Labor's election campaign breaks the golden rule

Conventional wisdom says that, in the face of an unpopular incumbent government, all an opposition needs to do is keep its nose clean, and the next election will take care of itself.

Instead of doing merely this, Labor could not resist announcing a raft of big-spending policies, the removal of many tax concessions, and an expansion of an already radical climate-change policy.  While this might appeal to the Labor comrades, it also risked scaring many swinging voters (previously disenchanted with the Coalition).

In effect, Labor in large measure has moved the focus of voters away from the problems of the Coalition, and onto the potential risks of a "progressive" government.  Labor's recent dip in the pollstherefore is hardly a surprise, and (though it is still ahead) has given momentum to the Coalition's campaign.  Bill Shorten (despite his lack of personal popularity) for the past couple of years had still been a shoo-in for the PM's job.  He now appears less so.

The change in political sentiment already has some commentators drawing comparisons with John Hewson's "unlosable election".  (This is despite the Morrison Government having a lot more issues than the Keating government ever had.)  Peta Credlin, for example, recently said (about Bill Shorten) that Labor's deluge of spending announcements is "hurting him with the electorate" because it reinforces long-held suspicion that Labor "spends too much".  Labor's plans for a 45 per cent target for the reduction of greenhouse gas emissions is also drawing increasing scrutiny.

In early April, Alan Koher had summed up the federal Coalition's election prospects.  He said that "everyone knows they’re going to lose, so they might as well start getting ready for 2022".  He was reflecting a widespread view, that a stint in opposition might be the best means of sorting-out the federal Coalition's internal problems and policies, as well as its persistent unpopularity in the polls.  I am not sure that Kohler would now be quite as certain about the election outcome.

The Coalition's issues have been many.

First of all there is the aftermath of instability and disunity following the deposing of Malcolm Turnbull.  A related factor is that the Liberal Party for years has been openly divided along ideological lines, with its parliamentarians bickering among themselves, with energy and detention of asylum seekers being key contentious issues.  Divisions seem greatest in NSW, where there are allegations of shenanigans on the part of the controlling "moderates" in pre-selection processes.

The Liberals and Nationals had also been publicly sniping at each other over coal-fired electricity, and been wishy-washy on key topics (eg reforming the ABC, getting rid of Section 18c of the Racial Discrimination Act, curbing Labor-initiated spending programmes like the NDIS, the NBN and Gonski funding).  The failure of the Coalition to agree on key issues, however, was most clearly evident in how they dithered and failed to agree on the issue of same-sex marriage.

The Nationals lost their natural leader (Joyce) to a sex scandal and his replacement is widely perceived as ineffective.  Also, (especially at state level in NSW) the Nats are regarded by many as having betrayed their base on issues like water buy-backs, greyhound racing, gun control, vegetation legislation, and other regional issues.

On top of all these problems, the federal Coalition's difficulty in governing was made worse by having a hostile Senate, and (more recently) a "knife-edge" House of Representatives.

Malcolm Turnbull greatly increased the traditional divide between his party's "conservative" and "moderate" factions.  He took party policy too far from its base, and made historic divides even bigger.

The Turnbull problem, however, seems to be turning around, (ironically) because of his own (seemingly vindictive) actions.  Turnbull's behaviour since being deposed now seems to be convincing more and more of the electorate that he should never have been made PM in the first place.  He now also appears to have even weakened the position of the "moderate" faction he once led.

Whatever one's politics, there are some obvious benefits from a change in Government.

First and foremost, a clear Labor majority in the Reps, with Greens and some Independent support in the Senate (the commonly expected outcome) will allow a Labor government to get most of its legislation through, and will give rise to greater political stability.  A stint in opposition should also allow the Liberals and Nats to get their respective houses in better order.

In terms of policy there are at least some changes likely, that most people believe will be for the better.

First of all, Bill Shorten plans to tear up a controversial $444 million contract with the Great Barrier Reef Foundation.  It was never clear what this policy was going to achieve, bar a pork-barrel benefitting researchers in a business-linked charity.  If you believe in the global warming alarmism, the reef is doomed anyway (due to rising sea temperatures) so the expenditure was going to be futile.  If you believe that the reef is resilient, the spending is unnecessary.  [The only problem is that Labor has plans to hand the money to public agencies to spend on other ways of "saving the reef", in what will likely be another waste.]

