ROUGH PATCH: Australian PM Tony Abbott is facing attacks for his plans to cut spending.
Tony Abbott, whose relentless taunts of Julia Gillard for breaking an election promise helped make him Australia's 28th prime minister, is suffering the biggest fall in public approval for a new government in 30 years as he faces a similar attack on his integrity.
On the eve of the September 2013 election, Abbott vowed he wouldn't cut funding to popular programs. Now, in an effort to rein in a A$48.5 billion (NZ$52.6b) budget deficit, his government plans to reduce spending on schools and hospitals by A$80 billion (NZ$86b) over the next decade and trim funding for the Australian Broadcasting Corp.
The reversal has enabled the Labor opposition to question Abbott's honesty with voters, undermining confidence in the Liberal-National coalition, which trails in opinion polls by three percentage points, having made the worst start for a party returning to office in almost 30 years. He's failed to pass key savings measures through the Senate, eroding confidence in his ability to manage an economy where commodity prices are plunging and unemployment is at an 11-year high.
"Abbott has already burnt up an enormous amount of political capital and it's hard to get that back," said John Hewson, an economics professor and former shadow Treasurer who led the Liberals for four years in the early 1990s. Abbott "ran a very negative campaign to win government and he's now getting that back in spades," he said.
Labor says the government has broken voters' trust at a time the economy is slowing. The economy grew 0.5 per cent in the second quarter, less than half the pace of the prior three months, while the Australian dollar has dropped 8 per cent against its US counterpart since the end of July, making it the third-worst performer among the Group of 10 major currencies.
The opposition's attacks on Abbott's credibility escalated this week after the coalition announced it was cutting A$207 million (NZ$224m) from the ABC on top of A$120 million (NZ$130m) announced in the May budget. The 82-year-old broadcaster, Australia's most-trusted media institution according to an Essential Research poll, said it would be forced to make more than 400 people redundant, close studios and scale back regional programming.
Labor leader Bill Shorten seized on the ABC job losses to attack Abbott's integrity, accusing him this week of "lying" and saying he was "setting a world record for breaking his election promises".
"He was merciless in opposition," Shorten told a rally outside Parliament House against the ABC cuts. "Never has a politician in modern history pinned so much of his own character to the issue of not telling lies in politics."
A placard held by one protester read "Abbott Liar" - reminiscent of the "Ju-liar" banners waved by critics of Gillard, Australia's first female prime minister, who backtracked on a 2010 pre-election pledge not to introduce a carbon tax.
Abbott has sought to fend off the attack, saying government policy is being driven by the need to address the deteriorating budget position.
"This is a government which has fundamentally kept faith with the Australian people," Abbott told parliament. The prime minister's office didn't respond to e-mail and telephone requests for comment.
As opposition leader, the former Rhodes scholar pummeled the Labor government over Gillard's broken promise and capitalised on infighting that saw her oust Kevin Rudd as prime minister in a party room coup in 2010, only to be replaced by him weeks before the September 2013 election. Gillard is now retired from politics and recently wrote her memoirs.
After winning office with the biggest parliamentary majority since 1996, Abbott's government has met key election pledges - scrapping Gillard's carbon-price mechanism and 30- per cent tax on iron ore and coal profits; stemming an influx of asylum seekers arriving in Australia by boat; and working with the states to boost infrastructure spending.
On the international front, his government has reached free-trade agreements with Australia's three biggest export markets, China, Japan and South Korea. It gained international acclaim for leading the hunt in the Indian Ocean for Malaysian Airline System Bhd. Flight 370, helming the Group of 20 economies meetings, receiving enhanced partner status from NATO and joining the U.S.-led coalition against Islamic State.
Still, Abbott's achievements on the world stage don't resonate with a public that votes according to its hip-pocket, said Newspoll Chief Executive Officer Martin O'Shannessy.
"Failing to bring the budget under control has been a negative, and an overly tough budget has been a real vote loser," he said in a phone interview. The coalition has "made a mess of the budget by putting voters offside, their standing in the polls is of considerable concern and the economy's much flatter than they'd hoped."
The latest Newspoll, conducted November 14-16, put the coalition on 36 per cent of the primary vote, down almost 10 percentage points from 15 months ago, compared with Labor's 39 per cent. Shorten led Abbott as preferred prime minister on 43 per cent to 37 per cent.
The Liberal-National coalition led by former Prime Minister John Howard slipped 5 percentage points during its first 15 months in office, while Rudd's government rose about 3 points, Newspoll data show.
The Australian newspaper, published by Rupert Murdoch's News Corp., said Abbott was in danger of becoming a one-term leader, having endorsed him before the election. "The prime minister is losing the battle to define core issues and to explain to voters what he is doing and why," it said in a November 22 editorial. "At stake is his political credibility."
Australia is struggling to transition from the end of a mining investment boom as other parts of the economy, except home building, have failed to see meaningful growth even as the central bank holds its benchmark interest rate at a record low 2.5 per cent. Mining investment fell 3.5 per cent in the third quarter, while the country's jobless rate is 6.2 per cent.
The coalition has pledged to return the budget to a surplus of 1 per cent of gross domestic product within a decade. Its efforts are being hampered by a plunge in commodity prices, eroding tax revenue in a nation that's the world's largest exporter of iron ore and steelmaking coal.
The political logjam in the Senate is also frustrating the government's budget repair job. While the coalition controls the lower house, Abbott must negotiate with independents and minor parties in the upper house to pass legislation.
Treasurer Joe Hockey estimates A$28 billion (NZ$30b) of savings measures, including abolishing handouts to parents of school children, have been blocked in the Senate. Bids to raise revenue by tightening welfare payments and introducing a A$7 fee to see a doctor have also been stalled.
The scale of what Abbott calls Australia's "debt and deficit disaster" will be revealed when the coalition releases its mid-year budget update next month. While the government in May forecast the deficit for the year to June 2015 would shrink to A$29.8 billion (NZ$32b) , the updated forecast by Treasury will make for grimmer reading, according to economist Warwick McKibbin.
"The fiscal position that will be shown next month won't be very pleasant," said McKibbin, who served on the board of the Reserve Bank of Australia from 2001 to 2011 and is a senior fellow at the Brookings Institution in Washington. Consumer and company confidence has fallen since the budget and an obstructionist Senate "hasn't helped," he said.
Abbott's woes may increase after Saturday's state election in Victoria, which Shorten described Friday as a "litmus test" for the federal government. Polls show the Liberal-National coalition government could be ousted in Australia's second-most populous state, which would mark the first time since 1955 a party has lost there after a single term.
While Newspoll's O'Shannessy said Abbott's government "is in trouble," it still has two years to turn its fortunes around.
Abbott's problems reflect the difficulties of making the "transition from being a good opposition leader to being a good prime minister," according to Hewson, now a professor at the Australian National University's Crawford School of Public Policy. "If he can't turn it around, things could get a lot worse for the government."
- Bloomberg
