On all measures, Liberal Party leader Tony Abbott is deeply unpopular. His approval rating is among the lowest recorded for an Opposition leader and his policy agenda is universally seen as shallow. Former colleagues of Abbott and Liberal Party elders are on the record saying “he has no interest in economics – he has no feeling for it”, he is “innumerate” and that his future “was not in economics”.
Against Abbott is Labor Prime Minister Julia Gillard. She leads Abbott by around 10 points in polls as the preferred Prime Minister. Gillard will be heading into the election year with the economy entering a 22nd year of unbroken economic growth. The unemployment rate is around 5.5 percent, one of the lowest in the industrialised world and real wages have been rising for 10 straight years. At the same time, mortgage interest rates are 6.6 percent, well below historical averages and 2 percent below the level of the Coalition government.
The Gillard Government has a policy agenda that includes education reform, a national disability insurance scheme and the national broadband network, all very popular policy proposals according to public opinion polling.
Despite these economic drivers being so very favourable for the Gillard Government, the common wisdom from political pundits is that the 2013 election is unloseable for Abbott. Indeed, most opinion polls have the Coalition well ahead of Labor in two-party preferred terms.
Now look back 20 years.
Common wisdom from the pundits is that the then Labor Prime Minister Paul Keating should have been soundly beaten in the 1993 election. Unemployment was 11 per cent, the highest since the 1930s Great Depression. The economy was barely climbing out of a deep recession and real wages had been falling for the bulk of the prior five years. At the same time, mortgage interest rates were around 10 percent, although this was down from the 17 percent experienced a few years before.
Confronting Keating was the Liberal Party leader, Dr John Hewson, a well credentialed economist with a blueprint for economic reform. Hewson’s so-called Fightback! manifesto included tax reform, establishing independence for the Reserve Bank and a range of other microeconomic changes designed to boost productivity.
Hewson was popular and credible; Keating was seen as arrogant and carried the weight of the recession which started under his watch as Treasurer.
It was an unloseable election for Hewson on these facts and perceptions. Yet there was a 1.54 percent swing in the two-party preferred vote to Labor and Hewson was humiliated.
There are obviously chalk and cheese differences between the economic fundamentals now and back in 1993. They massively favour the incumbent Labor Party. There are also differences in the relative credibility of Opposition leaders Hewson and Abbott which again undoubtedly favour Labor.
That said, the polls show the Coalition with a solid lead based, it seems, on Gillard’s comment prior to the 2010 election that “there will be no carbon tax under a government I lead”, the vexed issue of asylum seekers and some of the policy compromises that have been an inevitable consequence of the minority government arrangements entered into as a result of the hung Parliament.
It seems a stretch to think that for Abbott and the Coalition parties the 2013 election is “unloseable”.
On the contrary, the hard facts on the economy, rising living standards and a policy agenda of popular and decent reforms make the election a very winnable one for Labor. As 2013 unfolds and the election campaigning focuses electors’ minds on the things that matter for them, it is more than just conceivable that Labor will win.
This point is even more apparent with the Coalition currently holding 14 seats with a margin of 2.5 percent or less. Eight of those seats are in Queensland and Victoria where there are increasingly unpopular State Coalition Governments. All eight seats are at risk. The Labor Party has only nine seats with a margin of 2.5 percent or less and while those seats and others are obviously at risk, in the absence of a uniform swing some Coalition seats could easily move back to Labor and some Labor seats will move to the Coalition making the election outcome impossible to call.
All of which suggest the 2013 election is up for grabs. It is no forgone conclusion. It will be the Labor Party fighting on its economic record and agenda for social reform versus the Coalition fighting it on the perceptions of trust for Gillard and the promise to revoke the carbon and mining taxes. With close to a year to go until polling day, there will be many events that might sway voters one way or the other. This seems obvious, but try pointing that out to the pundits declaring Abbott home and hosed in another unloseable election.
Stephen Koukoulas is Managing Director of Market Economics. He writes a daily column for Business Spectator.