent pumped up ranters in the disrupted and caterwauling media.

Thus far, the Coalition’s record in that regard has been less than stellar.