The Abbott government is approaching an existential moment. The existential question: What is the point of the Abbott government?

In the week before Bronwyn Bishop's career-ending exposure for abusing the public purse, Tony Abbott issued a warning to some of his ministers.

It was not a warning about travel expenses or about any impending disaster.

Rather, it was about the absence of disaster: things were going so well for the government, the Prime Minister said, that they needed to guard against the danger of complacency.

His ministers were incredulous. Delusion, thy name is Tony. It's funny to everyone except, apparently, Abbott himself. It was like his gag on Thursday morning when he declared that "everything this government does is about jobs". The statistician supplied the punchline almost immediately – June unemployment had worsened from to 6.1 per cent to 6.3, the highest in 13 years.

The government is so lost, its standing so poor, its members so sick of Abbott's captain's picks, that the party is sullenly contemplating, once again, whether it needs to replace the captain.

"In February he asked for time," as he pleaded for his job in the party room, says one Liberal MP. "He asked many of us for six months." It's been six months, a deadline that expired this week.

"The reality is that nothing's changed and nothing's improved. He asked some people to give him to the end of the year. Well, we aren't quite there yet. 

"This government is doing some good things. But there isn't anyone who thinks this is a good government." The Abbott government is approaching an existential moment. The existential question: What is the point of the Abbott government?

To be fair, the jobs data weren't all bad. Thirty-eight thousand new jobs were created in the month. But, because this number was swamped by a gush of people searching for work, the unemployment rate went up.

Yet the emerging trend for Australia is becoming clear. As the mining boom fades and national income recedes, Australia is groping for new sources of vigour. And not finding them fast enough. So where are the jobs going to come from?

The Abbott budget is based on the comforting assumption that growth will somehow automatically return from a feeble 2 per cent to its long-run trend of over 3.

But this has been questioned by no less a figure than the governor of the Reserve Bank, Glenn Stevens. He said a couple of weeks ago that "perhaps trend output growth is lower than the 3per cent or 3 per cent we have assumed for many years ... perhaps the growth we have seen is in fact closer to trend growth than we thought."

Meaning? Australia could be stuck in a slump. Not a collapse but a long, slow malady, chronic fatigue syndrome on a national scale.

If so, it'll become progressively harder to find a job. For young people it'll become excruciating. The budget deficit will continue to rise. 

It's not just "some esoteric concern for economists" as Stevens put it, but our "collective ability to deliver social policy outcomes, to enjoy the benefits of a 'good society', or at a more basic level to provide public services and even to defend ourselves".

The solution, said the governor: "The case for reform needs to be presented as a positive narrative for economic growth."

This needs to be the purpose of the Abbott government. To rejuvenate the country for a new phase of vigour after the mining boom. 

Yet just now, faced with options for reform in three distinct areas, the government is somewhere between tentative and terrified in embracing them. On tax reform, Abbott is tolerating a discussion with the states but has said that without bipartisan consensus nothing will happen. On workplace reform Abbott has ruled out considering the modest, moderate proposals tabled by the Productivity Commission this week. On competition reform, the government is conducting a nervous internal debate.

"We have abandoned economic reform," says an Abbott minister. 

"The budget was a joke – it was a give-away budget."

The reform phobia "boils down to Tony and Joe having no capacity to project a vision or an economic narrative," the minister despairs. "They are useless advocates. Tony's just a wrecker."

The most serious reform delivered by this government is in trade. Andrew Robb has sealed trade deals with Australia's three biggest export markets – China, Japan and South Korea.

Two have taken effect with the third, China, yet to be ratified by the Parliament amid a misleading scare campaign by some unions. 

These seem destined to be Australia's stealth reform plan. By a gradual liberalisation of trade here and in the three North East Asian powerhouse economies, Australia should reap some extra dynamism. 

But trade opening can only be a part of a national rejuvenation. And even the China trade deal could be in trouble unless the government makes a serious effort to counter the scare campaign against it.

Abbott didn't take office planning this dispiriting performance. On the contrary. He came to office knowing that he would never be popular but determined to win respect. How? He would pitch some serious reforms in his first budget, argue doggedly to make his case, carry the argument and demonstrate grit and conviction.

He would be a reforming prime minister. Like his mentor, John Howard, he would win respect through determination. "You mightn't like him, but you have to admire the courage of his conviction," was the refrain that Abbott fantasised he would one day hear. 

That was the theory. The plan failed dismally. He overreached. He sprang all his pro-market reform ideas on an unsuspecting public. He had no mandate for any of them, GP co-payment or university deregulation or harsh welfare measures against young people. 

He broke promises, destroyed any trust, failed to win his arguments, and misjudged the Senate. The reform agenda collapsed with the government's standing. With the exception of a brief flare of public interest in this year's budget, the public is showing the government every bit of respect it deserves for its retreat into a miasma of confusion, trivia and distraction.

Abbott has dealt soundly with some of the underlying demands of national security, but cannot resist the urge to posture on the issue. 

The theatre of the flag-crammed podium is harmless; the wilful antagonising of the Muslim community is deeply harmful to national cohesion and to national security.

In the week that the IMF delivered its advice on the urgent need for serious reform of the Australian economy, just about nobody heard it over the racket and rancour of Abbott's hyped-up attack on the ABC, the confected indignation of culture wars drowning out debate over the future of the country.

Reform became retreat. And respect became reaction. In a desperate effort to just hold his job, Abbott has turned increasingly to a reactionary stance to mollify the group he sees as his final bastion of support, the hard right of his party.

On renewable energy, coal mines, gay marriage, Abbott chooses a truculent defence of a right wing minority over a broader national interest approach. "The government has become a preservation society to get Abbott from week to week" is the acid summary of one Coalition MP.

And, contrary to his public statement that the debate over gay marriage should be conducted in a way that respects differences, the Prime Minister privately has told supporters that he is determined that gay marriage will not be brought to a vote on his watch.

The Abbott government has had some achievements. The trade deals are a serious achievement. Stopping the boats was ugly but highly effective, so effective that Labor has now signed up to the turn-back policy. The carbon tax and mining taxes were scrapped, as promised. But that was the last election that was Abbott's project to cancel out Labor.

That done, what is the point of the Abbott government? Is it really just to defend a reactionary rearguard movement on social progress?

And even if Abbott can hold his job to the next election, he faces an ever more bracing question. As one of his ministers put it this week:

"Some people say we can't win an election with him. That's not true," because while it's hard to name any convincing purpose for the Abbott government it's just as hard to name one for Bill Shorten's opposition.

"But what's the point of winning another election with Abbott?"

But it's all going so well.

Peter Hartcher: Reform adrift in pointless politics of Abbott government