Need a budget ‘narrative’ – this is it

Forget insider words like 'message' and 'spin' and avert your eyes from the Senate railway wreckage. If the Abbott government wants to reset the budget debate here's what it should do.

The first step is to acknowledge past mistakes. In opposition, the Coalition underestimated the scope of the budgetary challenge they are now facing. In government, it has remained unable to articulate what budget problem they are trying to solve. Consequently, people don't believe the harsh budget is necessary and the government can't explain how their reforms will help.

The government has tried to scare the electorate with inflated projections of government debt and it wants us to be angry at Australia's monthly interest payments. This is the wrong approach; the real issue has always been the deficit. Fix the deficit and the debt will be manageable.

Having clarified the real problems and solutions, in the lead-up to next year's budget the next step is to convince the public of three things.

1. Australia has a structural budget deficit stemming from Howard, Gillard and Rudd permanently increasing spending funded either by temporary revenue from the mining boom (Howard) or nothing (Rudd – Gillard).
2. The Commonwealth now has to find tens of billions of dollars of additional funding in the medium term for the National Disability Insurance Scheme.
3. It also needs to find an additional 4% or 5% of GDP over the longer term to pay for the ageing of our population and rising health care costs.

While selling this message, the government must make crystal clear that these problems won't fix themselves – now or ever. Either spending has to be cut substantially or a huge amount of additional revenue has to be raised, and in both cases this burden will overwhelmingly fall on the middle class. Ordinary people will either get much less from government or pay much more (or both).

The final step is for government to convince itself that these hard choices are real. New spending through big (the medical research fund and massive gold-plated paid parental leave scheme) and small (marriage counselling vouchers) all must be dumped. Not renegotiated, not repackaged, not renewed – axed.

Furthermore, the government must never again produce a budget that implies increasing revenue from existing taxes will largely balance the budget. Governments have been waiting five years post the GFC for this to happen. It won't, as those tax forecasts have less substance than fairy floss; albeit being equally deftly spun.

Only once the government has done these things can it lay all the blame at the feet of intransigence in the Senate.

Simon Cowan is a Research Fellow at The Centre for Independent Studies.