Stop Press: Red Sea Refuses to Open

Many Australians will have an indelible memory of a triumphant Prime Minister Scott Morrison proclaiming, “I have always believed in miracles!” On that night, more than three years ago, Morrison’s Coalition government had been returned to power with a narrow majority against all the pollsters’ predictions of a comfortable Labor Party victory.

Well, it appears that God, like much of the Australian electorate, stopped listening to Scomo’s prayers. His much touted campaigning skills failed him and his side. This time, Labor shadowed the government, refusing to offer any clear points of distinction that the master-blaster could latch onto to turn the campaign into a referendum on the Opposition. As the six week campaign unfolded, indeed in the long phony war leading up to it, the terrible truth emerged – voters were judging the government’s performance or lack thereof. In spite of intense efforts of the mainstream media to divert attention back onto the Opposition, ungrateful voters refused to turn their eyes away from three years of Morrison bluffs, arrogance and incompetence. Lack of empathy for the victims of bushfires, floods and sexual trauma, broken promises from the 2019 victory, loose use of taxpayers funds, tardy and confused responses to the pandemic, and a general feeling that he and his government had stayed too long, trumped the rhetorical heroics of denial, diversion and division that were Morrison’s stock in trade.

To be fair Morrison was also unlucky. The size of the public debt run up under his government was pandemic related and unavoidable. But it kicked away one of the conservatives’ most potent electoral advantages, the claim to be the better economic managers  and neutralised the associated focus on public debt and deficits that were routinely used to attack Labor. Several unpleasant shocks emerged during the campaign. The incursion of China into the Pacific region courtesy of its agreement with the government of the Solomon Islands undercut the legend of Coalition governments’ traditional strengths on foreign policy and left them this time looking like mugs. The Reserve Bank of Australia bumped up official interest rates the week before early voting began, the beginning of a series of rises reminding over-indebted households that they were at serious risk of housing stress.

As the campaign continued, it became clear that in many parts of the country, Morrison himself had become a liability. His character was being called into question, especially in the larger states to the South and West. Even in his own state of NSW there were electorates in Sydney where he couldn’t campaign. In Victoria he was electoral poison. It didn’t help that the Deputy Prime Minister and National Party leader Barnaby Joyce was also electoral kryptonite  in the South. In many electorates, Morrison’s face was noticeably absent on campaign material and bunting. Some Liberal candidates in normally safe city seats tried to change the colour of their signs to a lighter shade of blue. In the most marginal seat in the country, the terrified incumbent chose purple, a combination of blue and red, while in others the deep blue of the party faded towards teal. It turned out that Labor’s overarching strategy was not, as his opponents inside and outside government claimed, a small target one but instead, directed at a large target – the Prime Minister. The longish campaign only served to make the Morrison factor loom larger.

There was, in short, a pervading sense of unease among the conservative coalition parties that ‘there was a move on’. As the six week campaign wore on, the government pinned its hopes on a repeat performance by the Prime Minister. He had pulled the Coalition’s chestnuts out of the fire in 2019. Surely, he could do it again. Self-styled campaigning messiah Scott – call-me-Scomo – Morrison went on the attack. Barely able to control his exuberant bullying persona, he crash-tackled his way from electorate to electorate, tiptoeing around those in which he was not welcome. His 2019-style performances in the three televised debates with the Opposition leader failed to resonate. The tactic of answering every question with some variant of his stump speech flopped. Audiences and observers also marked him down for his smirk-ridden interjections and heckling. He made Labor’s case that after three years of drift, his government had no clear agenda for the next term. It was to be more of the same.

So, when we all went to bed on election night, we knew that Scomo was gone. Whatever happened he would not be leading his people to the Promised Land through the turbulent waters. Over the next few days, it became clear that Labor under Anthony Albanese would be  able to form government with a small majority in the Lower House. But something else had happened. Although the Liberal Party lost seats to Labor, they were also wiped out in affluent heartland electorates that they had always held and in which Labor had never been competitive. The assassins came clothed not in red but teal, a mix of blue and green. What they had in common was gender, outrage and massive local support. Many secured funding from an interest group funded by a billionaire whose family made its money from mining. They and their sponsors were committed to speeding up action on climate change, restoring integrity to government and actually doing something about the sexual abuse of and discrimination against women. They also wanted a different, more consensual political culture and Parliamentary workplace. Unsurprisingly, the seven or eight (depending how you count them) teal victors were women. They came from a range of ethnic communities, giving the new Parliament a hue more closely representing the great diversity of Australian society. There will be a total of six Indigenous representatives in that Parliament, split evenly between the two Houses. 

