A Loving Look Back At The 2014 Budget That Destroyed Tony Abbott’s Career
A lesson for ScoMo: A bad budget can sink your whole career.
In 2014, then-treasurer Joe Hockey declared in the opening lines of his budget speech that “our future depends on what we as a nation do today”.
Hockey couldn’t have possibly known how apt his words were — although for entirely different reasons. He was, in a way, describing the future of the Abbott government, and how its spectacular decline was kickstarted by delivering one of the most hated budgets of all time.
Tonight, the Morrison government will announce its last budget before the federal election, due to be held in May. So here’s a lesson for Scott Morrison and Josh Frydenberg: A good budget might give you a much-desired poll bounce as you head into a campaign, but a bad budget can sink your whole career.
Skrillex, Taylor Swift And National Debt: The Context Of The 2014 Budget
Looking back eight years ago to 2014 is quite the mental exercise, you’d be forgiven if, after two years of living under the pandemic restrictions ,you’re unable to remember a time before Zoom meetings and social distancing. 2014 was the year that gave us Taylor Swift’s ‘Shake It Off’ and ‘Uptown Funk’. Zayn Malik hadn’t left One Direction yet. Despite this period being a sunshine pop renaissance, this period of Australian politics was anything but.
After a brutal election campaign, Tony Abbott became Prime Minister in September 2013. Abbott had fought a hard campaign that directly attacked the instability of the Labor party, which was going to the polls with Kevin Rudd as PM after he had replaced Julia Gillard a few months earlier, after she’d replaced him two years before that.
Before becoming PM, Abbott had been hugely critical of government spending. Australia’s budget deficit had risen to $54.5 billion in the 2010 budget, largely due to the Rudd government’s successful efforts to avoid a recession following the Global Financial Crisis. While the deficit decreased significantly in subsequent budgets, two of the key measures Labor planned to employ to return to surplus had attracted heavy opposition from the Abbott opposition: the now-infamous mining and carbon taxes.
While the history of these bills could and has filled books, the TL;DR of the politicisation of the taxes goes like this: Prior to Tony Abbott’s ascension to the leadership of the Liberal party in 2009, the Liberals were in discussion with Labor to pass an Emissions Trading Scheme, which basically proposed a cap and price on emissions for heavy industrial polluters in Australia as a way of cutting greenhouse gasses. After Abbott was elected leader of the Liberals, he quickly backed out of the deal, quipping that a price on carbon would be “disastrous for our democracy”.
Similarly, in 2012 the Rudd government had introduced a tax that targeted the “super-profits” of mining companies operating in Australia. The tax was aimed at making polluters and foreign companies pay their fair share for the extraction of minerals in Australia. The Abbott government claimed that the tax would hurt the mining industry by discouraging foreign investment in Australia and vowed to repeal the tax.
Tony Abbott’s Broken Promises
It was clear from early on in the 2013 election campaign that Tony Abbott was going to be Australia’s next Prime Minister. Despite his commanding lead in the polls, Abbott made a series of promises about what he wouldn’t do in government. In an election eve interview with SBS, Abbott pledged that there would be “no cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS” under a Coalition government.
Turns out, that wasn’t true.
Ahead of the 2014 budget, after just a few months in office, the Abbott government commissioned a national audit into ways the government could reduce spending in order to correct the budget deficit. The National Commission of Audit returned with 86 recommendations, including introducing Medicare co-payments and increasing the pension age to 70.
When the results of the commission were released ahead of the budget, media outlets pointed out that the “cradle to grave cuts” would directly contradict some of the government’s key election promises. Despite Joe Hockey’s assurances that “this is not the budget”, the commission laid out that the upcoming budget forecast would be “ominous”.
The Chief of the Commission Tony Sheppard proposed that the government should use the budget to “act now, act incrementally, act fairly”.
The 2014 Budget Was A “Miserable Piece of Work”
Joe Hockey delivered the 2014 budget on the evening of the 13th of May. In a galling contradiction to Tony Abbott’s election promise of no cuts to health or education, the budget revealed that $80 billion would be slashed from the sectors.
The Education sector would face $30 billion in cuts, and the government would not fund the Gonski needs-based school funding model beyond 2017. Public broadcasters such as the ABC and SBS also faced cuts of one percent of their funding over the next five years, with the government additionally axing the Australia Network, the international service for the ABC. The cuts would total $197 million over a nine-year period.
Welfare payments were also poised to change as the government introduced the ‘Learn to Earn’ scheme — prohibiting those aged under 25 from accessing New Start payments in an attempt to encourage them into tertiary study which was supported by the lower Youth Allowance payment. It also introduced a waiting period of six months before individuals could access Newstart, with the payments being only available for six months.
