Post-mortem on the election

Some general thoughts on the election outcome.

First, I have to concede immediately that the betting markets got this one right. Unlike polls and pundits, including me, they consistently predicted the return of the government. Before I’m convinced that there’s a real phenomenon here, though, I’d like to see an instance where the betting markets correctly predict a Labor win against the apparent odds[1].

Second, Labor suffered again from holding off too long on key policy issues. The tax policy went OK (but would have done just as well if it had been announced earlier), but the forest policy was clearly a disaster in political terms – the substantive merits are more complex, but precisely for that reason needed more argument and explanation. Instead the whole thing was left until the last few days of the campaign. The Labor planners ought to have been able to work out well in advance whether they could work out a deal which would satisfy the unions while achieving enough protection for the forests to keep the Greens onside. If it couldn’t be done, a political strategy to deal with the consequences needed to be worked out. Instead, they seem to have floated the policy and hoped for the best. This allowed Howard to announce a non-policy in response, without any time for Labor to do anything about it.

Third, and contrary to a lot of post-election claims, the campaign showed that health and education can win elections. The problem for Labor was that Howard was willing to outbid them, putting a heap of money into both bulk billing and state schools, even if it was poorly targeted (in policy rather than electoral terms) and hedged about with all sorts of silliness, like the idea of going through P&Cs. As I said several times during the campaign, Howard’s concessions, on Medicare in particular, mean that he has admitted defeat on the core ideological issue of the size of government.

Fourth, there’s economic management and interest rates. Undoubtedly these were the winning issues for Howard, as he had hoped. Contrary to Ken Parish’s argument, I don’t think you can really separate the two. And it was always going to be hard for Labor to make the case that Howard’s reputation on this score is overblown (I did so here, but I’d hate to try and condense it into a 30-second spot). A big problem here is the continuing memory of Keating, whose exceptional arrogance makes the mistakes of fifteen years ago still powerful electoral ammunition for the government – it’s as if Gough Whitlam had been able to run against the 1961 credit squeeze.

Finally, there’s the prospects for Howard’s next term. It’s clear enough that he will be able to push through the remaining elements of his 1996 program, the full privatisation of Telstra[2] and a final instalment of industrial relations reform. For the rest, his campaign platform was designed to match Labor – he hasn’t got a mandate for anything much in the way of free-market reform. It’s possible that, as on some previous occasions, he’ll repudiate his promises and embark on a new round of radical reforms. But my guess is that this won’t happen. Even the Telstra privatisation will cause a lot of political pain. In any case, there aren’t that many options on the table. Tax reform is unlikely to be affordable, the government is now committed to saving Medicare and bulk billing, and pushing privatisation on to Australia Post seems most unlikely to me.

The big issue is whether we continue to avoid a recession. The imbalances we’ve piled up in terms of household debt, the trade and current account deficits and the inflated price of houses can only be sustained, if at all, with low world interest rates, and those rates depend on the willingness of the Chinese and Japanese central banks to sustain them. As I said on election night, Howard’s reputation as a good manager owes a lot to luck, and luck always runs out in the end. But Howard’s luck has lasted longer than most.

fn1. Does anyone know if there are betting markets for state elections? If so, did the markets predict Bracks over Kennett?

fn2. As Andrew Norton points out, Family First actually opposes privatisation, but the government’s position is strong enough that it will certainly find some way to make a deal.

29 thoughts on “Post-mortem on the election

  1. While supporting the extent of preservation of old growth forests in Tasmania advocated by Labour and the Greens, I cannot see how it required an $800 million package. I thought I saw data that suggested the loss of somewhere between 200 and 300 jobs. This puts the package at well over $2 million compensation per job. I have not seen the detail of the package, just what and who were they compensating? It would be interesting to compare this package with compensation packages in other industries.

