I’ve been reading lots of stuff about the fundamental irrelevance of the Labor party and so on, and while this is inevitable in the aftermath of an election, it seems to be going on longer than usual. So let’s do a what-if. What if Labor had managed to get 3 per cent more votes than it actually did? The Liberals would have been out of government in every jurisdiction in Australia. Pundits would be falling all over themselves to point out the hopelessness of their cause, as witness the fact that they couldn’t win even with a strong economy and so on. This would be overstatement, but not as much as the corresponding claims with respect to Labor.

A related point is here at Crooked Timber

How much would it take to shift opinion by 3 per cent? I’d say a couple of percentage points on interest rates would have been enough, and if international bond markets ever get worried about big current account deficits that could happen overnight, and pretty much regardless of what the Reserve Bank thinks.

30 thoughts on “Over-reactions

  1. I agree if the RBA did that however surely one of the reasons why the RBA has been so reticient to raise rates this year is their worry about how much interst rate pain highly geared consumers ( whether they be owner-occupiers or investors) can bear.

    bond markets have forgotten about current account deficits. My guess is that they will only matter here when they matter in the US.

  2. Absolutely yes! Finally it has been said.

    It was only about 3%, of apparently “swinging” voters. Circa 48% didn’t “prefer” the Coalition.

    Yes there are trends that need to be analysed and understood. And Mark Bahnish’s discussion at CT on class vs. status explanations and Marx, Weber, Frank et al. was fascinating.

    But more importantly, the “48%” is the reason why the ALP doesn’t have to accede to “mandate” arguments in resisting Howard’s radical legistative programme. It should come down to the merits in every case. Perhaps, concerted opposition may in the longer term “swing” some voters when, as John Quiggin suggests on interest rates, the deleterious effects of policies start to be felt, and Labor can say it did its best to oppose them.

    In a situation where the Government controls both Houses, I can’t see the benefits of timorousness and “small targets” for the Opposition.

  3. Let’s not forget that even the result, with its bonus of Senate control, was a major unexpected outcome for JWH. Sure, not totally unexpected.

    But they did not promise a huge expenditure effort for nothing… even if it ends up being non-core. Same goes to the huge effort attacking the greens, supporting FF and the dodgy preference deals for the Senate with Dems, Fred Nile, etc. The result was never a given.

    A lot of the left and the ALP underestimated Howard’s strategy and tactics. He must have been a boy Scout, ‘couse they were very prepared! Just in case it didn’t turn out!

    And almost everything did!

    If I remember correctly, Beazley’s first electoral loss was so only by less than 1% of votes in a handful of seats. But again there was talk of catastrophe..

  4. Similar things are being said about the Republicans and Democrats here in the States. The difference is how much bad policy the victors are prepared to push. I think the Republicans will put the Liberals to shame in that regard.

  5. I can well recall the effusive commentaries from 1994 and 1995 about what a brilliant political machine the Keating Labor government and Federal ALP was, and what a hopeless cause the Liberals were.

    The recent tensions within the Liberal Party over abortion, as well as reflecting differences of conviction on the issue, also reflect another division. This is between:

    (a) those, like Abbott, who have over-interpreted the election result and the looming Senate majority to mean that, in the words of one Liberal blogger, the government will be limited only by its imagination in what it can accomplish;

    (b) those, like Howard and Costello, who can count to 51, and who recognise that the very same highly geared suburban familes who are hyper-sensitive to interest rates are also likely to be hyper-sensitive to anything which threatens their second income and/or lumbers them with another dependent to support.

  6. The only fly in the ointment of JQ’s analysis is that Labor might need substantially more than 3% to win in 2007, given that the increase in the Coalition vote at the recent election will mean that they are defending fewer marginal seats next time. 5-6% is a more likely requirement, and swings of this significance are exceedingly rare.