The budget also introduced a $7 fee for patients seeing GPs on Medicare and raised the cost of medicines of pharmaceutical benefits schemes to include a $5 fee. Consumer Price Index scaling would also now apply to the fuel excise tax — with the government announcing they would increase the excise twice per year in line with household inflation. Andrew McKellar, the CEO of the Australian Automobile Association estimated at the time that this would cost car owners an extra $140 per year.
Foreign aid spending would also face the axe, with funding being cut by $7.6 billion over five years. In signalling his austerity budget, Joe Hockey infamously declared in his budget address that the “Age of entitlement was over”.
Almost all of the changes would have the hardest impact on those who could least afford it. It was an affront to Australians’ sense of fairness and equality.
Tony Abbott’s Approval Ratings Plummet
The numerous broken promises in 2014 budget had an instant effect on Tony Abbott’s popularity as Prime Minister, with Abbott’s approval rating dropping nine points to 34, placing opposition leader Bill Shorten as the preferred Prime Minister for the first time.
Treasurer Joe Hockey’s public reputation as a Scrooge McDuck figure had already begun to crystalise after journalists from Channel Nine caught him smoking cigars with Finance Minister Mathias Cormann after a pre-budget meeting. It was also reported that Hockey had danced to ‘Best Day Of My Life’ minutes before delivering one of the harshest budgets in Australian history.
Public opinion dived further after Hockey, while attempting to defend the argument that fuel excise indexation was significantly harder on lower income earners, quipped “The change to fuel excise, the people that actually pay the most are higher income people”.
“The poorest people either don’t have cars or actually don’t drive very far in many cases.”
Hockey’s statement was firmly rebutted by consumer rights group One Big Switch, who argued in their research of over 75,000 Australian households that “Not only do poorer households spend a higher proportion of their budgets on petrol, they often spend more on average because of where they live”.
A Bad Budget That Can’t Even Be Passed
While the Abbott government had won in a landslide victory the previous year, it had failed to secure a majority the Senate. This meant that the majority of the government’s tough measures still required the support of other parties or the crossbench before they could be passed.
Crossbench support of the budget was non-existent, with Independent MP Andrew Wilkie labelling it “a miserable piece of work” and imploring other MP’s to block supply in protest to the measures.
Some of the contested bills included:
- The proposed Medicare co-payment scheme of $7 was scrapped, while the $5 Pharmaceutical Benefit Scheme was stalled until 2015
- Abbott’s plan to introduce a paid parental leave scheme was completely dumped after opposition from within his own party room
- Petrol Excise Indexation while initially blocked by the Senate, was revived and passed as a regulation measure
- Abbott’s ‘Earn and Learn’ changes to unemployment benefits were completely sidelined
- Public broadcast cuts to the Australia Network proceeded, along with the funding cuts to the ABC and SBS.
- The plan to increase the Pension Age to 70 was stalled and then official scrapped in 2018
Abbott was successful in repealing both the Mining Tax and the Emissions Trading Scheme, replacing the former with a $3 billion fund subsided by the taxpayer that was accessible for big polluters if they “promised to cut carbon emissions“.
Abbott’s first budget was reported by journalists at the SMH as a “death spiral”, with the Prime Minister’s approval rating never truly recovering. The budget also sparked national demonstrations, with thousands taking to the streets across Australia for the 2014 Break The Budget protests.
Abbott’s term as Prime Minister would be cut short in September 2015, after a second leadership spill that year resulted in Malcom Turnbull taking power. Abbott would then lose his home seat of Warringah in 2019, after a popular movement to replace him with Independent MP Zali Steggall went viral.
Morrison’s Budget May Decide The Election
Weirdly, many of the policies that pre-occupied the Abbott government are flashpoints again this year. After the Russian invasion of Ukraine led to rising fuel prices, the Prime Minister Scott Morrison has gestured that he will cut the fuel excise tax, but not the indexation that was brought in by the Abbott government of 2014.
One area that of politics that is incredibly calmer today is the issue of national debt. With Australia’s budget deficit sitting on $76 billion after stimulus measures from the Coronavirus pandemic, the “budget emergency” over $54 billion deficit of 2010 seems like a distant memory, and Morrison and Frydenberg have shown no signs of wanting to rein it in.
But beyond that, you can expect the government to deliver a lot of pre-election sweeteners in tonight’s budget. It may well be their last chance to change the nation’s focus, away from floods, fires, vaccine failures, and lockdowns, and onto something more positive.
If they’re successful, they may secure a fourth term in government. If they fail, it will likely be the end of Scott Morrison’s political life. Just ask Tony Abbott and Joe Hockey.
Charles Rushforth is a staff writer at Junkee. Follow him on Twitter.