But Labor’s delight and relief in finally tossing the Tories out was tempered by a further development. Another political colour had burst into prominence. The greens picked up three seats in the Lower House and another seat in the Senate. Even with a bare majority allowing them to occupy the treasury benches, passing legislation would require skilful negotiations in the Senate. The voters had got it right. They didn’t trust either main party enough to give either control of both Houses. That at least has become normal practice over the past thirty years.

The post-mortem began in real time as the trends became clearer on election night. Pro-Coalition politicians and right wing  commentators began along familiar ‘we wuz robbed’ lines, complaining about conspiracies between Labor, Greens, unions and billionaires splurging money on the other side instead of them (how dare they). Gradually as the time for conceding came closer, and the shock of defeat ebbed, the truth began to seep through the cracks of denial. The voters had deserted them in numbers. The hard truth had arrived with the dawn. The voters are always right. Not for the crew at Skye-after-dark. The likes of Credlin, Murray and Bolt slavishly backed up by the B-team (Chris one, Chris two and Dean), quickly pivoted to the voters got it wrong. Manipulated by the perfidious ABC and unnamed elites, voters had been fooled. If only thy had listened to their betters, notably the wise Skye commentators and Murdoch opinion writers, the country would have been saved.

A past leader of the parliamentary Liberal Party, John Hewson, made the unstartling observation that the outcome proved once again that elections are won from the centre, not the extremes. This comment references the fundamental ‘central tendency’ theorem in political science, based on the 1920s ‘two ice cream sellers on the beach’ metaphor of Canadian economist Harold Hotelling. To maximise market (read voter) share, locate yourself as close as possible to the largest number of customers (voters).

But this election was a bit different. As the Coalition, under the spur of big mining and threats from the extreme right moved to the right, Labor edged after them. This opened up twin opportunities left of right-centre. The Greens finally made good on their promise to despatch Labor from inner Brisbane and the Teals did likewise to the Liberals in Sydney. The combined first preferences for the two majors slipped to two thirds.

The great question from this election is: can either major party recapture their flanks? The question is less critical for Labor since it is the only party that can gain a majority in its own right. Since the 1930s the conservatives have only been able to govern in coalition, formal or informal. This was based on a spatial division of labour. The Nationals (previously called the Country Party) undertakes to deliver the non-metropolitan vote, while the Liberals capture sufficient metropolitan seats to make up the numbers. The Morison culling has undermined the Liberal’s role by ceding affluent city seats to the Teals. Winning them back any time soon will be hampered by (a) the quality of the successful Teal victors and (b) the change in the balance of power (numbers) within the Coalition, assuming that the latter holds. With the Coalition’ on 58 seats in the new Parliament, 21 are held by the LNP in Queensland and 10 by National elsewhere in the country, leaving the Liberal Party of Australia with 27 seats. Given that the Nationals have always been the ascendant political force in Queensland, this suggests that the Liberals are now outnumbered in the joint party room. Having maintained their grip on their seats while the ‘senior’ party lost 19 of theirs, the Nats are well placed to demand a bigger share of the smaller pie in Opposition; more Cabinet positions, more say on policy. The rural rump of the Coalition now threatens to turn the Liberals into its arse-end. More worryingly for the Coalition’s future electoral chances, this Queensland imbalance (including both Coalition leaders drawn from the LNP) is likely to strengthen the hard right’s stance on energy policy, making it even more unpalatable to the Teal voters.

Labor also faces difficulties. A three-seat majority disappears in an instant with two losses that could be caused by unexpected resignation, death or the findings of the new integrity commission. As has happened before, Labor inherits government during a crisis whose roots lie deep in the preceding conservative government’s tenure. Supported by the Greals, the Albanese government is likely to get two terms to address climate change and the transition to a low-carbon economy, making adequate progress on reducing Australian emissions by 2030 and reducing Australia’s global export contribution to climate change. But by tying its hands on tax increases in its first term, Labor risks being helpless to address the twin imperatives to cure the running sores of our aged care, disability care and housing affordability crises, while not blowing out the national debt further.

