One more election postmortem
Looking at the discussion following their election, there are few points I think still need to be made or restated.
First, although the outcome came as a surprise, it’s about what would have been expected on the basis of historical experience in the absence of any knowledge about the parties, their leaders and so on. Particularly at the Federal level, Australians don’t tend to change government in the absence of a recession or other policy failure. The realists like Ken Parish who predicted Labor’s defeat on this basis were right. I noted the general pattern, but thought that the government’s weaknesses were enough to give Labor a good chance. As it turned out, Howard’s decision to match Labor on health and education, combined with the messup over forest policy, wiped out any gains Labor might have made.
Second, over and above the benefits to an incumbent government from economic growth, I think the Liberals have benefited from the real estate boom. Even allowing for a fair bit of ideological crossover, it’s clear enough that the Liberals are more likely to act in ways that help property investors and encourage rising property prices for homeowners. More generally, in all the English-speaking countries, there has been a big expansion in debt-financed consumption, reflected in large trade deficits and supported by high and rising property values. The question of whether this is a sustainable model is a critical one. I’m on the record as saying it is not, but there are plenty of highly qualified people who take the opposite view, most notably Alan Greenspan. Among Australian bloggers, Stephen Kirchner has been most supportive of this view and critical of reference to the property price boom as an unsustainable bubble.
Third, it follows from this that I don’t think the election represents some sort of terminal crisis for Labor. Although several of the Labor state governments have hit rough patches at present (and this hurt Labor federally), Labor still looks like the natural party of government in most states. And, as I’ve already noted, Howard had to move a long way to the left to win, promising to preserve Medicare, assist state schools, expand the TAFE sector and so on.
It will be hard for Labor to win Federally in the absence of a recession or slowdown. But that’s a fact about Australian politics, not a fact about Labor.
fn1. Labor’s defeat in 1996 is sometimes presented as a counterexample. But it’s clear that the 1989-90 recession and the interest rate policy that caused it had not been forgotten then – as Howard showed, it hasn’t been forgotten even now. Labor should have lost in 1990 and 1993, but the Liberals mucked things up both times. 1996 was a referendum on Keating’s whole career, not the period after 1993.