Why John Howard will win next year's federal election

Between 1949 and 1972 was a period of uninterrupted government at a federal level. Unemployment was historically low, averaging about 2 per cent. Inflationary pressures were also non-existent.

It was not until the start of the 1970s that unemployment began to rise and inflation also became a problem. From 1972-73 to 1980-81, unemployment kept rising: the average rate jumped to about 7 per cent. By 1972, the inflation rate had also leapt to above 7 per cent. With this combination, the long reign of conservative government ended in December 1972.

But the election of a Labor government federally was short-lived. Unemployment continued to worsen between 1972 and 1975 and inflation went through the roof, reaching 17.6 per cent in March 1975. Gough Whitlam was voted out of office at the end of 1975.

Unemployment continued to rise during the Fraser Government, but it stayed in power until March 1983 thanks to a trend downwards in inflation from 1975 to 1982.

But inflationary pressures set in again, with the inflation rate hitting 12.5 per cent in September 1982. With unemployment reaching 9.7 per cent in February 1983, the Fraser Government lost the federal election.

The Hawke-Keating Labor Government was in power for 13 years. Between 1983 and 1990, the unemployment rate fell from 10 per cent to below 6 per cent (5.8 per cent in January 1990), holding back any change in government from inflationary pressures and rising interest rates (which were about 17 per cent at the time of the 1990 election).

After the 1990 election, Australia went into recession. By February 1993, unemployment had reached 10.8 per cent and everyone, including the Labor Party, thought the Hawke-Keating Government was over. The 1993 election was unwinnable for the then prime minister, Paul Keating.

But Keating won. Why? Although unemployment was at record high levels, inflation had dropped significantly. In March 1993, the inflation rate was about 1 per cent. Between 1993 and 1996, unemployment fell to 8.1 per cent, still historically high. But by December 1995, the inflation rate had risen to 5.1 per cent. Keating lost in March 1996 in a landslide to John Howard.

While inflationary pressures are now present in the economy (and may cause a further interest rate rise by the Reserve Bank next month), unemployment has continued to fall to a 30-year low of 4.8 per cent.

Accordingly, all that Beazley's Labor can do is sit back and let the election cycle take its course.