  2. Are you serious JQ? After July 1, all bets are off, and that includes all of the “policies” announced by the coalition in the camplaign. They’ll have a nine year hit-list of people and organisations to go after, starting with the unions, but certainly including Medicare, the ABC, the enviromental lobby, and a repealing of the cross-media ownership laws (I’m sure Packer is right now figuring out who he’ll install on the Fairfax board). Medicare will be gutted by the ideologues in the Liberal party, their mates in the insurance industry (health an other) will be looked after, and reduced to the safety net scheme Howard’s long wanted. I reckon they’ll be thinking they can do anything without and scrutiny or care, and they will. It will be very very ugly.

    -Pete

  3. I agree that changes to cross-media laws are likely, but I think there are plenty of risks for the government in this. I don’t see the payoff for Howard in a large-scale repudiation of promises, though.

  4. I don’t see the payoff for Howard in a large-scale repudiation of promises, though.

    But Howard is an ideologue at heart – if he thinks it really is his last term he’ll try and ‘make his mark in history’. Anyway he’s got plenty of experience at repudiating promises.

    I think his excuse will be the coming revenue slowdown as profits slump a bit and the property boom goes off the boil (if not worse). When the fiscal shit hits the deficit fan a lot of promises are going to become non-core, to be replaced with policies that weren’t promised. Even without this, the next budget is going to be a 1996 style one – the spending spree will have to be paid for with other savings.

    I’ll make my prediction now – by the 2007 election the coalition will be a deeply unpopular government, whether Howard or Costello is at the helm.

  5. On the labor tactics, yeah they made a couple of blues (the forests being the major one). But I thought overall their campaign was pretty good; it was always going to be really, really tough to overthrow a moderately competent, longstanding government at the height of a boom.

    Note ‘moderately competent’ does not mean I like the SOBs, still less their ideology. Nor do I think all of their ministers are competent.

  6. The key factor in the lower house was preferences. The Green vote at around 7% was lower than expected. Latham’s old-growth policy did not get purchase on the mainland. Or, anectodally, Family First were effective, outside the polling booth, in steering voters who didn’t like the major parties away from the Greens and to themselves. Gary Morgan (and others) got the primary vote right, but not the two-party preferred. FF did not register on Morgan’s Wed-Thu telephone poll. Last weekend he gave the Greens around 12%. On Wed-Thu he gave them 9.5% – and predicted a tight result. Where did those Green votes leak to? A combination, it would appear, of second thoughts plus leakage to FF. Someone needs to do some research (if it’s not already done) on how far voters for minor party tickets are aware of the real flow-on consequences of their vote.

  7. Not wanting to be a scare-monger, but the Libs can get through their most radical leglislation through the senate in late 2005. That gives them two years to cosy back up to the public.

    In fact, they could probably do make changes to cross-media and unfair dismissal laws, approve the sale of Telstra, reframe Medicare and gut the ABC all in one evening if they were so inclined. It’s not like any time needs to be allocated for debate, nor will the media be particularly unfriendly toward them – brief death squawks from Fairfax and the ABC aside.

  8. I disagree both on holding policy back – and on the Tasmanian forests issue. On the first, Bob McMullan (a person for whom I have a lot of respect – as a politician and as an objective commentator), was correct to say – that Labor needed to have something to excite people and to talk about during the campaign. Where I depart from conventional wisdom is that I think Latham is a crap communicator – I don’t think he sold the policies well.

    On the second issue, Howard played the forests thing for all it was worth – he was quite capable of coming out and saying “stop logging now” – he had nothing to lose in Tassie and everything to gain if he had been in trouble on the mainland. I think this election has put to bed at long last the notion that John Howard stands for ANYTHING apart from a visceral anti-unionism. Latham erred, in my view, only by promising such an over generous compensation package and by promising to hold an enquiry. He ought to have said – “we’ll save the forests, full stop”. That would have reinforced the “it’s the right thing to do” argument. And Dick Adams be buggered. Again, as Bob McMullan said, who now quibbles with Labor’s saving the Franklin and the Daintree?

    It seems to me, John, that you’re buying into the conventional wisdom here – as articulated by Paul Kelly on Insiders this morning – and I think it would be in all our interest to contest this sort of analysis before it gets set in stone.

