Tony, what a big surprise!

Rocco Fazzari and Denis Carnahan present their musical analysis of the Budget. With apologies to Chicago.
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As Joe Hockey set about deciding how to cut welfare payments,
he asked for a comprehensive list of all entitlement programs. He
couldn’t find one.

Each department, each level of government, knew its own
programs. But his public service advisers told the Treasurer that there
was no complete document that included all federally funded payments,
concessions and programs supplied through all three levels of

<i>Illustration: Rocco Fazzari.</i>
Illustration: Rocco Fazzari.

So the Treasury set up a team of four officials to pull together a full list, according to officials familiar with the exercise.

They spent weeks ferreting out every entitlement for the
Treasurer, who had promised to bring an end to the “Age of Entitlement”.

Hockey wanted them to be so determined that he nicknamed them
the “Team of Arseholes”, although he sometimes moderated this to the
“Team of Bastards” in more polite company.

They rewarded him by finding that while age pensioners, for
instance, can receive the pension as a direct payment, they could also
be eligible for 23 other supplements and concessions, depending on their

And a further 26 types of services, training or loans, although many were not specifically for pensioners, the team told Hockey.

Likewise, students in training might be eligible for one of
four types of direct payments from the government, plus another 23
supplements and concessions although, again, not all were designed
exclusively for students.

Students might also be able to make use of a further 21
categories of services, training and loans, according to the team’s
findings. Every one of these was conceived over the decades for good
reason – because it served a need.

Yet Hockey had decided that Australia had developed a
syndrome of expectation and dependency that strained its budget and
sapped its energy.

In the traditional Treasurer’s post-budget address to the
National Press Club, Hockey said: “At the end of the day what brings a
budget together is not just the information that is provided to us but
the values that we bring to the table.”

So what values were they?

Some of the budget cuts were so harsh that even the Business
Council of Australia, the lobby group for the biggest of big businesses,
was moved to protest: “We are very concerned about the risk that
savings are falling too heavily on some families and young people trying
to find work,” said its chief executive, Jennifer Westacott.

What moved the government to such harshness? Is the entire
government, in fact, what Hockey labelled his crack welfare ferrets, a
Team of Bastards, or worse?

The budget gives Australia the clearest view yet of the
character of Tony Abbott and his cabinet. It also gives the country
insights into Bill Shorten and the kind of opposition he wants to lead,
as well as the Greens and the new wildcard in Australian politics, Clive
Palmer. First, the government.

The fiscal task confronting the government was to cut the
deficit in a purposeful but gradual way. It had to be purposeful not
because Australia is in a budget emergency, because it certainly is not.
But it was on the way to one.

The federal government today collects revenues equivalent to
23 per cent of Australia’s GDP. It spends the equivalent of 26 per cent.
The simple reality is that the annual shortfall is 3 per cent of GDP.

If that is allowed to persist, there is only one possible
outcome. Corrective action was needed. It was not fiscally urgent, but
it was politically urgent. Why?

The lesson of history is that the only time that a government
will impose real discipline is in its first budget. Or, as the US and
some European nations have just shown, in a dire crisis. The economists
who’ve been reassuring the media that there is no urgency in Australia
fail to grasp this reality. Best not get to the point of dire crisis.

The government set its budget repair at a sensible rate.
After taking account of the one-off top-up of the Reserve Bank balance
sheet, the first Abbott budget is calculated to cut the deficit by 0.8
per cent of GDP in the first year and a similar amount in the second
before easing off. This will bring the deficit in check but won’t
appreciably harm growth.

It’s at this point, within those fiscal guiderails, that the
government’s values come into play. How should it impose those cuts?

First, it discarded the many election promises that would
have tied its hands in making dramatic change. Abbott decided it was
more important to be purposeful than truthful.

After dispensing with its promises so lightly, the government
then set about applying, according to Hockey, “the values of
enterprise, of hard work, of self-reliance, of control of your destiny,
and the fact that we’ve got to move away from the culture of entitlement
in some areas to a culture of opportunity and hope”.

