Blaming others is tiresome, but cutting yourself will hurt

It is a strategy that has been passed down from generations before. Present a negative picture. You can blame your predecessor. Answer the questions. Make it clear that bitter medicine will be involved.

The Midyear Economic and Fiscal Outlook states that “Living within your means requires eliminating waste but will also require you to reduce some of the spending to which you have grown accustomed.”

Treasurer Joe Hockey is blunt in his statement: “Over these next few months, Australians will have to accept decisions that make our quality-of-life sustainable.” This speech is similar to Hockey’s last year’s about the end of the era of entitlement. However, he uses a more cautious language.

The government wants to make the changes as clean as it can for the coming ones. These will be based on the findings of the Commission of Audit and the first Hockey Budget in May.

The revenue estimates for this year’s budgets have declined significantly since the elections, but the Coalition also sends a dire message to voters by increasing the numbers.

What Labor did, what changed, and what the Abbott Government has done are all merged into the new bottom line. The outcome provides a reason to do things that would otherwise be difficult to justify.

Even with the Charter of Budget Honesty, it’s remarkable that the government was able to create a huge black hole (nearly 17 billion dollars this year and over $68 billion in the forward estimates).

The charter, which was put in place by the former Liberal Treasurer Peter Costello, requires that the Treasury and Finance Departments issue an early update during an election campaign. PEFO is designed to avoid nasty surprises after an election.

The current blackhole is the result of a combination of worsening conditions since PEFO, new government decisions and revisions (including an injection of $8.8 billion for the Reserve Bank), and changes to the methodological projections of unemployment and terms of trade.

The Coalition accused Labor of producing overly optimistic budget figures. Now that it’s in power, the numbers are more pessimistic. This increases the likelihood that the results will be positive in the future, at least when compared to this benchmark.

Arthur Sinodinos, Assistant Treasurer, said that the projections are now more realistic and credible. He said that if the reality were better than expected, it would be a pleasant surprise. Precisely.

Chris Bowen, shadow treasurer for the Labor Party, pointed out that both the Howard-Costello and Labor governments used the old method of calculating unemployment in future years using “trend.” The unemployment projections for today’s MYEFO could have been lower if the PEFO method had been used.

The numbers will be affected by the method. As statistics are often interpreted in many different ways, the assumptions that underlie projections will also affect the numbers. Budget numbers will always include some “rubber.”

The election promises will constrain the government’s ability to make savings for its budget in May. Tony Abbott, for example, said that there would not be any net cuts in health or education before the election. There will be “efficiencies,” but they are likely to involve sweeping changes.

The government has a history of stretching promises, even though Abbott insists that contracts are important. He learned this lesson the hard way after the Gonski funding scandal.

It is not just about the election promises but also about putting everything on the table.

The Coalition must change its message in 2014. The Coalition can’t continue to blame the other side as the election draws near. The opposition’s relentless negativity has now become the government’s relentless negativity, but this will alienate the people if they continue.