What Abbott has in store for Australia

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After speaking to an outgoing MP, managing editor David Donovan presents his predictions for what the incoming Abbott Government has in store for Australia.

Press conference video below (Image courtesy phonytonyabbott.com)

SOME WEEKS before Saturday's Federal election, I had the opportunity to speak to a senior Labor Party MP, one who will not be sitting in the next term of Parliament. At the end of our conversation, which was about a different matter, I asked him what he thought an Abbott Government might do in power.

He said the first thing an Abbott Government would do would be to try to repeal the carbon pricing scheme and the mining tax to appease his rich business and mining backers. However, he said he thought that Abbott was unlikely to succeed in this aim, since the current Senate will remain in place until July 2014 and he couldn't see Labor supporting such a move under any circumstances. Even after July 2014, he said, he couldn't see Abbott getting the numbers in the Senate. The former MP thought that any talk of a double dissolution was likely to be hot wind, given its electoral risk and the likelihood of even more fringe and minor party wild-cards being thrown into the mix.

The former MP said the other thing Abbott would do would be to launch an audit commission headed by a tame former Coalition figure ‒ as occurred with Peter Costello in Queensland after Campbell Newman's election ‒ who will pretend to go through the books before inevitably announcing the state of public finances are much, much, worse than the previous Government had said. After angrily denouncing Labor waste and incompetence, Abbott will "regretfully" scrap a raft of election promises whilst also announcing a range austerity and other measures so as to "shore up the budget".

I asked him whether this meant the Coalition's extravagant paid parental leave scheme would go. The MP said no, because if you read Abbott's book Battlelines, handouts to the upper-middle class and wealthy ‒ which is what the Coalition's PPL will effectively achieve ‒ are exactly what Abbott believes in. According to the MP, what Abbott does not agree with is benefits going to the poor and needy, whom he regards as generally lazy and unworthy. Therefore, said the MP, expect services and assistance to lower income earners, the underprivileged and the disadvantaged to be the areas most under attack by an Abbott Government.

What a comforting thought, I thought.

I asked the outgoing MP one more question, but before I tell you what that was, and what he said in return, let me first give my thoughts on the above and make some predictions about what I believe an Abbott Government will look like in its first term.

Firstly, as it turns out, I believe the Abbott Government is quite likely to eventually end up with the numbers in the Senate, after a deal of wrangling, to ditch the hated "carbon tax"* and mining tax in July 2014. This is because the final make-up of the patchwork Senate to me looks to be right-leaning, hence more inclined to negotiate with a conservative Government. Deals will be done and Abbott will get there in the long run, I would anticipate. I could be wrong about this, but I doubt it. This will be a great shame for Australia, as we will become the first country to actively retreat away from action on global warming — still the greatest moral issue of our times.

Secondly, Abbott's response to the Commission of Audit report ‒ which was most likely written by some Liberal Party staffers about six months ago ‒ is likely to involve a mixture of public service cutbacks, revenue raising measures, privatization and industrial relations "liberalisation".

The public service cutbacks are likely to be in such things as health, disability support services, measures to combat global warming, employment services, public schools, tertiary education and scientific research — as well as anything else which is of no immediate benefit to the Coalition's wealthy backers, small business or upper middle-class constituency.

A simultaneous inquiry into reforming the tax system will, I predict, come away with two main measures to "stimulate the economy" — cutting the top rates of personal tax and increasing the GST to 12.5%.

Heir apparent, Lachlan Murdoch

Thirdly, the Coalition will sell off any of the remaining assets that weren't fire-sold under the Howard Government. They have already announced they will sell Medibank Private. They will, of course, also sell the partially built NBN. I doubt, however, that Rupert Murdoch or News Corp will be one of the active bidders for this asset, as the optics would be too bad in a political sense for both the new PM and Chairman Rupert. But keep an eye out for Rupert's heir-apparent Lachlan to be a key part of the consortium of backers tendering for and ultimately acquiring these valuable assets in the family name either sometime next year or early the following one.

Finally, in terms of the economy, the Abbott Government will be under significant pressure to reform industrial relations by Gina and Twiggy and the usual fat cat pressure groups, such as the noisy Business Council. However, I believe Abbott will be wary of moving too quickly in this area after experiencing firsthand the voter backlash over WorkChoices in 2007. Instead, I expect him to move more cautiously and incrementally to remove employee protections and conditions, though move he undoubtedly will. In the next term of Government, I expect Abbott to  loosen (though not entirely repeal) unfair dismissal laws and reinstall the Australian Building and Construction Commissioner. If he is re-elected in 2016, expect more drastic changes.

The Liberal Party say that their economic initiatives will "kickstart the economy", especially by the removal of the "carbon tax". In fact, removing the "carbon tax" will have no appreciable impact on the economy as it is a minor impost that has barely raised prices at all in the economy and caused no damage whatsoever to Australia's economic growth. Removing the mining tax will also do nothing as it raises virtually no money due to the current somewhat subdued global commodities market. Other likely initiatives, such as cutting top personal tax rates, will do nothing apart from put more money into the hands of the very wealthy, who will mostly just bank it. The anticipated small changes to IR laws – being minor – are similarly unlikely to result in any appreciable benefit to national economic performance.

However, Abbott's likely decision to slash the public service and raise the rate of GST and is very likely to cause the same deleterious effects seen in Europe ‒ and recently in Queensland ‒ when governments decided to implement austerity budgets to "balance the books". The multiplier effect of the cuts will cascade throughout the economy, causing lower economic growth, rapidly rising unemployment and a decline in business confidence. Unless there is a counterbalancing recovery or upsurge in the global economy – or at least in the commodities market or the economies of our major trading partners – I would expect Australia may dip into recession and for unemployment to rise above 7.5% in the next 12-18 months. This will almost certainly be blamed on the poor economic management of the previous Labor Government. Business will use the downturn to push for more drastic changes to IR laws. And in the 12 months before the next election, the Coalition will almost certainly implement a series of handouts to lower and middle class voters to stimulate the economy and prevent a major collapse in the housing market, as well as to buy votes (the Howard template).

A third area not mentioned by the MP was the inevitable "culture wars" we are soon to see. An Abbott Government will, like his hero John Howard before him, launch a war on progressives, which will take place through the education curriculum, the promotion of right-wing ideologues to the ABC board (as well as other semi-autonomous cultural institutions) and through the slashing of funding to initiatives conservatives usually see as having no financial value — such as humanities, music, drama, literature and the arts. Abbott will also attempt to promote the Australian flag and monarchy into a more central role in Australian public life. In addition, it almost goes without saying, he will slash environmental protections and standards.

This is just a cursory, broad brush outline of what I foresee — I have no doubt we have many other unpleasant "surprises" ahead. Batten the hatches, we are in for turbulent times.

As for the final question, well, I asked the MP was whether he thought Abbott was bright. The MP said he did not know how they selected the Rhodes Scholars the year the PM-elect received one, but no, he did not think he was a particularly intelligent man.

Abbott is ruthless, cunning and ambitious, he said, but bright? Not as far as he could see.

Dog help us all.

* Editor's note: The so-called "carbon tax" was never a tax but a price on carbon paid by major polluters.

See also yesterday's piece by the same author: 'Tony Abbott and our new Murdochracy'. Read also David Donovan's economics series, starting with 'The Art of Economics'. Follow DD on Twitter @davrosz.

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License

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