These were the declared values, but there were also the
grudges and frustrations. The deputy prime minister and leader of the
National Party, Warren Truss, said this about age pensioners in a
post-budget speech to Brisbane’s Conservative Club: “Increasingly the
lifestyle - and the savings for superannuation - are being seen as the
opportunity to enjoy a few cruises and the luxuries of life for a few
years until it runs out and then people wish to fall back on the aged

The minister for social services, Kevin Andrews, told a press
conference on Monday: “The days of easy welfare for young people is
over. We want a fair system, but we don’t think it’s fair that young
people can just sit on the couch at home and pick up a welfare cheque.”

And some of the frustration in the Coalition was frustration
with their former leader and Liberal hero John Howard. A government
strategist told me: “It’s horseshit that a family earning $170,000 with
three kids still gets government support.”

That’s a reference to the system of family payments that was one of John Howard’s proudest legacies.

All of these areas – pensions, unemployment benefits for
people under 30 and family payments – were among those targeted by this
week’s budget.

We have now learned, very starkly, that even some of the Liberals who know Abbott closely were quite wrong about his values.

His former cabinet colleague, Peter Costello, wrote a column
in this newspaper in 2011 to issue a warning to the Liberals: Abbott
didn’t share the core beliefs of the party mainstream, the party of
Howard and Costello.

He pointed out that Abbott had “worked closely with the DLP
in his student days”, a reference to the old Democratic Labor Party of
BA Santamaria.

“The DLP was good on defence and the Cold War but it was not
up to much on economic issues,” Costello wrote. He said that the senator
recently elected under the resurrected banner of the DLP, John Madigan,
should be left to “run the case for protection and regulation”.

“That is not the future for the Coalition. Its leaders are
there to promote and implement Liberal policies like freedom in the
workplace, open trade, lower tax, and careful spending of taxpayers'

The evidence now before us is exactly the opposite. The
Abbott-Hockey government is revealed to be a more ideologically
conservative outfit than Howard-Costello.

The budget conducts a frontal attack on three Howard
legacies. One is the family payment system. It will remain as a support,
but the government proposes to strip out elements that it considers to
be “middle-class welfare.” Howard was moved to publicly mourn the

Second is the Howard urge to centralise power in the federal
government at the expense of the States. Abbott and Hockey are proposing
the exact opposite, to devolve power to the States.

“We’ve been infantilising the States for the last 30 years,”
says a government strategist. Now they have to grow up, says the
government, with a proposed $80 billion less than Labor had promised for
their hospital and schools over the next decade.

Third is the Howard boondoggle known as the ethanol production subsidy. It’s gone.

The Abbott-Hockey government is also more pro-market and
pro-deregulation. The Howard-Costello government never proposed the
deregulation of university fees. It never proposed a co-payment to visit
a doctor.

But the Abbott-Hockey program isn’t all about shrinking the
state. They’re also introducing three programs to give weight to their
rhetoric of opportunity.

The biggest is the decision to give federal subsidies not
only to university degrees but to all higher education courses. Second
is to grant $20,000 concessional loans for trades training. Third is the
“Restart” plan to pay a $10,000 incentive to companies to hire older

Abbott’s plan would begin to repair the budget; it would also
make Australia a more unequal society. The cuts to welfare are
permanent. The 2 per cent tax levy on the rich is temporary.

Bill Shorten’s budget response is also revealing. He is
modelling himself as opposition leader not on Labor leaders Bob Hawke or
Kevin Rudd but on Tony Abbott. His budget reply was all snarls, no

The Greens’ positions confirm what we already know about
them. They are more interested in obstructionism than outcomes. Just as
the party of climate action opposed a Labor government’s emissions
trading scheme, the party of wealth redistribution is opposed to the
Liberals’ tax levy on the rich.

And Clive Palmer party? He’s talking mumbo jumbo and shaping
as a classic populist opportunist. He’s committed to blocking the
Medicare copayment, but he remains a wildcard. Some of Abbott’s most
dramatic proposals for Medicare, universities, welfare and health and
education  depend on him. We have not yet seen how he will conduct his
party in Senate negotiations.

And, like Shorten and the Greens, Palmer remains in blithe
denial that there is any need to start addressing Australia’s deficit.
Bastards all, I hear Don Chipp’s ghost cry.

Peter Hartcher is the political editor.