This raises the intriguing possibility of a continuing haemorrhaging of the major parties and the rise of a third and even fourth new party or permanent bloc. The most likely new third force would be the Greens, who have an existing party structure, philosophy and electoral foothold. To the extent that this occurs, we might find ourselves in a European-style situation of enforced coalitions, Labour-Greens versus Liberal-Nationals. Politics would revert to a new central tendency with a  centre right coalition facing a centre-left adversary. This is clearly going to appeal to the Greens and may be their long game. If it is, the Party faces an intriguing immediate dilemma. To grow from four seats in the Lower House to, say ten or twelve, enough to force Labor to the table, means taking seats from their future coalition partner. That means using their numbers in the Senate to thwart an Albanese agenda. Labor would then be forced to depend on Coalition support as the lesser of two evils to get its legislation through, with the result of boosting the left leakage to the Greens. But the short term cost to progressive policies would be the inevitable result; remember the Greens blocking Labor’s climate change legislation back in 2010?

Such a new electoral configuration may not prove to be stable. As Labor shifts left, some of its working class supporters may move right, but not necessarily to the Coalition. They might jump to the populist hard right. Likewise, as the Coalition moves towards recapturing the centre from the Teals, conservative voters might also look to One Nation and worse.

The emergence of the Teals as a permanent collective force is, however, unlikely. Their current confluence is largely a result of common priorities over a few key policy areas and a common detestation for the immediate past leadership of the Coalition. The idea of a permanent  combination of ‘independents’ is an oxymoron. More likely, the current Teals will fade away as the sound and fury of their elevation fades and new challenges arise. Their affluent voting base will seep back to the party that best represents their socioeconomic interests and individualist ideologies. But this process may be a lengthy one, consigning the Coalition to the Opposition benches for several terms.

Labor has an opportunity to govern for the rest of this decade. But it will need to display rare skill in managing the multiple domestic and international challenges facing Australia. To substantially improve the life chances of an ageing population, along with those with disabilities and suffering housing stress and those Australians marginalised by the embedded forces of economic inequality, far-reaching policies of taxation reform and targeted spending will need to be sold to a disgruntled and distrustful electorate. All this must be achieved in the teeth of an Opposition led by a political thug geed on by a rabid commercial media and the anarchy of social media. Labor must also somehow survive a first term confronted by multiple flashpoints – high inflation and an energy crisis – while positioning the electorate for substantial economic reforms in its second. The further worsening of the federal budget over the current term will make the sales task more difficult. Much effort could and should be devoted to educating voters about the links between productive expenditure and budget repair. One useful innovation would be to doubly divide the budget task into (a) separating current from public investment expenditure (as Keynes suggested in the 1930s), and (b) working towards matching current revenue to current expenditure. The case for long term repair to structural deficits can then be progressed, involving removal of arbitrary limits on total expenditure and developing a range of sensible tax reforms like removing the favourable treatment of unearned income, replacing stamp duty with land tax, increasing the impost on banks and mining companies for their social licenses to operate, closing the most egregious income tax loopholes, and chasing down and aggressively prosecuting tax dodgers. The logic of a well-designed and administered wealth tax is irrefutable.

Quite a challenge for a new government! Is it any wonder that some sage observers opined that 2022 might have been a good election to lose? Unfortunately, we as a species don’t have the luxury of opting out. This decade may be our last chance to save the planet’s furniture for our grandchildren. Ninety years ago, John Maynard Keynes wrote an essay called ‘Economic Possibilities for our Grandchildren’. In it he argued that another one hundred years of compound economic growth would solve the economic problem of scarcity, allowing all citizens in the advanced countries to live decent lives – as long as the world’s leaders avoided wars and explosive population growth. How did that work out? Clearly these vital conditions have not been met since he wrote. Nor has the motive of compound economic growth that he looked to to drive outcomes – namely, the ‘morbid love of money’— subsided in favour of a rounded focus on the good things of life. Prime Minister Albanese must direct his ship of state through the rocks and currents that still face a world far removed from the liberal dreams of a long dead economist. The future of our grandchildren depends on his success. Good luck Albo.