2019 Federal Election Update #3
NEW LABOR ERA TANTALISINGLY CLOSE AS NATION GRIEVES BOB HAWKE
Is Labor finally out of the political wilderness? The sad passing overnight of one of Australia’s greatest Prime Ministers, Labor icon Bob Hawke, has already had an impact on the final day of campaigning and will likely boost the electoral fortunes for Labor as people recall more optimistic times and a highly effective, authentic style of political leadership.
It feels like Bill Shorten can now almost reach out and touch elusive victory, yet the race remains extremely close with at least nine seats looking lineball. As we noted last week, predicting outcomes in this election is very, very complicated due to uncertain preference flows among undecideds. In the past week, the contest has tightened, denting but not dimming Labor hopes.
Notably in the final stages of the campaign, Bill Shorten has been seeking to tap into the legacy of the reformist Whitlam and Hawke Governments to give Labor the winning edge in an electorate where there is no clear mood for change.
What we’ve seen is a campaign in which Scott Morrison has sought to shore up his base and Labor has in turn sought to shore up its own primary vote, both sides coming off historic low levels of primary support. However, this situation works out better for Labor. This is because when the Coalition loses primary votes to conservative minor parties and right-wing Independents, only 50% of the preferences flow back, whereas Labor gets back 75% of Greens and other left preferences.
The Coalition appears to still be 3-4 points away from lifting its primary vote to the early 40s – a winnable position. Morrison has been largely successful in recovering the LNP base in Queensland but the traditional Liberal base in Victoria appears to be still alienated over climate change, and there are concerns that its long-held support in WA is also slipping. If that plays out tomorrow, Labor is in the box seat to win. While there may even be some green shoots particularly in NSW for the Coalition, everything would have to go perfectly on top of a very late swing for the Coalition to stave off defeat. The bookies agree: Sportsbet has Labor at $1.14 versus $5.75 for a Coalition win.
The Labor camp is feeling modestly confident but less buoyant than a few weeks ago, with some sotto voce murmurings about the possibility of minority government. This is in part thanks to Clive Palmer cutting through with his Trump-style messaging in Queensland. Labor’s mixed messages and a lack of a strategic plan on Adani and coal will likely be costly in regional Queensland.
The Palmer surge has been fascinating to watch for what it says about the power of advertising in reaching a pretty disengaged, browned off bunch of voters. It is entirely possible that Palmer’s United Australia Party ends up with Senate balance of power, facing off against a Labor Government whose mandate it rejects.
The campaign has also been fought against a backdrop of a weakening economy, with growth being revised down and unemployment rising, leading to a confident prediction that the RBA will begin lowering interest rates to what is seen as emergency levels of around 1% at its next meeting in early June. These are issues that are likely to be on the agenda for a Hawke-style economic summit with business and unions that Bill Shorten is proposing in Perth in June.
Whatever happens, any new Government can expect to have to deal with a challenging political and economic landscape after Saturday and that means business will face a very uncertain environment in which to operate.
We attach our assessment of key policies, state by state the seats to watch, a handy pendulum – and don’t forget to read our prediction at the end.
One senior Liberal elder commented this week that the Coalition has won the campaign but started from too far behind to win the election. Scott Morrison certainly wasn’t leaving anything on the field in the final days, blitzing a series of in-play Queensland seats and staying on message. Meanwhile in western Sydney, Bill Shorten evoked the successful “It’s Time” theme of Gough Whitlam in 1972. Labor released ads late in the week strongly attacking the Coalition’s record on climate change, which seems to be its most powerful policy weapon in the campaign.
A last-minute brawl between the Nationals and Liberal Party over the NSW Senate contest is undermining Coalition efforts to build its vote in the Upper House. Liberal Jim Molan is in the unwinnable fourth spot and his supporters have been encouraged to ignore the ticket and vote for him instead of the Nationals’ Perin Davey. Not a good look when you are trying to convince voters that disunity is a thing of the past.
Policy constraints ahead
On policy delivery, either a Coalition or Labor Government is likely to be constrained by the Senate and weakening economic conditions, particularly if the China/US trade war escalates. None of the major parties are likely to control the Senate, and there is a slim prospect of a hung Parliament in the House of Representatives, which would also give a diverse group of Independent MPs veto power over legislation. On any of these scenarios, a new Federal Government would have to fight hard to deliver on its promised mandate, with Labor facing the greatest threat on its sweeping tax reform, climate change, industrial relations and health policies.
We don’t expect to know outcomes of the Senate on the night. Analysis suggests that, at best, after the election the ALP and Greens combined could have 37-38 senators, two short of the 39 votes needed for a majority. Senate optional preferential voting reforms enacted before the 2016 election will make it more difficult for minor parties to achieve seats. However, Clive Palmer’s large election spend may carry the UAP into the Senate with the Greens likely to lose Senators. With Cory Bernardi, Pauline Hanson and the Centre Alliance not up for re-election, the Senate will likely see a conservative and populist crossbench prove a challenging dynamic.
Some 3.5 million people have now pre-polled this election, beating the record of 3.2 million at the 2016 election. 500,000 people alone voted on Wednesday. If this rate continues, there would be 4.5 million pre-polls. Assuming turnout is the same as 2016 (91%), that would mean pre-poll would make up just over 30% of the total vote.
2019 Election Key Policies
State by state – key seats to watch
Here is our state by state analysis of the key seats in play for Election 2019. Note the percentage in brackets below is the swing needed for the seat to change.
2019 Election Pendulum
denote seats to watch
On the balance of probabilities, we think the most likely scenario is a Labor win in the range of 78-83 seats – but Bob Hawke will shift sentiment Labor’s way.