Date created:10/2/03
Last modified:10/2/03
Maintained by: John Quiggin
John Quiggin

Voters need real difference

Australian Financial Review

5 December

The latest Labor landslide at the weekend reinforces the great paradox of Australian politics. Labor is in office, and looking comfortable in all the States and Territories, but seems doomed to endless Opposition at the Federal level.

It could be argued that this is just a random fluctuation. After all, something very close to the opposite configuration occurred during the last year of the Keating government.

Then there is the general tendency of Australians to distrust overly powerful governments, reflected in the strength of minor parties in the Senate. A Liberal government at the federal level is therefore good for Labor at the state level, and vice versa.

There is something in this, but not enough. Labor now appears to be the natural party of government in all the states, with the exception of the Northern Territory and perhaps WA, and even there, the old mould of non-Labor dominance has been broken.

In the past fifteen to twenty years, Labor has rarely lost a state election, except when it has displayed high levels of incompetence, arrogance or both. Even in the wake of fiascos like the Victorian and South Australian bank failures, the Liberals have struggled to gain a second term, and have never managed a third. By contrast, all the Labor governments on the eastern seaboard have won re-election by landslide margins, and all look set for extended periods in office.

At the Federal level, John Howard's current dominance of the political stage has led many observers to overlook the fragility of his hold on power. The government scraped back in 1998 with a minority of the two-party preferred vote, and appeared doomed to defeat early in 2001. Only the combination of international crisis, astute demagoguery and a hopelessly lame opposition strategy saved them, and even then the win was far from crushing. As recently as August, the government trailed Labor (on a two-party basis) in opinion polls.

In an election fought solely on domestic issues, the government would probably lose, despite relatively good economic performance and the absence of an inspiring alternative. Since state elections are always fought on domestic issues, Labor has a huge headstart at the state level. Its only potential weak point is law and order, but the current crop of Labor leaders have proved entirely capable of neutralising this natural conservative winner, with aggressive policies of their own.

Underlying all of this is a divide between elite and popular opinion that emerged during the Hawke-Keating years. John Howard exploited one aspect of this divide, over cultural issues, during the Tampa crisis.

In doing so, Howard temporarily obscured the fact that, on economic issues, he has been the most important single figure in forming and articulating elite opinion in favor of freer markets, lower taxes and cuts in public expenditure. The business, political and opinion elites are far more unified on these issues than on immigration and multiculturalism.

While the elite has pushed economic and social policy steadily to the right, public opinion has, if anything, moved to the left. The public clearly wants better schools and hospitals rather than reductions in taxes or the elimination of debt. And where they were once sceptical of policies like privatisation, they are now actively hostile.

As the Victorian campaign showed, even hardy perennials like the trade union bogy have lost their pull. With a new corporate scandal every other day, and employers acting more and more like 19th century mill-owners, no-one is much impressed by the exposure of a few old-fashioned rorts on wharves or building sites.

The big question is whether Labor can switch the focus the attention of the national electorate on domestic issues. The only way to do this is to present a clear contrast with the government. The decision to review the health insurance rebate is a good first step, but much more is needed to finance a substantial domestic program, however.

While there is a good case for income tax relief for lower-income earners, whose meagre gains from the 'new tax system' have already been eroded into insignificance by bracket creep, this must be offset by a renewed assault on tax minimisation, and by the reversal of mistaken concessions like the halving of capital gains tax. Unlike state Labor, which can assume that the electorate will focus on domestic issues, and be grateful for even modest benefits, federal Labor needs to convince voters that it will make a real difference to their daily lives.

Professor John Quiggin is a Senior Research Fellow of the Australian Research Council, based at the Australian National University and Queensland University of Technology.

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