A softening economy could only further complicate election timing

Scott Morrison may have cause to think that he and prime ministerial travel don’t seem to mix very well.

Last week, there was the whole unfortunate “taking the bus but catching a plane” thing around Queensland.

This week in Singapore the Prime Minister’s attempts to look statesmanlike by ramping up our interest in the Pacific was overshadowed by an ever-growing debacle over his announcement in the final days of the Wentworth byelection of the possible move of our embassy in Israel to Jerusalem.

The Indonesians – and the Malaysians – aren’t happy. And the Indonesians made clear this bit of political smarty-pantsness is now holding up the signing of a free trade deal with Australia.

The House crossbenches, led by Cathy McGowan and Rebekha Sharkie, have also foreshadowed legislation to set up such a ...
The House crossbenches, led by Cathy McGowan and Rebekha Sharkie, have also foreshadowed legislation to set up such a body when the House sits for its final two weeks of the year from Monday week.

Mick Tsikas

For good measure, Morrison now has to find a way out of the mess that doesn’t look like it has been dictated by Jakarta.

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At a more retail political level, the Prime Minister for fair dinkumness got himself involved in the massive Bunnings sausage sizzle “do you put onions on top or underneath” controversy.

It’s no wonder he’s looking a tad depressed, or that senior ministers are apparently increasingly at each other’s throats.

Complicated times ahead

No, it isn’t going at all well for the Coalition. And what is more, the government is running out of time.

Centre Alliance candidate for Mayo, Rebekha Sharkie (centre) celebrates her win with supporters at the Mt Barker Wallis ...
Centre Alliance candidate for Mayo, Rebekha Sharkie (centre) celebrates her win with supporters at the Mt Barker Wallis theatre in Adelaide, South Australia, Saturday, July 28, 2018. Dubbed “Super Saturday”, five federal simultaneous byelections will be held today, unprecedented in Australian election history after sitting members of parliament were forced to resign due to dual citizenship in breach of the Constitution. (AAP Image/David Mariuz) NO ARCHIVING

David Mariuz

The Senate sat this week and sent a message to the House of Representatives that it wants it to debate a federal integrity commission.

The House crossbenches, led by Cathy McGowan and Rebekha Sharkie, have also foreshadowed legislation to set up such a body when the House sits for its final two weeks of the year from Monday week.

The government says it’s open to talking but has reservations about the proposals that have been floated. Its political problem, though, is getting stuck in a position where it appears to be resisting what is now a widespread call for such a federal body on the one hand, or that it is simply following the agenda by others.

So many people trying to boss the Prime Minister and the government around!

Before the change of prime ministers in August, the plan had been to beat NSW to the polls in March, with Malcolm ...
Before the change of prime ministers in August, the plan had been to beat NSW to the polls in March, with Malcolm Turnbull announcing an election on January 27.

ABC TV

At least, you would think, the government is the master of its own political strategy and the most important aspect of that – the timing of the next election.

But all the signs are that this is only becoming more, rather than less, complicated.

Before the change of prime ministers in August, the plan had been to beat NSW to the polls in March, with Malcolm Turnbull announcing an election on January 27 – at the beginning of what has become the traditional start of the political year.

Australians would be feeling good after their holidays and the economy was going along pretty well, went the reasoning.

The implosion of NSW Labor leader Luke Foley has changed the dynamics in NSW.
The implosion of NSW Labor leader Luke Foley has changed the dynamics in NSW.

Janie Barrett

Changing landscape

Always important in driving this strategy was the problem that still confronts Morrison: the next election must be held by May – right in the middle of normal budget season.

If you wanted to hold off the election until May, you would have to bring the budget forward to the middle of April. But in 2019, that is smack bang in the middle of Easter.

With the Berejiklian government in NSW not doing all that well at the time, it all seemed a reasonably straightforward choice: announce a return to budget surplus in the mid-year budget review in December and campaign on your economic credentials.

Such a strategy fitted with the former prime minister’s (not always completely successful) “go on the front foot”, risk-taking style when it came to election strategy.

Much of the landscape has now changed, however.

The implosion of NSW Labor leader Luke Foley has changed the dynamics in NSW.

Even more significant, but largely overlooked, the economy’s trajectory is not quite as certain as it was three months ago.

The Australian Industry Group regularly publishes indices of economic activity in construction, services and manufacturing that have always had a heavy weighting in the Reserve Bank’s assessments of the outlook.

In October, the indices started to soften. The construction index, for example, fell for a second consecutive month after 19 months of growth, and with the sharpest rate of contraction since October 2016.

It is not a reason for alarm, but when combined with headlines about slumping property prices, it suggests we will be going into a 2019 campaign in a softening economy, rather than one that is going gangbusters.

This is a bit of a problem if you have said, ever since becoming prime minister, that your government’s priorities are “keeping our economy strong, keeping Australians safe and keeping Australians together”.

Government’s dilemma

The government, of course, has been arguing that Labor’s proposed negative gearing changes will only exacerbate the housing downturn.

Labor counters that, a time when tighter lending restrictions have already taken investors out of the market is exactly the right time to be pushing such a policy.

The government, of course, can’t get away from the fact that housing prices – still the primary asset of most Australian households – have been slumping for months under its watch.

If you are nervous about whether a slowdown might only accelerate, you might be more inclined to go earlier to voters, even if polling suggests you are going to be wiped out.

There is also that sneaking possibility that, just by delaying, you will actually further exacerbate the slowdown: that there will be an investment pause while people anticipate an election and assess what a different government might mean for them.

The other risk of waiting is that voters would think you were simply trying to delay the inevitable in the interests of wanting to keep your feet under the ministerial desks as long as possible.

People who have watched Morrison and Turnbull up close say the current Prime Minister does not have the risk-taking gene of his predecessor and would be more inclined to try to throw everything at fixing his government’s appalling standing with voters and hope something turned up.

Options are starting to tighten around the Prime Minister.

The parliamentary calendar for 2019  – for example – has not yet been published. It’s a month late.

Publishing would require revealing some of your strategy, for example, for an early budget – if you were hoping to wait until May to go to the polls.

And a federal integrity commission is just one issue that might entice one or two of your disaffected MPs – who are planning to leave anyway – to cross the floor, or even sit on the crossbench in the dying days of the government

It is not going to be a pretty end to the year.

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