The aftermath of the budget featured a rare conjunction of three of the more fundamental problems faced by Labor.

The first and simplest problem is a toxic media environment, which is primarily a product of the sheer level of partisanship from the company owning the bulk of metropolitan newspapers in the country, and Labor’s failure to fight it. No wonder Tony Abbott was chortling at a Canberra nightspot late on Tuesday night as he went through the budget coverage planned by the Daily Telegraph’s Paul Whittaker.

This government, as no one needs reminding, has a reputation for incompetence, despite it not being noticeably more incompetent than its predecessor, which at various stages wasted billions of dollars and was every bit as responsible, indeed more so, for the deaths of dozens of Australians, than Labor conceivably is.

Nonetheless through dint of sheer repetition by some shock jocks, sections of News Ltd and particularly The Australian’s Press Gallery contingent, the “Labor is incompetent” theme has taken hold in voters’ minds, just as it has in journalists’ minds. Even those purported paragons of balance, ABC journalists, refer to the “debacles” of the insulation program, Green Loans and the BER program.

The Green Loans program was indeed a debacle, although not of the order of magnitude of, say, the first sale of Telstra, nor as blatant as the Howard government siphoning advertising contracts to Liberal mates. But the Home Insulation Program, for all its documented faults, saw a huge rise in the safety of insulation installations. The much-reviewed BER program supported tens of thousands of desperately-needed construction industry jobs providing important infrastructure for schools, with a complaint rate that was almost freakishly small given the nature of the industry involved —  in fact the BER was probably the most successful non-cash stimulus program developed anywhere in response to the GFC.

Much of the media campaign about Labor’s competence thus consists of running plainly false stories at the expense of the government and ignoring or better yet misrepresenting any evidence, no matter how independent, that doesn’t fit the campaign­. Some outlets went even further than this. The ABC’s so-called “Online Investigative Unit” tried to suggest the ANAO was somehow biased when it audited the BER and, inconveniently for the media, found few problems.

Thus we had another round of blatant falsehoods last week, mostly from journalists at The Australian and The Daily Telegraph, seriously contending that the government had done the slightest harm to middle-class welfare in the budget, when the one notable — and to economists disappointing — aspect of the budget was Wayne Swan coming out firmly in defence of “family payments”.

Labor’s passivity in the face of such straightforward propagandizing appears a form of learned helplessness. The willingness of the government to treat anti-Labor propagandisers as legitimate media outlets, in particular by placing advertising with them — remember that The Australian makes a loss and is therefore being subsidised by taxpayers via government recruitment and tender advertising — is remarkable and presumably a source of great amusement at Holt St. And the inability of ministers — with the rare exception like Stephen Conroy — to respond to the persistent circulation of lies encapsulates Labor’s problems in communicating effectively.

Yes yes, of course, everyone knows Labor can’t communicate effectively, couldn’t sell a cold drink on a hot day. Everyone has covered that issued to death. And yes, perhaps the obsession with communication distracts from the substance of leadership. Perhaps they should instead try governing well, as Lindsay Tanner quipped.

But what last week showed was that Labor’s other two basic problems – being unable to communicate and lacking the will to tackle tough reforms – are actually bound closely together, not mutually exclusive. This is the more serious point that emerged from last week’s childishness.

I noted a while back that Labor’s communication strategy — much like that of the Coalition — is based on explaining in detail how much they respect and admire Australians and especially those of working age. If you believe our political leaders, the mere act of rising (early, of course), getting the obligatory kids to school and putting in a fair day’s work is the stuff of classical legend, especially if you enjoy the status of a “tradie”.

With this constant encomium of the ordinary has come a ready pandering to whatever self-delusions voters care to adopt. In particular, the claim that Australians face cost-of-living pressure has been elevated to the level of a national founding myth, despite the constant evidence (most recently, from the Herald-Sun’s Phillip Hudson) that “cost of living” has been far outstripped by income, that for all but the lowest-income earners “cost of living pressures” entirely reflect the lifestyle choices of consumers or, in the case of electricity prices, that they reflect no more than a return to the real price levels consumers paid two decades ago.

Labor used to be an adept exploiter of this self-delusion, in the same way Tony Abbott now uses it for political gain. Kevin Rudd wielded “cost of living pressures” against John Howard and Peter Costello ruthlessly, dismissing their eminently sensible response that there were limits to how much governments should intervene in the operation of markets as further evidence of how out-of-touch they were.

This constant pandering to voters, this race by politicians to feel their every ache and pain — from having to wait more than five minutes for access to a free, high-quality emergency medical service, to the rising cost of running a home stuffed full of electrical appliances — naturally reinforces the entitlement mentality of people even on what are, by our own standards, high incomes. Such people, with their “we don’t feel rich” and “struggle to make ends meet” clichés of compensation, now expect that if politicians are so convinced of their innate worthiness and understand their circumstances so well, they’ll be only too happy to help out.

Forget the politics of envy. We’re now beset by the politics of empathy.

In this political environment, reform that offends or inconveniences even a small number of people becomes a sort of thoughtcrime, contrary to the overall policy imperative of lionising ordinary voters. Imagine how the Hawke government’s tariff reforms would be reported now — you can just see the pictures of unhappy families photographed in front of outer-suburban homes, and readily imagine the industry modeling predicting hundreds of thousands of “direct and indirect” jobs that would be lost, amid apocalyptic headlines like “Labor to destroy industry”.

The Coalition knows this better than anyone. It wasn’t just Kevin Rudd’s cynical exploitation of “cost of living pressures”. Their own experience with Workchoices did it. Originally intended as a mechanism to cut wages and conditions for low-income workers and wreck the trade union movement, the damn thing escaped its handlers and began attacking Middle Australia, which of course no one ever dared suggest for a moment was earning too much money or enjoying over-indulgent working conditions. The Coalition have got the malady even worse than Labor, which is why Tony Abbott offers nothing except slogans and demands for an election, while Labor at least is having a crack at some reforms where it thinks it can get away with them.

But Labor itself played a part in the creation of what is now the most cynical, opportunistic and vacuous opposition in recent decades. It was Labor that turned its back on its legacy of economy reform while in opposition. It was Labor that tried to block the GST even after John Howard had won an election promising it. It was Labor that, time and time again in opposition, opposed the Howard government’s reform efforts. It’s entirely appropriate to blast Tony Abbott and his crass, content-free approach to opposition, but he’s certainly not the first of recent opposition leaders to be guilty of that.

The result is a bipartisan extension of political language into political substance, of form fundamentally shaping content. What ails our current crop of political leaders is a confusion between the national interest and the national obsession with self-interest, between the public good and telling the public how good they are. It’s been a generation in development, and it would take a brave politician to tangle with this national conviction of self-entitlement.

Until one finds a way, don’t bet on there being substantial economic reform.