With the last budget, and budget in reply, before the next election, we’re in a position to assess how the major parties are coping with the challenge posed by the death of neoliberalism.

It’s been a tough time to be in government for the Liberals. When Malcolm Turnbull became Prime Minister, he could promise a “thoroughly liberal government”. But his has been the most interventionist government in decades, with a ramp up in protectionism, de facto nationalisation of energy assets, a banking royal commission that looks set to wind back key elements of the banking business model and an acceptance of the Gonski education funding agenda, in an even more pure form than Julia Gillard implemented.

Each has been a response to political pressure, each has been against Liberal instincts. At no stage has the government tried to step back and work out a broader strategy of how to proactively address where the electorate has moved, rather than simply react, usually in crisis-management fashion, as each new manifestation of the same underlying problem crops up.

The underlying problem is that voters don’t think the economic and political system is working for them. The economic system works, they feel, for the rich and for large corporations; the political system works for big donors and vested interests in Canberra. The benefits of the economic reforms of the last thirty years have stopped flowing to them and have been redirected to the powerful. And when government does intervene in the economy, its capacity to do effectively has been crueled by institutional enfeeblement.

When they’re not managing crises, the Liberals are still pursuing a neoliberal agenda, via neoliberal means — such as the shift of taxpayer funds to large corporations, advocated by an alliance between the Liberals, the Liberal party branch office that is the Business Council, and media conservatives. That Murdoch-owned Sky News has provided the Business Council with a platform to advocate its agenda is only a more concrete example of how neoliberalism has worked in Australia for so long, a more vivid demonstration called into existence because the more traditional and subtler forms of wielding influence haven’t worked.

The budget continues this tradition of crisis management while adhering to a neoliberal agenda. The company tax cuts remain; the corporate regulator has had its (recently increased) funding trimmed. The Fair Work Ombudsman has had its funding frozen. The ABC has been punished. A long-term plan to reduce the progressivity of the income tax system has been proposed. But for electoral reasons, tax cuts targeting low and middle income earners have been made the political and fiscal centrepiece, as a direct attempt to offset wage stagnation created by a shift in the relative power of corporations vis-a-vis workers. In effect, corporations have used their greater power to transfer the burden of giving ordinary Australians growing real incomes — a key achievement of the first two decades of neoliberalism — to government.

Labor — with the greater flexibility of opposition — has been far more proactive in repositioning itself to deal with the emerging disasters of neoliberalism. It’s taken three big ideas from the Greens — negative gearing (and capital gains tax) reform, a banking royal commission and a federal ICAC. The last is particularly important in sending a signal to voters that the power of vested interests in Canberra will be curtailed; unsurprisingly Shorten repeated Labor’s commitment to it in his budget reply. His commitment to additional funding for the Commonwealth Director of Public Prosecutions to go after banks in the wake of the royal commission is in a similar vein.

This is a notable policy and political difference. As the defensive reactions of the banks and AMP to the royal commission illustrate — a continuation of their eternal “no systemic problems, just lots of bad apples” defence — public shaming won’t be enough; hard regulating is needed to curb the power of the banks to gouge customers. And Labor will be happy to go to an election promising bankers in the dock compared to a government cutting ASIC funding.

Labor’s own tax cuts, as expected, are substantially bigger than the government’s — $928 to $530, or a 1.4% after-tax wage rise for an ordinary wage earner, compared to 0.8% from the government. But Shorten also made a point last night of talking about restoring penalty rates, ending sham contracting, strengthening enterprise bargaining and “a new push to deliver genuine pay equity for Australian women”.

Unlike the tax cut, this would partly address the central political problem of neoliberalism — the impact on workers’ incomes of the power shift to corporations. But it wouldn’t address it as much as the ACTU’s call for a more radical overhaul of industrial relations laws that would start tilting the balance back toward workers and unions against corporations.

This is the real policy conflict generated by the collapse of neoliberalism: do political parties proactively shift power away from corporations toward workers and consumers, or merely continue to treat the symptoms of the current power imbalance, such as wage stagnation and gouging of customers? Labor is pursuing the former strategy much more so than the Liberals, who are stuck trying to manage the symptoms as they erupt all over the body politic.