  9. Labor failed badly in their selling of Medicare Gold. They got a visible boost from its announcement, but they did not deal with the criticisms at all well. There were at least 4 points they should have made repeatedly. 1. Medicare Gold is basically an extension of an already operating scheme for Veterans. The Veterans Gold card covers 34% of men over 75 now so an extension to all over 75 is quite feasible. 2. Private hospitals are at 75% capacity so can cope with the extra work load. 3. The extra work load will be minor anyway. I don’t know how many over 75 on the waiting lists but it would be 40,000 at the most, and hospitals treat 5.4 million people per year, so 40,000 is less than 1%. 4. Private health insurance premiums would fall substantially because the over 75 get back vastly more than they put in in premiums (Did you hear Howard’s strange line on this. He said the premiums would rise, because its obvious if people drop out of private health insurance then prices must go up!!!)

  10. Mark,in tactical terms, I agree with saving up some votewinning surpises, Medicare Gold being the obvious example (BTW, I think this was a defensible policy, but I’m focusing on the politics of it in this comment).

    But the forest issue had the obvious (and realised) potential to lose votes, and therefore had to be addressed early. To follow up your example, Labor didn’t announce its Franklin policy two days before the election.

  11. The new electoral pendulum does not look good for Labor. These are all preliminary 2PP numbers but on the latest on the AEC website, Labor will now need a swing of 4.2% to have one more seat than the Coalition (74 seats), and a swing of 4.3% to have 76 of the 150 HoR seats. Large swings like that are not common in national elections, though Howard got 5.1% in 1996 and Beazley got 4.6% in 1999. Whitlam only got 2.5% in the Its Time election of 1972.

    Election date ALP 2PP Swing
    10.12.49 49
    28.4.51 49.3 0.3
    29.5.54 50.7 1.4
    10.12.55 45.8 -4.9
    22.11.58 45.9 0.1
    9.12.61 50.5 4.6
    30.11.63 47.4 -3.1
    26.11.66 43.1 -4.3
    25.10.69 50.2 7.1
    2.12.72 52.7 2.5
    18.5.74 51.7 -1
    13.12.75 44.3 -7.4
    10.12.77 45.4 1.1
    18.10.80 49.6 4.2
    5.3.83 53.23 3.63
    1.12.84 51.77 -1.46
    11.7.87 50.83 -0.94
    24.3.90 49.9 -0.93
    13.3.93 51.44 1.54
    2.3.96 46.37 -5.07
    3.10.98 50.98 4.61
    10.11.01 49.05 -1.93
    2004 -2.0%

    (Above from the aec website http://www.aec.gov.au/_content/when/past/hor2party.htm)

  12. True, John – that’s fair enough – though I think that the negative effect may have been more a matter of knocking Latham off message (health, education, ready) in the crucial last days. I suspect that the campaign was there to be won for Labor – whereas Beazley’s task in 01 was never to win, but to redeem a wipeout. So it may have made a difference.

    As to Howard’s luck, my consolation in all this is that it will run out and the coming recession (exacerbated by the Howardian credit bubble bursting) will at least hold the Libs to the consequences of their so-called “economic management” record. Greg Combet, for mine, was spot on this morning when he said that Labor should have emphasised that intervention in skills development, research & encourageing saving through super was absolutely essential to keep the economy strong. I’m sure Simon Crean understands this – but I think Latham made the decision to campaign on the “proceeds of prosperity” argument which kind of neutralised Labor’s ability to point to the warning signs that all the economists have pointed to about where things are heading. Howard will be utterly unable to explain the interest rate rise in December and I wonder if he won’t slink off and leave the mess to Costello when the economy goes bad. Alternatively, I suspect Howard might spend the majority of the time left to him undermining Costello – who I think everyone agrees made an utter fool of himself in the campaign – an d setting up Abbott to succeed him.