  7. So the ALP came second and the Libs were next to last? C’mon guys, it was a disaster and will be followed by Labor losses in upcoming State elections too (here in WA, Gallop is bribing the electorate already – well it worked for Howard so who can blame him? Sure there was a scare campaign on interest rates which, as pointed out in this forum since, could and should have been rebutted easily, but this reminds me of John Major’s win in the UK in (checks Google furtively)1992. Labo(u)r just didn’t make the grade, didn’t convince enough people that they were better than the incumbant. How many times have I heard “We don’t really like JWH, but better the devil you know…”? As far as I know (thinks, but rejects inclination to revisit Google) elections in UK, Aus, US are always won by a few % of the populace – the swinging voters (“It’s the swinging voters, stupid”).
    I really though Latham would be the white knight but ever since he stood in front of the US flag and pledged allegiance to the Alliance for which it stands, undivisible under God, well he lost some street cred, eh? Well, three years to get it right this time and as Phil Adams said on LNL the other night – maybe the Libs will abuse their power so much they will self destruct….straw clutching or what?

  8. In simple terms, I agree.

    The coaliton now appears to be arguing they have a mandate for everything or at least that Labor should support them on absolutely everything.

    But look at it this way

    John Howard won his seat on Coalition views.
    Mark Latham won his seat on Labor views.

    Latham was elected to his seat and now the Coalition lobbyists want Latham and Labor to throw out everything they were elected upon.

    That is stupidity and it hardly makes anything irrelevant.

  9. The landscape is going to be very different for the next election. It is likely that the labour market will be significantly deregulated, thus putting in place a vital piece of the reform agenda that the Hawke and Keating could not deliver. This means that in the absence of major problems the economy will really be humming and unemployment should be down near 4%.

    Latham is going to have to reinvent himself if he is going to lead the party in three years time, and what are the options? In addition the party itself will have to distance itself from the union movement and the left faction if it wants to have credibility in economic management. That will not be a painless process.

    As for the moral agenda such as reconcilliation, it is self-serving nonsense to claim that the Coalition and the mainstream of Australians don’t care about Aboriginal affairs, they just want to see more effective policies and less moralistic posturing.

  10. Rafe,

    In somewhere less than 6 years, we will have moved to a mostly user pays society. Those people that won’t have to pay will be farmers, as part of the cost of being in coalition with the Nationals. Public and Free educations for city folk will be a thing of the past. Private health infastructure will expand. The minimum wage will be removed and 1/2 of the population will be on $5 an hour employment working at walmart. Our 1 billion dollar investment into private technical colledges (instead of the TAFE network) will help the rich.

    YOu can believe 4% unemployment is real, but take a look at the number of people on disability allowances (mainly stress and backpain). The thing that will accelerate in the coming 6 years will be the gap between the rich and the poor.


  11. For truly hopeless, try the NSW Liberals.

    At the same time as having a rail system that is a shambles, Carr can advocate fining people $1K for getting drunk in company, IN AUSTRALIA, and he probably still can’t lose!

  12. Pr Q is correct that the Housing Boom has floated the conservative LN/P to victory. The numbers do not look promising for the parties of the Broad Left at the Federal level.
    The ALP’s primary vote has stuck under 40% for most of the past decade. THis means it must rely on the preferences of progressive minor parties to obtain FED power.
    But the overall share of the progressive parties is in secular decline, in the SEN their primary vote share fell by 30% from 13% 1996 to 9% in 2004. The AUS-DEMS will be wiped out in 2008.
    This secular decline will adversely effect the GREENS so long as they let a radical fringe drown out their core ecological conservative signal with peripheral ideological progressive noise eg anti-nationalism, anti-capitalism and misanthropism.
    The feedback in the US election shows that the cultural conservative message is gaining resonance with more and more people, perhaps as they get older and wiser.

  13. After 1975 there were numerous commentators writing off the ALP indeed I remember hearing how a new party was the only way to beat the LIbs.
    After 1983 I heard the same thing about the LIbs. One Paul Kelly wrote how could they ever beat the ALP after they lost in 1993 given the recession in the early 90’s.

    now I hear the same refrain again.

    We have an economy highly leveraged to the housing sector where lending standards have been falling ( valuers making decision from their office and not examining the physical location is but one sympton, Super Mac warning about these things and about raising rates but not doing it is another.)

    Those of us who have watched the US scene can recall the death of the Republican party from commentators in the 60-70s.

    In the UK it was the death of the Labour party in the Thtcher years and now it is the turn of the conservatives!

    This is what commentators write about!

