Campbell: Albo’s support slides as interest rate rises loom

Another day, another poll showing a drop in support for the Albanese government – and that downward poll trend is only going to get steeper, writes James Campbell.

Another day, another poll showing a drop in support for the Albanese government.

The latest, from RedBridge, has Labor’s primary down three points from 36 per cent to 33 per cent and the Coalition up one to 38 per cent.

The numbers are less important than the fact it’s the same story everywhere, with support for the ALP slipping in the most recent Resolve, Freshwater and Morgan polls, while support for the Coalition is up.

No doubt some of the drop can be explained by things Albo has done – most importantly last year’s giant smoking ceremony of his political capital, the Voice referendum.

But not all of it.

As time passes it is becoming increasingly clear the PM’s real problem is, as a German journalist once observed, that while men make their own history, they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already.

The circumstances which are haunting Albo of course are the return of inflation to levels not seen since the late 1980s.

Prime Minister Anthony Albanese’s popularity is falling along with Australians’ standard of living. Picture: Saeed Khan/AFP

Since he took office, Australians’ standards of living have fallen. A lot.

According to the calculations of Michael Read at the AFR, in the year to last September “Australian household incomes slumped 6.1 per cent adjusted for inflation”.

That’s across all households.

According to the RBA in January, for “the median mortgagor, real disposable income is estimated to have fallen by 15 per cent”. So yeah, it’s no wonder people are shitty.

Until last week, however, the assumption of most political folk was that as bad as things are by the time we go to the polls, these trends would be reversing as interest rates began to fall.

The trouble for Treasurer Jim Chalmers is that there are plenty of things the Opposition will be able to point to as having made inflation worse. Picture: NCA NewsWire/Nikki Short

But after the hotter-than-expected inflation caused economists to reverse ferret, that assumption is out the window.

Now instead of betting on interest rate falls, the bond market is betting we’re likely to have seen another interest rate rise by August.

In other words, it looks like people’s standards of living are going to keep dropping this year.

True, thanks to the decision to spread the Stage 3 tax cuts more broadly, from July we’ll be getting more money in our take-home pay.

We’ll just have to cross our fingers they don’t further stoke inflation.

As bad as all this is for a government with a tiny majority, the prospect of further interest rate rises wasn’t even the worst news in these inflation numbers. Even more worrying for the government is what the data showed is driving the jump.

No sooner had it dropped than Shadow Treasurer Angus Taylor was out in front of the cameras with a simple message: “What is very clear from this data is it is homegrown domestic inflation – homegrown inflation – is running at 5 per cent. Whereas international inflation (is) running at less than 1 per cent.”

Now Taylor has been saying our inflation problem is Made In Australia for a while without much evidence the idea is penetrating the mind of the public.

But that was in a context in which it was expected that interest rates would start to fall sometime this year.

When it dawns on the public, not only are they unlikely to fall this year, but they’re going to go up, that conversation is going to change.

Until now we’ve been judging the government on its response to the inflation problem, and although most polls show people think they’ve been pretty useless, it’s fair to say they haven’t been judging it as the cause of the problem.

The trouble for Albo and Jim Chalmers going forward is that there are plenty of things the Opposition will be able to point to as having made inflation worse.

It could for instance point out the big wage increases it has shepherded through Fair Work in various wings of the caring sector are most definitely inflationary.

Somehow however, I doubt they’ll focus on how much we’re paying aged care workers.

Nor do I think we’ll be hearing as much as we might about the productivity killing changes in the various tranches of Tony Burke’s IR legislation.

No, if I were to bet, the Coalition is going to concentrate its Made-In-Australia inflation fire on surging rents in the capital cities, rises which are being stoked by the half-a-million extra people who arrived in the country last year.

It’s unclear what the Government can do about this, but it’s clear if the charge sticks that it is causing or even making the crisis worse, that downward poll trend is only going to get steeper.