  13. I’ve asked this question over at Tim’s place – but I’ll ask it again here. Does anyone actually like Howard? I’m interested in the place of emotion and identification in politics – it seems to me that while Keating was hated, he was also loved. Same with Gough. On the right, I think Fraser and Joh were both hated in their day more than Howard is (and with the view of politics I have, I don’t buy into the revisionism about either man). He seems to induce lassitude, resignation or depression more than hate. To me, he is T. S. Eliot’s “Hollow Man” personified. Howard infamously quoted PJK – “when you change the government, you change the nation”. I remember having a beer with a mate of mine (who works for the tax office as a lawyer with the idealistic mission of screwing the rich to pay for the welfare state) just after the 96 election in the Treasury Hotel (back when – in the Keating administration’s wake – there were still inner city pubs that were very dark and frequented by public servants rather than chrome-filled and full of suits looking to pick up), and saying “Justin, I think we will have to change ourselves to live under Howard”. Then when Pauline was at the height of her influence, I used to regard any area outside a 5k radius of the inner city as potentially territory where I would avoid making any remarks about politics – and despite my inner urban location, I grew up in the burbs and am a suburban Brisvegas boi at heart. The strength of Keating’s observation is such that I half feel like giving up what I do now and going off to make tons more money in the private sector than I do now (and selling out my principles entirely) and focussing life on having fun and buying things. But that’s both an artefact of Howardian Australia and a temptation hard to resist – it really does take strength, dedication and rededication to be on the Left now – the mantra we should repeat again and again is “Keep the faith” – along with “Trim your sails to the prevailing wind and tack when you can”.

    What won Howard the election, I think, is a deep cultural change where it’s all about private “aspiration” and selfishness rather than any sense of solidarity or public interest – and he has been a master of creating this and cleverly restructuring the material conditions to build on this ideational climate (in the same way that Thatcher was a Gramscian – selling council houses off…). Latho surprised me a bit because I thought he was part of this crew – with the third way triangulation – and the “aspirational” stuff – but his policy position identified winners AND losers in the public interest – which is what politics is and should be about. That gave me some hope. What is depressing is that there is little left of the regard and concern for the other and the community that ostensibly was what this country is about.

    I remember thinking when Hewson ran (comments about revisionism apply to him as well) – it was a sort of epiphany or at least a shock of realisation – that he was pitching directly to me – middle class, educated, white male. And that horrified me. He lost in part because PJK was able to weave together a story about who we were as Australians – and I despair that this sort of vision no longer sells (in the current debased and marketised language). I said this on the other thread, but I think that we have to take a very long view and realise that it is exceedingly difficult to create any sense of community in a capitalist society and that any gains for the Left are incremental at best and against the tide. How then, to turn the tide? It has to be an act of faith for a start, and then an attempt to model a different way of living in your own life style and build community where you can. That’s the precondition for political change – not rage. Let us rededicate ourselves again and again to building a world that we are proud of and where we feel like our selves and not alienated beings. Realism is not incompatible with idealism – it should rather be a spur to fight and never give up hope.

  14. Unless we’re terribly lucky, an economic hurricane is going to hit the world economy, probably quite soon. Australia is likely to be badly hit and whatever government is in power, it will have Buckley’s chance of handling what will be an unprecedented crisis.
    When Stanley Melbourne Bruce got wiped out in 1929, he left Scullin to try to sort things out. Poor Scullin and his team weren’t all that bad but, in the desperate circumstances of the time, they hadn’t a chance. Labor split and wandered in the wilderness for 10 years.
    Billy McMahon couldn’t have handled the “stagflation” phenomenon in the seventies any better than Whitlam – although Whitlam did his best to commit political suicide – but McMahon left the task – most unwillingly of course – to Labor to do another Scullin.
    Now it seems that these historic twists of fortune have been reversed. Howard – or Costello – will try to harness the hurricane. They will fail and perhaps Latham will emerge as a modern-day Curtin or Chifley and restore our faith in the left.
    You never know….
    I must have – I desperately need – some hope to cling to.

  15. I hope we cop a mutha of an increase in interest rates- just as a lesson in year 10 economics for the Australian people. Not that I’m bitter or anything =)

  16. I’m just outraged that the ALP and Dems have given their Senate preferences to Family First ahead of the Greens and thus secured the final Victorian Senate seat for the religious far-right. And given Howard a total Senate majority.