Labor also wants to put an end to the excesses of out-sourcing, indulged in (for ideological reasons) by the Coalition.  This had included umpteen incidents whereby public servants were paid generous redundancies, only to be re-employed soon after as contractors on much higher salaries.  Defence and IT have been notorious in Canberra as areas where such policies cost rather than saved money.

Then of course there is the area of defence acquisitions, whereby $50 billion is being spent on 12 new submarines, and $38 billion for nine new frigates.

Essentially the taxpayer is underwriting an indigenous naval shipbuilding industry (mostly in South Australia) that has an appalling track record in terms of cost management, late delivery and poor reliability.  (The Audit Office has warned there is an “extreme risk” of cost and schedule blowouts.)  These industries (supported in an attempt to buy votes in South Australia) have no hope of ever getting much in the way of foreign orders because their costs are about double those of overseas suppliers (who have access to higher tech, and produce to higher quality standards and on time).  Australia is too small a market to support this industry, which is destined to suffer irregular demand and persistent high costs.

This might be a reason for those outside South Australia to vote against the Coalition, except that it was one of the few areas where the Coalition received bi-partisan support from Labor.  It seems that none of the major parties has the back-bone to scrap an industry far less efficient that the recently closed motor-vehicle manufacturing industry.

Labor's big spending promises include a $4 billion childcare package, $10 billion over a decade for a taxpayer-funded 20 per cent pay increase to childcare workers, $2.4bn for expanded free dental care, $2.3 billion to fight cancer, and $660 million for still more programmes to curb violence against women(more than double the amount the Coalition allocated to the problem just two months ago).

There are big policy changes being promised by Labor.  There will be a rewrite of workplace laws (removing sanctions on union excesses), and a hike in the minimum wage.  Labor supports the idea of a "living wage" and has promised to hire "the best lawyers in the country" in a bid to fast-track a general wage increase.  It also wants to reverse reductions in penalty rates. The overall result will be a rise in wages, and a dramatic shift in the industrial relations system, granting the unions greater power, with less accountability than ever before.

Labor plans to scrap the cashless welfare card.  There are also plans to increase the Newstart Allowance, back the Uluru Statement from the Heart (including the ‘establishment of a First Nations Voice enshrined in the Constitution), and there is a good chance that asylum seekers detained in PNG and Nauru will end up in New Zealand within months of a Labor victory. 

Labor plans to go ahead with a 45 per cent emissions reduction target by 2030.  Expensive electricity has already driven much of our heavy industry overseas.  The policy is also un-costed, though Dr Brian Fisher has estimated it would result in a GDP loss of at least $53 billion.  Labor has also pledged to make up to $1 billion in finance available to boost solar power in Australian schools, improving access to rooftop panels and battery storage.  Additionally, Labor has promised to improve the "robustness" of state governments' native vegetation clearing laws to better match Queensland's, in an effort to reduce carbon emissions.

The alternatives in the election are coming down to a choice between a big spending Labor administration that will effect a major further push in renewables, and a Coalition with more emphasis on smaller government, income tax cuts (especially for middle income earners and companies), and more modest increases in renewable energy.  Morrison's promised tax cuts have been taken with a grain of salt by the electorate because few have been expecting the Coalition to regain power and be in a position to deliver them.

Labor remains firm favourite to be the next government at $1.25 (at the time of writing) compared to the Coalition at $3.85.  We are therefore looking at the prospect of an era similar to but not quite as radical as the Whitlam one, with higher spending, higher taxes and increased debt on prospect.  Labor wants to promote wage increases but has a number of policies, which are countervailing (eg. continuing record immigration, seeking further increases in the Superannuation Guarantee.)

While Labor is intent on taking us further down the road to socialism, this might still be a good election for the Coalition to lose.  This is because, in addition to opposition being a good place to sort out internal problems, there are clouds on the economic horizon.  Australia and the world are due another recession, and US/China relations are problematic.  In addition our electricity system is set to become much more expensive and unreliable, assuming Labor goes ahead with its energy plans.

All this reminds me of what Paul Keating said in May 1986.  "If this Government cannot get the adjustment, get manufacturing going again, and keep moderate wage outcomes and a sensible economic policy, then Australia is basically done for. We will end up being a third rate economy... a banana republic".