LEIGH SALES, PRESENTER: A week ago, the Prime Minister was trying to reboot his government's message in the hopes of ending the year on a high.
Well if anything, his problems have only deepened since then and the latest concession to the Government's woes is that Tony Abbott's compromising on his pet policy on paid parental leave.
At the same time, he's been handed a potentially tricky series of reforms that affect the livelihood of every Australian.
A report into the financial services industry, commissioned by the Abbott Government, is recommending some controversial changes to everything from housing investment to superannuation, as political correspondent Sabra Lane reports.
TONY ABBOTT, PRIME MINISTER: We will be better targeting our parental leave scheme.
JOE HOCKEY, TREASURER: Well, we've been talking about it for a while. I mean – and the fact is that he listens, we listen.
TONY ABBOTT: We'll better target it. I'll be working on the precise changes with my ministerial team over the summer break.
SABRA LANE, REPORTER: It's been a long gestation period. For nearly five years, Tony Abbott's argued the Coalition's paid parental leave policy is signature policy, one he says will be a defining mark of his leadership.
Some argue it has been, for all the wrong reasons.
It was imposed on his Coalition colleagues without consultation. Some of them have long complained that it was a Rolls Royce scheme which did nothing for stay-at-home mums and disadvantaged regional women.
The Prime Minister's revealed on the weekend the policy will be tweaked again.
TONY ABBOTT: Obviously when I first committed us to a paid parental leave scheme based on a woman's wage, the Labor Party was telling us we'd be in strong surplus. Now, we're not. That's why we've got to make the money go a little further, put some of it into child care, as well as a lot into paid parental leave.
BRIDGET MCKENZIE, NATIONALS SENATOR: I'm absolutely convinced that the Prime Minister in his considerations over summer will maintain his commitment to the principles that he took to actually crafting this policy, and that is, to ensure that working mums in Australia have access to a real wage replacement, plus superannuation.
SABRA LANE: It's the second concession Mr Abbott's made to the policy this year. He earlier dropped the maximum payout from $75,000 for six months to $50,000 dollars.
While the Prime Minister says he's changing it, citing community concerns, the policy was never going to pass the Upper House. Coalition senators had threatened to cross the floor over it and it is friendless on the Senate crossbench.
Many Coalition MPs have gone to ground today, declining to comment until the new version is unveiled. And now that Mr Abbott's vowed to consult the party room, 7.30's been told there'll be push to further modify it.
Big business is still not happy it's being funded through a one-and-a-half per cent levy on them.
KATE CARNELL, AUST. CHAMBER OF COMMERCE & INDUSTRY: We would welcome any change; in fact we'd welcome it totally being put in the bin. We really don't like the policy at all.
SABRA LANE: Victorian National Senator Bridget McKenzie has long-supported Mr Abbott's idea.
BRIDGET MCKENZIE: I think it's entirely appropriate and I think it's important that we maintain an open mind to changes to the PPL and how we can best support working mums to do that important job of having children and caring for them, but also contributing to the national economy, and importantly, their own earning capacity.
SABRA LANE: 2015 is shaping up as the year for arguing about economic reform, with the Government about to unveil a taxation discussion paper, with the Treasurer flagging changes for major companies like Google that make money in Australia yet pay tax elsewhere.
JOE HOCKEY: I'm going to have more to say about it in the next few days.
SABRA LANE: That'll be an easy change to explain to voters; so too the need to eliminate or reduce credit card surcharges. That's one of 44 recommendations from a broad review into the financial services industry, conducted by former bank boss David Murray. That finding could be adopted, given this endorsement by the Treasurer this morning.
JOE HOCKEY: Obviously there's some gouging going on. We've got to stop that to make things affordable for consumers. I hear that. One of the recommendation – another one was to reduce the fees that superannuation companies and intermediaries and others are taking. If we do that, we'll see a very significant increase in retirement savings.
SABRA LANE: Some recommendations are controversial and Mr Hockey's given himself wriggle room to drop anything too hot.
JOE HOCKEY: It's a report to the Government, not of the Government.
2UE RADIO COMPERE: Yeah, not of the Government. I understand that …
JOE HOCKEY: Well it's a very important point, Stuart.
2UE RADIO COMPERE: Of course it is. It is an important distinction.
SABRA LANE: One idea in that category isn't a recommendation, but an observation and it is a political hot potato, given Australia's obsession with property investment.
In comments published in an appendix, the report says, “Housing is a potential source of systemic risk for the financial system and the economy.”
The tax treatment of investor housing through capital gains tax and negative gearing, “… tends to encourage leveraged and speculative investment”. That suggests an end to the tax breaks.
Economist Professor John Freebairn welcomes that finding, saying the current system doesn't make sense.
JOHN FREEBAIRN, ECONOMICS, UNI. OF MELBOURNE: Well I think what they've encouraged us is to have big McMansions. It's encouraged us to then buy other property. And so Australia's scarce savings are in a sense overloaded into buildings that we live in, rather than invested in industry that would produce exports or produce goods and services that we value.
SABRA LANE: Yet he's not convinced the Government's able to explain to the public why the status quo has to change.
JOHN FREEBAIRN: So you've got to be a very convincing politician to say, “Listen, you pressure groups, what's good for you is not necessarily good for the country. But actually, in the longer run, it will all be good for you as well as for the country.”
SABRA LANE: Some of Mr Hockey's colleagues don't think he's up to it. Others suggest Malcolm Turnbull would be a better treasurer and have been making mischief.
In a fantasy football sense, some Coalition MPs say Mr Turnbull would make the better treasurer, as he's the Government's best communicator. But there's no mood for change in the current Coalition party room and removing Mr Hockey would be admission the Government's economic strategy has been wrong. It would also taint the Prime Minister.
And while Mr Abbott acknowledges polling today shows he and the Government are on the nose, he's trying to sound positive.
TONY ABBOTT: This is not the first government to have a rough patch in the polls. The Howard Government, the Thatcher Government and the Reagan Government, all had rough patches in the polls. … And I think that the public are also focusing on performance and this is a government which has fundamentally kept faith when it comes to the big commitments we made to the Australian people.