    I doubt many ALP and Dem voters realised that their votes above the line were going to go that way.

    Heads should roll in the ALP for that decision, and the Dems deserve their upcoming oblivion.

  17. The strongest subjective impression I gained during a long day handing out Green HTVs in Norman Park (that’s in inner-eastern suburban Brisbane, for those in other cities) was:

    (a) a significant increase in the numbers of people refusing to accept anyone’s HTV and saying “we know how we’re voting”; and

    (b) perhaps more significantly, entirely different body language and facial expressions from such voters than what I’ve seen from them in past elections.

    In past elections (Federal, State and local), my perception has been that people who refuse HTVs did so with an air of conviction and confidence (and occasional aggro), and gave the impression that they really believed they were doing the right thing. In this election, these voters (especially the younger couples amongst them) bore themselves as though they were doing a disagreeable duty, or doing something with which their conscience was not at ease but which they felt compelled to do. The fact that a significant proportion of them were younger couples was also a notable change from past elections.

    All of this chimes with the analysis that the electorate has become particularly sensitive to interest rates and have become highly risk-averse on this issue in their electoral behaviour.

    Beyond that, as a life-long leftist I can’t argue away the reality that this election result represents the greatest rejection of my world view by Australian voters in a long time, perhaps of all time. The increased Green vote and extra Senators is simply a consolation prize.

  18. The other comment I have concerns Labor’s forestry policy. My initial optimism about this was clearly misplaced, and I agree with JQ that this policy needed to be announced a long way from home, clearly explained, and also supported with a strong on-the-ground mobilisation by the various peak environmental organisations (which could only have happened had they known a long way out that Labor was committed to such a policy).

  19. For the first time ever in an election, I wasn’t offered any how-to-votes when I approached the polling station, even though I make a point of taking everything I’m offered and being polite.

    Also, there were two police stationed inside, which I have never encountered before, and which bowled me over. This was in Sydney’s east.

  20. I have had most of my say at BP however I wouldn’t lose heart if I was an ALP supporter. I remeber chering up Lib supporters in 93 who could see them winning the next election.

    howard is quite vulnerable to either rising interest rates or an economic slowdown because of a highly leveraged housing sector which to my mind was clearly the reason howard won.

    Iron Mark needs to get back to the economic ideas he supports and ensure the economic team is capable and bring out a clearly enunciated economic program.
    I favour Craig emerson as shadow trasurer purely because of his economic expertise and also because of the pressure this would put on costello who needs a senior man from Treasury in the buikding when Question time is on.

  21. How soon will the four pillars banking policy be dismantled? I mean really, if you’re going to give Australian banks a true opportunity to be competitors in the global market place, they need to achieve proper economies of scale (some tongue in cheek there).

  22. I wonder whether the real failure on the part of the ALP was that their attempt to rebut the interest rates line only went so far as saying “no we won’t”, which the coalition was able to powerfully counter … on that level at least … by pointing to how high interest rates got under Hawke and Keating.

    If you’re an average punter, and you think that the actions of the federal government are the primary influence on interest rates, then why wouldn’t you accept the coalition premise?

    I think what the ALP needed to do was to question the ASSUMPTION that low interest rates were a funtion of government policy, by showing people just how little control a federal government has over key economic outcomes. I mean, a government can screw it up, but if the current happens to be running against you, there’s nothing you can do.

    Now, while we’d all be better off if people did have a better understanding about how interest rates come about, from now on, the government’s assumption is going to work against it, because interest rates will rise, and it’s difficult for them to argue that it’s not their fault.

  23. It was always going to be really tough to knock over a long-established government at the peak of a boom, so I’m disappointed but not surprised at the Reps result.

    But the Senate was a totally avoidable disaster. The Greens, the Dems and Labor should all have been taking advantage of Australians’ risk aversion and running scare ads (“how do you think mortgage rates are going to go when the Libs give the banks open slather?”). It’s not as though political insiders didn’t know it was possible – Malcolm Mackerras predicted it at the start of the campaign, even in the event of a narrow Labor win.