  14. Experts have been predicting the demise of the ALP and Liberal-Country Parties for decades. History shows that only a major [usually external] crisis changes the political party system. Crises were the reason for the various splits in the ALP (First World War, Great Depression, Cold War). You could argue the same thing about the non-Labor parties (Great Depression, Second World War). The parties are surprisingly robust, and, lacking the ideological coherence of, say, European parties, adapt themselves to change. Only an economic or security crisis, directly affecting this country, will change anything.

  15. Well, Laborites love to whine and Liberals love to gloat. Everybody will get over it sooner or later.

    By the way, Alphacoward, I did look at your site, but was unable to leave a comment, which I was going to do about sorryeverybody.com.

  16. timg say that the ALP will need a swing of 5 to 6% next time and swings like this are rare.
    4.9% is the uniform swing required and such a swing is high but not impossible. The swing has been above 4% in 7 of the last 18 elections. Swings above 4% are (Leader of party which received the swing in brackets) 1961 (Calwell) 4.6%, 1966 (Holt all the way with LBJ)4.3% 1969 7.1%(Whitlam) 1975 7.4% (Fraser) 1980 4.2% (Hayden)(I’d forgotten Bill got the ALP within 0.4% of victory in 1980) 1996 5.1% (Howard) 1998 4.6% (Beazley)

  17. johng:

    You’re correct – Labor needs a uniform swing of 4.9% to win office. But the concept of a “uniform swing” is purely academic and never actually happens. At every election, due to a variety of factors (i.e. local issues, quality of candidates) governments hold at least some marginal seats and lose others that are less marginal. That’s what I base my 5% figure on – realistically they might need close to 6% to be sure of winning 16 seats for a bare majority. The ALP hasn’t got a swing like that since Don’s Party – 1969. (And they didn’t even win that one!)

  18. The ALP needs a major uniform swing to return it to office > 5%. These only come around once in a generation.
    To add to its woes the ALP’s broad Left political base is in eco-demographic secular decline:
    personal:New Left spinster feminists & progressive Wets replaced by Old Right conservative family valuators;
    professional:Old Left statist unions replaced by New Right capitalist labour hire firms, human resources and self-employed franchises ;
    The normal oscillations of the boom/bust economico-financial and in/out cumbent politico-electoral cycles will no doubt see the ALP returned to office by the end of the decade. But these cycles will oscillate around a trend line which seems to be heading to the Right-wing spectrum, at least as far as families and firms are concerned.
    There will stil be plenty more statism. The emphasis is shifting from modern concerns – welfare and workfare – to more traditional ones – warfare and lawfare.

  19. watcher’s comments are truly insightful. A whole lot of the others are wishful thinking, eg: Jack Strocchi, posting his own hopes as part of supposed trends happening here and elsewhere… hehe.

    Remember, a mandate is there when those issues are fought over during the election campaign AND there is a clear resounding vote in its support.

    About the only thing that was offered AND supported in this last election was more middle class welfare, and dodgy payments.

    The Coalition total votes nationally add up to: 46.36% of the total vote [Lib 40.47 + Nat: 5.89].

    Sure the 2 party pref, is higher by definition but that’s also a statement of the lack of appeal from the ALP.
    Maybe all those armchair analysts should read the ACTUAL figures…? http://vtr.aec.gov.au/

    House of Representatives National Two Party Preferred Result %:
    Coalition 52.75 +1.80
    ALP 47.25 -1.80

  20. Mark, oops, yes at Troppo. Typed in haste.

    Again, I agree with Carlos, no mandate for anything. Arguments based on a mandate are specious. Comes down to the merits.

  21. For an Opposition to succeed usually requires both a perception that the Government is inadequate/incompetent/corrupt and beyond redemption, coincident with a view that the Opposition offers a reasonable prospect of being better.
    As Australian political history suggests that the default outcome is a conservative victory, Labor in Opposition probably has a bigger hurdle to jump than its opponents.
    While I felt quite convinced of the deficiencies of the Howard Government, and the qualified merits of the Latham-led alternative, I was clearly in a minority on 9 October.
    I agree with the posters who are arguing the statistical feasibility of a Labor victory in 2007. However, if my opening sentence hypothesis is close to the mark, that will depend on significant economic problems and/or foreign policy difficulties becoming apparent. It will also require Labor to be in much better shape than prior to the election, and certainly since.

