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Tony Abbott's conservative government in Australia battered over austerity budget

Monday, 19 May 2014 - 1:15pm IST | Agency: Reuters

Support for Australian Prime Minister Tony Abbott's conservative government has collapsed following the release of an austerity budget that has emboldened opponents and even sparked calls for early elections.

The government last week released a contentious budget packed with deregulation moves, new levies and spending cuts aimed at overcoming what it calls unsustainable deficits totalling A$60 billion ($56 billion) over the next four years.

Thousands of protesters took to the streets of Australia's biggest cities at the weekend to rail against the changes to welfare, healthcare, education and pensions that they say outstrip the mandate Abbott won in elections last year. "Within a very short period of time he has effectively turned around to the people who voted for him and said 'Stuff you'," Greens Party deputy leader Adam Bandt told Reuters. "The polls suggest that is not going down at all well with voters. There is only so long an already unpopular prime minister can suffer further blows, not just to his popularity, but to his government's support."

Two polls released on Monday in the wake of the budget, one by Nielsen and the other by Newspoll, showed a precipitous drop in the popularity of Abbott and the Liberal-National coalition he leads.

Both showed that Labor would handily win fresh elections, a sharp reversal for a party that was only recently turfed from office after six tumultuous years in power.

Perhaps most worrying for the government, however, is the perception that it has stumbled badly in framing a budget the polls say is seen as both disproportionately punishing the poor and bad for the economy. "I think people don't like the medicine, and the government has stoked up the bad reaction for themselves almost amateurishly and now are copping it," John Wanna, a professor of politics at the Australian National University, told Reuters.

The Greens have now publicly called for early elections, and Bandt says he is hopeful that both Labor and mining magnate Clive Palmer, whose Palmer United Party will have the balance of power in the incoming Senate, will help to bring that about.

Abbott had raised as recently as last week the prospect of an election if his budget was blocked, but he seemed to rule that out in the wake of the polls. "My job is not necessarily to win a popularity contest. My job is to run the country effectively, and that's what I'm going to do my best to do," Abbott told the Australian Broadcasting Corporation.

SELF-FULFILLING PROPHECY?
Australia has fared better than most developed nations in the past decade, having avoided the implosions of the finance and housing sectors suffered by the United States and Europe, while Chinese demand for resources fuelled a boom in its terms of trade.

Its debt pales in comparison to most developed nations, spurring criticism that many of the mooted measures are unnecessary and might actually damage the AAA-rated economy.

The government argues that 22 years of unbroken economic growth have been squandered on a bloated bureaucracy and tax breaks for the wealthy, rather than investing in infrastructure now so badly needed in many regions.

The budget is likely to further dent consumer confidence, which could be reflected in consumer sentiment data due on Wednesday, said Stephen Walters, an analyst with JP Morgan. "Consumer confidence, already low and fragile, will likely decline further after the announced income tax rises, welfare cuts, and resumption of petrol tax indexation," he said. "The drag on consumer confidence will make the rotation in the sources of growth in the economy away from mining investment more problematic."


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