For voters economics is queen

First, the Gillard government was adamant that Labor would deliver a budget surplus by 2012-13, evident from her first press conference as Prime Minister (23 June 2010).  While a difficult international economic environment made it difficult for both public and private forecasts predicting economic growth, with the 2011-12 budget delivering a budget deficit of $43 billion (2.9% of GDP), it was only near the end of 2012 that the government finally admitted that a surplus would not be achieved. 

Second, while the Rudd government’s handling of the Resource Super Profits Tax was one of the main reasons why caucus support shifted to Gillard, the Minerals Resource Rent Tax compromise raisedjust $126 million during its first six months, despite the government previously predicting $3 billion for the 2012-13 financial year.

Third, the carbon tax was an economic failure, while doing nothing to prevent global CO2 emissions reaching a record31.6 gigatonnes in 2012. With the carbon tax initially set at $23 per tonne, higher than most similar schemes around the world, an April-May 2013 Australian Industry Group surveyof about 400 businesses in the manufacturing, services and construction found that most were unable either to pass on the costs of the carbon tax or afford to reduce their own exposure to it. Only the most emissions-intensive and trade-exposed industries received assistance to meet their carbon liabilities (Innes Willox, ‘Business pays too much for carbon’, The Australian, 26 June 2013).

With such policies hardly delivering benefit, common sense told most Australians that all was not well under Labor at a time of greater difficulty for many workers. For example, the ABS indicated that average hoursworked per Australian worker continued to decline: 35 in the 1980s, 34 in the 1990s and 33 since 2000, yet 32.9 in 2011.  Further, the real unemploymentrate was 13.1% when one included those who worked just one hour a week, discouraged jobseekers, the underemployed and those who wanted to start work within a month, but could not begin immediately.

And, despite a 2013 reportby the National Centre for Social and Economic Modelling finding that average disposable income increased by 65 per cent since 1988 (15 per cent since 2008), thus leaving households $15,861 per year ($5,324 per year since 2008) ahead after accounting for cost of living increases, benefits was far less for low-income people. During the 2012-13 financial year, high income households were assisted most by low mortgage rates (down 14.5 per cent), yet low income households and government beneficiaries faced higher living costs with utilities rising by 14 per cent, health 6.2 per cent and education 5.5 per cent. Low income houses were much less able to cope with double-digitgrowth in electricity prices after 2007, including 14% in 2012-13.

Labor’s poor economic policy prowess did not help boost consumer or business confidence. It merely cemented its electoral demise at time when workers observed the end of Ford’s domestic operations and recent departures from the Australian food manufacturing sector, including by Heinz.

Economic mediocrity also hindered Labor’s ability to adopt a more progressive or balanced economic, social and environmental policy mix.

For example, a flawed mining tax alone, although increasing the tax free income threshold to $18,200, jeopardised other Labor policy promises: family payments increases; a bonus for school-aged children; small business tax breaks; and compulsory superannuation increases.

With Australia’s total social welfare expenditure at a record 19 per cent of GDP in 2012, boosted by government fiscal deficits, Labor was forced to make other cuts elsewhere to pay for new policy programs, thus angering some Labor voters. This included cutting $2.5 billion from universities over four years; around 84,000 sole parents being moved off parenting payments to Newstart once their youngest child turns eight, which meant 60,000 single parents from January 2013 could lose $60-100 a week; and no increase in the Newstart allowance, despite the base rate not increasing in real terms since 1994 and the Business Council of Australia President Tony Shepherd calling for an increase at a National Press Club address.

By not adopting a more conservative economic platform, and rushing to implement flawed mining and carbon taxes, Labor’s fracturing (begun under Rudd) continued, as did policy desperation.  

First, Labor’s policy towards asylum seekers arriving by boat moved further towards the Coalition’s hardline stance, as further evident under Rudd during the election campaign.

Second, Labor conducted a whinge campaign looking for someone to blame for its own policy woes. Treasurer Wayne Swan accused mining magnates Clive Palmer, Andrew Forrest and Gina Rinehart of trying to assert too much influence over policy given their strident opposition to the carbon tax and the mining tax. Gillard, responding to an education debate, also suggested that people who lived on Sydney's North Shore were not ‘real people’ (Mitchell Nadin; Imre Salusinszky, ‘Julia Gillard takes on Tony Abbott in a reality showdown’, The Australian, 10 May 2012.).