    Labor’s decisive election defeats in 1966 and 1975-77 led to serious soul-searching within the Party. In each of those cases, the process was followed by structural reform and a critical revision of policy.
    This did not occur in 1996, nor has it done since. The result is that Labor is faced with a serious task of belated organisational reform and policy review, at a time when it seems ill-equipped to undertake such activity. Unless this review occurs, and the necessary structural and policy changes follow, I cannot see Labor making significant head-way.

  22. It’s good to have this discussion. I think the media can only survive on polarisation, hence the ridiculous discussions about Labor’s demise. I’ll add the list of reminiscences my distinct memory that pundits were asking ‘is Labor the natural party of government in this country?’ (circa 1995). Fact is, the Liberals’ woes are obscured by their current winning position. Just look at how the Nats are bleeding, and at the weak state oppositions.

    On the economic issue, just how long can a boom go on? Is this boom even real? Check out our dollar, our wobbling share market, our trade deficit and think about the indebtedness of the average person. What will happen to the army of contractors and ABN holders if there is any sort of downturn? How many homes and investment properties will flood the market as people rapidly downsize? What’s that going to do to property prices? How will people pay the school fees and the private health insurance?

  23. The boom is no less real for it being funded by a mountain of debt. But it is true that rampant consumerism is fueling the boom. And the likelihood of a gentle landing is diminishing by the day.

    However, Howard’s performance at APEC in Santiago demonstrated at least three things:

    1. Howard intends to be PM for the foreseeable future and at least until after the next election.

    2. Howard recognises that it would be dangerous to rely upon the indulgence of the Australian electorate by embroiling Australia in another of Bush’s frolics. In other words, there will be no Diggers in Teheran.

    3. Howard recognises that the China free trade connection is more important than the economic connection with the US for the continuation of our debt-driven boom (and the delay of the day of reckoning for Australia’s army of Gen-X debtors). Howard knows that Gen-X will never be happy, but he knows that if he can keep their misery in manageable proportions, they will vote him back to Kirribilli House in 2006.

  24. The notable things about the election response is the strange combination of two contradictory elements: 1. ultra-crude sociological determinism: quite minor changes in the level of self-employment are assumed to have enormous and profound impacts; 2. unexplained ideological determinism: out of the blue conservative Christianity is supposed to be sweeping the suburbs with no explanation of how or why, it just happened by magic. On (1) look at the 2001 ABS publication on small business, it shows that small business has grown only slightly and much less than you would expect given the shift to services, on (2) the most religiously observant population, and I would say morally conservative, in Australia by far are Muslims: are they lining up to vote Liberal?

  25. Where have you heard these claims, Geoff? I haven’t heard the first one at all. And if it’s true that many of the newly self-employed are down-trodden dependent contractors, it wouldn’t even make sense. The second argument was made mostly in the context of the US election (where it seems irrefutable), although Christianity does seem a plausible reason for the bigger than average swing in Greenaway. As for Muslims, they’re probably not swinging voters, and if the Liberals trumpet their Christianity, that’s only going to alienate them further, isn’t it?

    The anecdotal evidence I’ve collected is simple and consistent: swinging voters with big debts swung to Howard because they swallowed the nonsense about the interest rate.

  26. Strocchi – The ALP’s primary vote has stuck under 40% for most of the past decade. This means it must rely on the preferences of progressive minor parties to obtain FED power.

    False cause for alarm, Jack. You know a Green voter who would preference Liberal unless physically coerced. Why is not the Libs reliance on the Nats a problem for them?

    ALP/Green is essentially an alliance. The principals of the parties play up the differences to maximise the share of the cake but we all know that the cake is fixed in size.

    Whether progressives choose to work within the ALP system or work on the margins in the Greens, they’re all heading in the same general direction.

  27. Strocchi – This secular decline will adversely effect the Greens so long as they let a radical fringe drown out their core ecological conservative signal with peripheral ideological progressive noise eg anti-nationalism, anti-capitalism and misanthropism.

    The radical fringe will be drowned out as the party gets votes and therefore funding and attract professional operators. In fact if you read the Greens policy document (1 Mb PDF) you’d be hard pressed to find a sign of radicalism in it.

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