Abbott steps into budget debate, saying reform is a precondition for tax cuts

Tony Abbott has exhorted the government to stand up for reform and avoid new spending that does not promote growth, in a rallying speech aimed at the Liberal base.

“Reformers can’t lose heart – even though a government with a solid record of achievement has just had its majority slashed,” he told a building industry lunch in Melbourne.

He said budget reform began with cutting spending but should not end there. “Budget reform is the essential precondition for tax cuts,” he said. “The more budget reform we can achieve, the more scope there is for tax cuts once the deficit is going down, not up.”

“With a difficult parliament and a budget in peril, the first challenge for the next term will be to avoid new recurrent spending, outside of national security,” he said.

“No new spending should be considered unless it will clearly boost economic growth: that could mean economic infrastructure, high-quality research and cost-effective new drugs – but not extra spending that’s mostly political positioning.”

Abbott said that when it came to budget repair the government “has been in office – not in power”.

“As in the previous parliament, where Labor supported the deficit reduction levy but opposed all the structural reforms to get the budget back under control, in this parliament Labor is set to support all the higher taxes on super but not all the lower taxes on companies which are needed to drive economic growth.”

Abbott warned against moving closer to Labor “in the hope of being a smaller target”. The Coalition’s challenge was “to make the difference crystal clear so that voters can choose a party that puts its faith in empowered citizens rather than empowered officials”.

Saying a good government could be notable for avoiding bad policy as much as for implementing good policy, Abbott set out what amounted to a series of benchmarks for the Turnbull government.

“I’m confident that a pro-reform Turnbull government will avoid returning to the bad old days of bailing out businesses with political clout,” he said. This comes when powerful Senate crossbencher Nick Xenophon is demanding help for steelmaker Arrium.

“I’m sure the government will resist pressure to increase the renewable energy target,” Abbott said. “I’m sure the government will strongly support the coal industry … I’m sure it will work hard on the Queensland government to ensure that green sabotage and lawfare doesn’t stop the Adani mine … I’m sure it will encourage the South Australian government to develop the nuclear industry.”

Tapping into the “forgotten people” theme, Abbott said that “across the political spectrum there’s a tendency to take for granted the people who love our country without qualification and who strive to be as self-reliant as possible; those who don’t want our country exploited by people smugglers, unfriendly foreign governments, the undeserving poor and the equally undeserving rich.

“The rise of populist protest parties here, Brexit, and the troubles of establishment candidates in the US suggest that, as in Menzies' day, there are lots of people who feel forgotten but would rally to strong and effective leadership.”

To counter populist politics, reform had to be made more attractive than the alternative. The reform mightn’t be of the dramatic kind that excited headline writers but “it will be incremental change for the better – Fabian conservatism, if you like!”

Abbott said that since the election he had been asking good people what should or could be done better. Answers included rethinking the superannuation changes, fixing Section 18C of the Racial Discrimination Act, and making workplace bargaining subject to the competition laws.

But “the first challenge for a reforming government is not to publish a to-do list but to persuade people that change is worth it because it will be good for them”, he said.

“We have to show some fight in the things we believe in. We may not be able to do all that we would like but we have to demonstrate that we know what that is.”

The best way for the Coalition to win the next election “is to support higher wages, lower prices and less tax”.

Abbott said he was pleased that support for the re-establishment of the Australian Building and Construction Commission – that will come early before the new parliament – was one of the continuities between his government and that of Malcolm Turnbull. Cleaning up the construction industry was an important economic reform.