How the Incumbent Rules

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Strip away the underlying cash balance, departmental forward estimates, Treasury's economic forecasts and the rhetorical flourishes in Peter Costello's Parliamentary speech on May 11, and what can you make of Australia's 2004-05 federal Budget? Is it anything but a routine annual statement on taxing and spending? While fiscal policy is nowadays a second-tier economic tool, it's always been a top-shelf political accelerant. It's also the best example around of how governments set the agenda - particularly when general elections loom. If Prime Minister John Howard and Treasurer Costello have become masters at anything during their 3,000 days in government, it's been how to turn their brand of conservatism - quiet economic reform and blunt social populism - into a winning electoral strategy. Howard's team is like a great football club that's won the comp - and then gets to write the rules for the following season.

It's funny to think back to 1996, when Howard won office. The first Howard ministry was a bunch of no-names; after 13 years of Labor rule, today's big guns, like Costello, Foreign Minister Alexander Downer and Attorney-General Philip Ruddock, had no ministerial experience. But the conservatives have put their stamp on the country, improved their party organization and employed the privileges of office to keep themselves in power. Howard became P.M. with a huge parliamentary majority; implementing his convictions - tax and industrial-relations reform, tougher gun laws and cultural realignment - cost him some of his electoral buffer at the 1998 poll. Three years later, his uncompromising border protection stand saw him increase his margin.

Familiarity breeds incumbency. A cautious electorate likes stability. Since 1949, there have been only four changes of government - in '72, '75, '83 and '96. Three-year electoral terms are, in practice, even shorter, as the P.M. can call a poll whenever he likes; on average, since 1972, Parliaments have run out of puff seven months early. The perpetual campaign cycle suits the agenda setters and those who control taxing and spending: they can ensure that wallets are bursting with dollars by the time the electoral writs are issued.

With an election expected later this year, the outline of Howard's campaign pitch just got clearer: continued economic growth, tax cuts all round, and generous payments to voters with children (or those planning to have them) and the aged. Howard has played this game before. Three years ago, he was toast, his government seen as "mean" and "tricky." Sure, 9/11 and the Tampa issue allowed Howard to display his superior national security credentials compared with Labor aspirant Kim Beazley. But a Budget-time spending bonanza six months before the poll helped Howard and his government to get back in the race.