It’s become fashionable lately to speak ominously about the fortunes of Australia’s Albanese Labor government, especially with polling showing a decline in their vote. (On polling, see eg, Roy Morgan, and a Kevin Bonham summary.)
There are many things that will shape the next election; it’s still a long way off. However, there are two things that will make it quite hard for the Coalition to win even minority government. The first is the basic electoral math, and the second is the macroeconomic forecast. In this post I want to look at each of these.
The Electoral Math
Let’s start from the simple point that it’s easier to win an election when you have fewer seats to gain. The Coalition needs 76 seats to form a majority government; they currently have 55. Could they win 21 seats? It’s not out of the question. In 2007, Labor under Rudd won 23 seats, going from 60 seats to 83 to form government. That said, Rudd’s opponent, Howard, had been PM since 1996, and his government had forced through the terribly unpopular WorkChoices legislation. In 1996, Howard beat Keating with a gain of 29 seats. In 2013, for comparison, when Abbott knocked off the unpopular Gillard/Rudd government, the Coalition gained only 18 seats.
These change-of-government elections were generally ones where the outgoing government was very much on the nose. Although there is some voter disappointment with Labor, I just don’t see the level of anger that is characteristic of a 20-seat electoral swing. A gain of 21 seats seems highly implausible.
What about minority government? There are currently 12 independents and 6 minor party MPs: four in the Greens, then Bob Katter and Rebekha Sharkie. While some crossbenchers may lose their seats, and some new ones may get elected, we can consider this as a starting point. Here, I could see four to five votes for a Coalition minority government. (I’m imagining that Broadbent and Gee are replaced by Coalition MPs, then Dai Le and Bob Katter helping the Coalition, and maybe Sharkie.) Let’s say that a Teal seat also goes to the Coalition, partly through a redistribution. That gives them maybe six extra votes. In this case the Coalition still needs to gain 15 seats. This is quite a big lift!
Overall, the sheer lack of seats currently held by the Coalition makes it difficult to form even minority government.
The Macroeconomics
It’s plausible that challenging economic conditions will stabilise and even improve in late 2024, delivering a boost to ‘vibes’ and perceptions of Labor’s economic credibility heading into a 2025 election.
Through most of Labor’s terms so far we’ve seen high inflation, steep rises in interest rates and, accordingly, a decline in real wages. This is not exactly what a first-term government wants to preside over! However, things are predicted to turn before the next election. Inflation is easing, and the general prediction now is for interest rates to be stable (or maybe one more increase?) and then possibly even be cut in late 2024.
This would be electoral manna for Labor. It would give people a quick and deeply felt improvement in their economic situation, while also vindicating the macroeconomic strategy that Labor has pursued. With maybe a couple more cuts before May 2025, Labor can credibly claim to be the adults in the room, not only managing the economy better in the abstract but actually having made decisions that made peoples lives better. Voters don’t really care about economic management in the abstract, but they do care about lower mortgage repayments, and having jobs, and having real wages growth. In this sense, stable interest rates, and potential cuts, would do wonders for Labor’s fortunes.
I give Labor about 80%
Given the likely improvement on cost of living, and the basic math facing the Coalition, I estimate an 80% probability of Labor forming the next government. A key unknown here is the narrative or general ‘vibes’. I see growing frustration with Labor and a sense that they aren’t doing enough on cost of living. The final pre-election budget would be too late to address this sense, if established. As such, I expect Labor will offer some sweeteners in the upcoming May 2024 budget to give people a sense of having been listened to, and this will certainly keep them in the game long enough to bank some interest rate cuts, offer even more pre-election sweeteners in an early 2025 budget in March/April, and then secure government again, even in minority.