Labor’s post-material push cannot conquer the nation

Anthony Albanese and former leader Bill Shorten in the Labor caucus meeting following the election loss. Picture Kym Smith

Early data suggests the great paradox of the election — richer suburban and inner-city seats voted Labor against their class interests while poorer outer-suburban and regional seats voted Coalition against their class interests, ignoring Labor’s “soak the rich” appeal.

So what is happening?

There are three trends at work. First, occupational-based class voting is dying, which means more low-paid workers are ready to vote for the Coalition. Second, wealth­ier and highly educated people attuned to progressive norms vote on a post-material basis for Labor (and the Greens) because of climate change, refugee rights and cosmopolitan values. Third, as Australia becomes a broader asset-owning democracy — think family home, investment properties, superannuation, share ownership and retirement assets — any conflict over tax treatment of assets becomes a test of aspirational values and a potential vote turner. And this election saw Labor’s tax assault on the asset class.

The bigger picture is a nation fragmenting along crisscrossing economic, social and cultural divides. The party that wins an election is the party best able to form a voting coalition that spans these divides. Constructing such coalitions is essential yet high-risk.

Labor got it wrong in 2019. Denial is strong among shocked progressives who say Scott Morrison is a scaremonger and there was nothing wrong with Labor’s policies. It is true Morrison ran a scare campaign. But Labor invited this campaign with a deeply flawed agenda the public did not want anyway. The bigger question is how and why Labor was rejected. For three years Bill Shorten seemed to have constructed and preserved a winning coalition based on working Australians offered better wages, better services, more redistribution and loads of anger towards banks yet also based on urban progressive values on climate change and appealing to women and minority groups.

Labor wasn’t intimidated by Shorten’s unpopularity. It abandoned the “small target” tactic and went the “big target” route. In an age of disruption, hostility to the “big end of town” and distrust of the Coalition government, Labor offered radical change: higher taxes, bigger spending, more redistribution. It shifted decisively to the left. This strategy would work only if Australia was also shifting to the left. And there were signs of change. A conservative nation had voted for same-sex marriage, was worried about climate change, loathed the banks and was concerned about losing the “fair go”. It was becoming more progressive.

The ultimate statement about Australia’s transformation to become a progressive nation was the Quarterly Essay by social researcher Rebecca Huntley, called “Australia Fair”, released to coincide with the election. Huntley’s thesis, “because the research tells us”, was that a majority of Australians were in advance of Shorten — they didn’t need to be persuaded by Labor because they “already inhabit such a place”. They were awaiting a nirvana of climate change action, anger at corporate influence, higher taxes across the board and policy based not on profits “but by what is right”.

No doubt much research pointed in this direction. It must have been influenced by the immense progressive hold on cultural power, a ubiquitous message flowing from virtually every cultural and many educational outlets. The idea of a progressive Australia took hold. And it was more than half true. But for Labor “more than half” was not enough.

The problem with radical change is that it inspires opposition. Shorten gave the right something to fight. He believed it was “down and out”. But Shorten re-energised the right under a new leader in Morrison, who knew how to fight. The election story became not the underestimation of Shorten but the underestimation of the right’s recuperative ability under Morrison. It was a difference at the margin — the Coalition has 77 seats to Labor’s 68 seats. But margins count in elections. Shorten’s shift to the left had another consequence. It alarmed breakaways on the right voting for Pauline Hanson and Clive Palmer into a stronger preference flow to the Coalition. With Palmer campaigning against Labor, it produced an unusual and surely temporary degree of anti-Labor unity on the right.

In retrospect, everything looks obvious. It always does. Labor made three errors. First, it confused Coalition disunity with endorsement of Labor’s agenda. Shorten operated against a winning backdrop — chronic divisions within the Coalition for more than two years. Labor sat on an average Newpoll 53-47 per cent victory margin during this time.

Let’s be clear — Coalition divisions cancelled its right to govern, a point apparent in Liberal research. Labor convinced itself this lead was a vindication of its policy audacity. It was misled because so many of its policies were released and when Labor won the “super Saturday” by-elections last July the party decided its negatives — higher taxes, franking credits and punishing capital gains — had been “factored in” by the public.

But Labor was always exposed in the event of a new leader who could revive the right. It was nervous about Julie Bishop doing the job. Ultimately, Labor, along with most analysts, figured there was no such leader and no such possibility, hence it was safe. The fundamental event, therefore, was the Morrison emergence and performance.

Put under pressure Labor’s second mistake was exposed — it had overreached. It had gone too far. It had become intoxicated with the nation’s shift to a more progressive position. Contrary to Huntley’s research, Labor had become more progressive than the nation overall. The fascinating question is how much Shorten did this to buttress his leadership internally.

In retrospect, Labor’s policies look astonishing. Australians want better services and will consider higher taxes. But Labor offered an assault on the asset class and that includes households across much of the income range. It unnerved people. It didn’t matter the fine print showed only a minority would be hit by negative gearing, franking credits and higher income taxes. Fine print never triumphs over the big trend. Labor was viewed as asset-hostile. Analysis by Ian McAllister and Toni Makkai from the Australian National University shows that in post-industrial society the “ownership of assets”, not occupation, is a major influence on the vote.

Shorten ran on redistribution, not aspiration. But he left the impression of redistribution instead of aspiration. It was a divisive agenda — creating the perception of a line of people Labor would scorn or de-prioritise: miners, tradies, investors, believers and people from the regions. Progressivism’s great flaw is that its sweeping plans to change the established order involve elevating some groups and downgrading others — a variation on the “fair go” thesis that alarms people.

This election exposed Labor as the party of the urban cultural dynamic. But Australia is a big country, becoming more fragmented, and a governing party needs a broad sway. Taking the four southern states (NSW, Victoria, South Australia, Tasmania) and two territories, Labor won the election 57 to 43 seats. Yet it paid a high price for this success — in the resource-based development states of Queensland and Western Australia (a third of the nation) it won just 11 of 46 seats.

This penetrates to Labor’s third mistake. What counts is winning in the entire country, not winning in two-thirds. Looking at provincial and rural seats, Labor holds 18 of 59, less than a third. Labor’s agenda lacked the balance to win an election in the whole of Australia. Ultimately, the primary vote tells the story — Labor’s 33.3 per cent compared with the Coalition’s 41.5 per cent. Labor’s urban success is partly a function of the Greens, and the Greens tie Labor to values that limit its ­nationwide vote.

The election showed Labor as the party of post-material values. It has the Liberals under pressure in once safe seats where people are rich enough not to worry about higher taxes and progressive enough to vote on climate change. This time Labor failed to win those seats and paid a price in many of its own seats. Next time it might get the balance right.