'It's the economy, stupid'. Or is it?

Kevin Rudd and Labor's continued surge in opinion polls has, for the first time in years, many seriously contemplating a change of government later this year and its possible implications.

The second surge - Australia's ongoing economic boom - has many bewildered why there would be a change of government in these prosperous times and just how long can the good times roll on.

This month's national accounts revealed annual economic growth at 3.8 per cent, with buoyant household spending; rising business investment; an ongoing resources boom and most industries and states showing growth in the March quarter.

The results were a welcome fillip for the Howard Government determined to reinforce its economic management credentials in the lead-up to this year's Federal election. The positive results will enable the government to hammer away at Labor over its economic credentials.

Earlier this month the latest Galaxy poll found 42 per cent were worried interest rates would rise under Labor; 40 per cent thought the Rudd team was too inexperienced; and 37 per cent were concerned a Rudd government would run up debt.

Ironically, the danger for the government is the risk the economy may over-heat and force the Reserve Bank to consider interest rate increases - even before the Federal election.

The other surge - Rudd's stellar poll results - continues in most published opinion polls, with all of them indicating that if a Federal election were held now, Labor would be swept into office in a landslide.

The last month's Newspoll had Labor at a record high of 60 per cent of the two-party preferred vote to the Coalition's 40 per cent and this week’s poll continues to have Labor well ahead of the government.

On the primary vote, Rudd has taken Labor from 37 per cent under Beazley in November 2006 to 52 per cent in May.

The Galaxy poll, published this month, has shown some softening of the Labor vote, but still in an election-winning position.

That poll has Labor's two-party preferred vote at 53 per cent and the Coalition on 47 per cent, with the Opposition' s primary vote on 42 per cent - two points ahead of the Government.

When it comes to who would make a better prime minister, again, Rudd continues to lead John Howard by a substantial margin.

For many, particularly most government members of Parliament, Labor's ongoing surge has them scratching their heads in wonderment given the booming economy. Prime Minister John Howard even wondered aloud if Australians were playing a joke and Health Minister Tony Abbott questioned if Australians had fallen asleep.

It is interesting to note that Bill Clinton’s political strategist, James Carville, famously summed up their 1992 Presidential campaign with the slogan: “It’s the economy, stupid”.

Clinton’s dogged focus on this key issue carried him all the way to the White House.

But, with the Australian election only months away and opinion polls consistently showing voter concern about the Howard Government’s industrial relations reforms, is it time to revise Carville’s mantra? Is today’s slogan: ”It’s the workplace, stupid.”?

Despite the strong economic conditions - with record low unemployment, low interest rates, inflation under control, record high consumer confidence and the best received Federal Budget on record - the Howard Government is still copping a belting in all published opinion polls.

Prime Minister John Howard and Treasurer Peter Costello have been at pains to highlight their successful stewardship of the Australian economy. At every opportunity they try to remind voters of the “bad old days of Labor” with high interest rates, budget deficits and record unemployment.

Opinion poll after opinion poll still has the government well ahead of Labor when voters are asked who is best to handle the economy.

In addition to the recent Galaxy poll, The Age/ACNielson poll published this month had twice as many voters saying the Coalition government is better at managing the economy than the Labor Opposition, with just 30 per cent of voters backing Labor.

Despite these polls and the government playing to its strength as economic managers, voters are moving away from them.

So is it: “The workplace”, that is the key issue swinging voters to Labor?

If the polls are to be believed there certainly is some merit in that argument.

The most recent Newspoll specifically measured voters’ attitudes to the current industrial relations debate and respective policy positions.

Disturbingly for the government, it found only 12 per cent of voters were more likely to vote for the government following this month’s softening of the WorkChoices industrial relations package. Slightly more voters, 15 per cent, indicated it would make them less likely to support the Coalition. By contrast, 29 per cent of voters indicated they were more likely to support Labor following the announcement of its “Fair Work Australia” policy.

Certainly the media, commentators, unions and the Labor Party have jumped on these recent poll results to claim this explains the massive lead Labor has in the polls despite the strong economy.

In their mind, the slogan is: “It’s the workplace, stupid.” But is it just this? A closer look at Newspoll reveals two other interesting figures.

When voters were asked about the Coalition’s industrial relations changes, a full 68 per cent indicated it would make no difference to how they voted. And 52 per cent of voters said Labor’s policy made no difference to they way they would vote.

That appears to be an awful lot of people who are not making up their minds on who to vote for at the forthcoming elections based on the respective party’s industrial relations policies.

Sure, industrial relations has risen as a key issues for voters in recent months, but it’s not the sole reason for the troubles facing Howard and his government.

Two other oft-quoted campaign slogans might also be worth examining.

“It’s time”. After eleven years of Howard, are voters relaxed and comfortable enough to give the other lot a turn?

Howard and Costello’s constant reminder of the “bad old days of Labor” may well be falling on deaf ears for a large proportion of the electorate. For a start, any voter under the age of 32 has never voted in a Federal election where Labor won, let alone be old enough to have had mortgages when interest rates were at their historic highs in the late 1980s.

Paul Keating’s infamous “recession we had to have” was in 1991, when even today’s 32-year-olds were only 16. It was hardly at the forefront of their minds then and probably isn’t now either. Not to mention today’s 18-year-olds who were just two-years-old when Keating told it like it was.

Another campaign slogan: “Think globally, act locally” may also be looming larger.

As climate change and the environment rise as issues with voters, particularly young voters, the government is confronting a new challenge. Having been climate change sceptics initially and historically not seen as the “greenest” of political parties, Howard and his colleagues are left scrambling to play catch-up.

The Age/ACNielson poll highlights their problem. More than twice as many voters (58 per cent) indicated that Labor is the best party to handle the environment, compared with just 26 per cent for the Coalition.

Voters can see that climate change is real. In the last week, the last month and last year, voters have experienced or seen drought, cyclones, water restrictions, melting ice caps and record summer temperatures. To them it’s not an abstract.

The government’s industrial laws also are real. Voters have seen, heard or experienced the impact of WorkChoices.

In contrast, the “bad old days of Labor” are an ancient memory, or at best an abstract.

So, when Howard and Costello rail against the risk of an economic disaster under a Rudd Labor government, they are conjuring an abstract. And voters don’t seem too scared at this point. They are concerned, but not enough to prevent them from voting for Labor at this stage.

That’s not to say Howard cannot turn it around as he did in 2001 and 2004.

His challenge is to convince Australians that it is indeed: “The economy, stupid”. And that his continued stewardship is essential.