    And yes, the Vic preference deal was especially boneheaded.

  24. You guys dont get it do you? All the blather about interest rates, Howard’s luck and scare campaigns misses the point.
    I expected the LN/P to win in the HoR. You dont vote out a guy who has doubled your house price.
    But at the last minute I changed my tune and expected that all the Howard-hating would cause the LN/P to go backwards in the Senate. I expected the mainstream would want an accountability check and give a sop to Progressive Doctors Wives. In fact I was happy to do this myself, without being ear-bashed by the Left.
    The Big Bad News is that the Cultural Left’s anti-Howard campaign have blown it big time for the Left in the Senate. For the first time in a generation both Houses are in the hands of the Right.
    I am still in shock at the rightward lurch in the Senate results. This has confirmed my worst forebodings about the perverse electoral effect of the Cultural Left’s Symobolic Political Howard-hating campaign. I repeatedly warned Cultural Leftists, such as Pr Q and Tim Dunlop, that there would be an electoral backlash against the Howard-hating moralistic campaign.
    But there was no stopping it. Evidently, for the Cultural Left, the pleasures of moral vanity exceed the pains of political sanity.
    This has cost the Left the balance of power in the Senate. It will innaugurate an attack on working class living standards.
    Bravo Cultural Leftists! I hope you are all very pleased with yourselves. Other Australians, presumably not Doctors Wives, will now pay.

  25. You might be right on the wider point, Jack, but your specific point on the Senate is nonsense. The Coalition’s control of the Senate is due to a combination of the self-destruction of the Democrats and One Nation and the web of preference deals in Victoria. Apart from that, the only thing that is happening is a return to the days, before the Democrats came onto the scene, when most people voted the same way in both houses.

    If I didn’t know you better, I’d be suspicious that the pleasures of moral vanity have just exceeded the pains of political sanity!

  26. Although I’m devastated at the results of this election, I really don’t think it was a ‘lie on interest rates’ that decided it so much as a poor policy package (again) from Labor. Here’s how it went
    Howard: “interest rates will go up under Latham. Don’t trust him!”
    Latham: “I promise never to let interest rates go up.”
    What a pathetic reaction. What if higher interest rates are a good policy option sometime in the next 3 years? That kind of ammature reaction is exactly what Latham couldn’t afford to do given how young/new he is to leadership.

    Secondly, his policy on Iraq. I don’t think this went down at all well with any but the dedicated left. The ‘cut and run’ line summed it up perfectly. Now that we’ve removed any form of government institution, I think many Australians (despite what they thought about starting the war) find it irrisponsible to just leave them too clean up the mess.

    Thirdly, I think Australian’s are worried about a return to unionism.

    Fourth, the Medicare Gold policy looked like it was just throwing money around without any detailed planning.

    Fifth, people got the very strong idea that Labor were all about ‘soft’ issues, like reading bed time stories. Very admirable I’m sure, but when question time is all about national security and free trade deals, to suddenly ask why the government wont support a policy to ban junk food advertising during children’s TV hours looked really pathetic.

    Despite how despised Howard is, the rest of the Government is forgiven all their lies and selfishness very quickly because they know how to get the job done. Latham and the entire Labor party appeared amaturish and not anywhere near competent enough to run a country. The choice for me was between values and competency. I chose values, but I can understand why most other people would choose competency when deciding who will run the country.

    All we can hope for now is that the Greens get all 4 of their possible extra senate seats so there is at least some voice of reason in the government. And if they really work hard for the next 3 years there’s three seats (Sydney, Wollongong and Melbourne) where they might get MPs into office next time.

  27. Confessin’ the blues
    At some stage this afternoon I emerged from the wretched stage of feeling nothing but the pure pain of defeat – a defeat that just gets worse the more you look at it. Now the shock and horror comes in…

  28. Australian election round-up
    John Howard’s thumping win on the weekend was always the most likely result. Labor’s inept final week and especially its unnecessary deal with the Greens which cost it two seats in Tasmania, not to mention Mark Latham’s limited time at the helm, all co…

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