Tony Abbott's Budget reply gives Labor some issues to fight on Opposition leader Tony Abbott delivers his Budget-in-reply speech. ON THE eve of Margaret Thatcher's funeral, British Prime Minister David Cameron hosted a dinner at 10 Downing St for a group of distinguished Conservative politicians and ex-politicians who were in London to farewell the Iron Lady. They included Canadian PM Stephen Harper, former American vice-president Dick Cheney, two former US secretaries of state - George Shultz and James Baker - and several ministers in the British Government. Plus our own John Howard. At one point, Cameron said to Howard: "Your party is doing well in Australia, John." Howard agreed, but then surprised some at the table by expressing concern that things could go awry before the election on September 14. It was still possible, he said, that Labor would dump Julia Gillard and bring back Kevin Rudd. If that happened, Labor would suddenly become much more competitive and the election would be closer than looked likely at the moment. It was interesting that someone as politically shrewd as Howard continued to hold that view weeks after Rudd was written off as a joke because of his refusal to contest a leadership ballot forced on Gillard by Simon Crean. Howard's argument was that MPs staring down the barrel of defeat will panic and try anything that might help them survive. I suspect, though, that Labor MPs have already passed through panic and are into the stunned mullet stage. They seem to have accepted their fate. And Wayne Swan's Budget on Tuesday night did little to snap them out of their zombie-like trance. If it was supposed to be a call to arms, it failed. One backbencher likened it to the Budget that Bill Hayden brought down as treasurer just before the Whitlam government's demise in 1975. It was a good Budget, he said, but too late to prevent a landslide defeat. A key problem was that Swan's sixth Budget could not be viewed in isolation. Its credibility was fatally undermined by the wildly inaccurate forecasting -- and particularly the supposedly iron-clad promise of a surplus -- in the Treasurer's 2012-13 effort. That, along with the Gillard Government's widely accepted dead duck status, meant there was little Budget night buzz in Parliament House. It is hard to get excited about a blueprint that won't be implemented. At least, not by its authors. And because everything indicates Tony Abbott and Joe Hockey will soon be calling the economic shots, the Opposition Leader's Budget reply speech 48 hours later felt like a more important event. Tony Abbott confessed to "a few butterflies in the tummy" before getting to his feet, but he made the most of the occasion. If the main task was to appear prime ministerial, he achieved it. The ploy of looking at the camera and addressing the TV audience rather than the Parliament was effective. There were plenty of attack lines, but also more detail than most pundits had expected, particularly about how he would retain higher income tax thresholds, pension rises and family payment increases after abolishing the carbon tax that now pays for them. And, in response to demands he nominate where savings would be made under a Coalition government, Abbott virtually appropriated the spending cuts and tax rises in Labor's Budget. The Coalition benches erupted in delight at the end of Abbott's speech. Faces on the government side were grim. Gillard had sat through it with an expression like a sour Easter Island statue. But, after poring over what Abbott had said, Labor's leaders and their minders were a little less down in the mouth. They realised the speech meant the Opposition Leader was starting to move away from his small-target strategy. "The clouds parted and we saw a bit of blue sky," according to a party strategist. Abbott's rejection of the Gonski school funding measures, he said, "makes the election about education -- our issue." Labor will now portray Abbott as taking away billions of dollars from school children. Labor also sees superannuation as a potential hot issue and is trying to exploit Abbott's announcement that the low-income superannuation contribution will be killed and the increase in compulsory super deferred. They were also doing their best to raise concern about a rise in GST and a widening of its base in light of Abbott's plan for a tax reform White Paper. Abbott has left open the possibility of tinkering with the GST, but says any tax reform won't be until his second term in office, and he'll seek a mandate first. At the very least, Labor has some issues to fight on. Gillard will be hoping it puts some fight into her backbenchers. As for Howard's analysis in the dining room at Number 10, Rudd was out campaigning in Brisbane yesterday alongside Swan, the man who last year accused him of having no Labor values. There aren't any signs of a revolt in Labor's demoralised ranks - just gloomy talk about how bad the defeat is likely to be. Laurie Oakes is political editor for the Nine Network. His column appears every Saturday in the Herald Sun