Guest slot on the Australian election by Steven Phelps

The next General Election in Australia is likely to be held in October this year. The last one having been held in October 2004 the latest possible date for the next one is 19th January 2008, but commentators are predicting 20th October 2007, and that’s only five months from now.

The incumbent Prime Minister is John Howard. As leader of the Liberal Party, he heads the Liberal Party / National Party Coalition, the equivalent of the Tories in the UK. The National Party is only a power in rural areas. In opposition is the Australian Labour Party (ALP), who had an unbroken spell in Government from 1983 to 1996. John Howard won all four subsequent General Elections: 1996, 1998, 2001 and 2004.

The Australian Parliament has two houses, the House of Representatives (the lower house) and the Senate. The Prime Minister comes from the lower house. Voting for the lower house is by constituency, but by transferable vote where there is no overall majority of first preferences. Voters list candidates by preference and so the phrase “Two Party Preferred” (TPP) is used by pollsters and pundits to indicate likely outcomes.

In addition to the Liberals, Nationals and ALP, there are several minor parties, but the only important one now is the Greens. They poll around 8%, which gives them no lower house seats. However, the overwhelming majority of Green preferences go to the ALP, so Green votes are important.

RECENT ELECTIONS

In 1996, the Labour Government was tired and suffered a heavy defeat. In 1998, the campaign was dominated by the proposed introduction of GST (the Aussie equivalent of VAT), which was anything but popular. Howard won anyway, albeit with a smaller majority. The ALP was lead at that point by Kim Beazley, whose lack of charisma was comparable to Howard’s.

In 2001, refugees, the MV Tampa and accusations of ‘Kids Overboard’ held the headlines throughout. Howard was accused of playing the race card, but his position won out. The ALP, still under Beazley, saw their opinion poll lead overturned during the campaign.

In 2004, the ALP had a new leader in young firebrand Mark Latham, who had deposed Beazley. Australia had taken part in the invasion of Iraq in 2003, but trustworthiness in handling of the economy and other domestic issues dominated the 2004 election. Although it looked to be evenly-balanced, Howard and the Coalition won comfortably. Howard showed his mettle by coming from behind yet again. That made it three times in succession.

2007? Howard is still there, but the Labour leaders have played musical chairs. Beazley, who came back from the dead to replace Latham in 2004, was himself unceremoniously ejected and replaced in December 2006 by one Kevin Rudd. With Kevin Rudd, the ALP now has a leader who is both fresh and seen as being a safe pair of hands. After Rudd took the helm, the ALP rocketted in the opinion polls and hasn’t looked back. They have consistently rated 55-60% on a TPP basis, sufficient for a huge Parliamentary majority.

Another major factor is Howard himself. His Government has now been in power for over 10 years and is starting to look very tired. Shades of 10 years of Thatcher and 10 years of Blair?

In 2004, the coalition won control of the Senate. It’s unusual for a Government to control both houses, but what looked like a blessing gave Howard the opportunity to shoot himself in the foot. And shoot himself he did when he introduced the major workplace reform known as WorkChoices. This has allowed employers to tear up old contracts and re-employ people under poorer conditions. It’s been nothing short of an electoral disaster and Howard knows it – but he’s stymied. It was his policy that brought it in.

Australia has enjoyed a long period of economic growth, averaging 3% pa. or more. It seems that China can’t get enough of Australia’s raw materials. On top of this, low interest rates and tax giveaways in recent years have kept the average Aussie very happy, economically. All this should make another Government victory a shoe-in, yet they are floundering in the polls.

At the beginning of May the latest budget saw another major tax giveaway. This was expected to give the Coalition a recovery in the polls, but it just hasn’t happened.

John Howard is a highly skilful politician and is no stranger to overturning opinion poll deficits. But the size and consistency of the ALP’s opinion poll lead this time is starting to look unassailable. On 22nd May Howard himself said to his party room that they face annihilation at this year’s election. It was a tactical statement, but it’s the truth.

BETTING MARKET AND LIKELY OUTCOME Howard’s past record has kept the market from being a one-horse race and so – in my opinion – provides plenty of room to make a very healthy profit. The price of a Coalition win has been in the 2.1 to 2.2 range on Betfair in recent days, while an ALP victory can still be backed at around 1.80.

When I was in Australia in 2001 and 2004, Howard looked to be on top of things. But now, more and more commentators are starting to see him as a spent force. WorkChoices is turning into a millstone. Even if they don’t know someone affected, everyone has read stories of unfair conditions being forced on employees – they’re are all over the newspapers.

The economy is still doing well, but there is the possible effect of the drought to consider. Howard made a momentous statement a couple of months ago, when he said that if there wasn’t significant rainfall soon, all non-domestic water consumption in the Murray-Darling basin would have to be stopped. In other words, no irrigation. Now the area covered by the vast Murray-Darling basin is 40% of the very large Australian agricultural sector, so the economic hit from this could be major.

The ALP price on Betfair went above 2.00 in the days after the budget of 8th May, but with opinion polls showing that their lead was staying solid, the ALP price has since dropped to the low 1.80’s. In my opinion, as we near the election, that figure will tighten considerably, and tighten very quickly. On 19th May, the average of the Aussie bookies for an ALP win was 1.85. On 24th May, it was 1.75.

I think that this recent comment on the OzPolitics blog (www.ozpolitics.info/blog) sums up the situation very well: “I still think we need to wait until end of June early July for a real clear cut trend. Yes, I know the ALP are a long way in front, but if we get into July and the ALP have spent 6 months over 57% or at least above 55% then I cannot see the ALP losing the next election. Yes, I know I called it here about a week ago, but while the Economy is good, a very small part of me thinks that Howard could wiggle out of this corner, even though that small chance is very very small.”

Note those words – “very very small”.

Addendum Also on Betfair is the seat of Bennelong, which is Howard’s own constituency. His opponent will be the high-profile former ABC journalist Maxine McKew. She needs a 5% swing to win.

Steven Phelps