Exactly what Labor can do to insulate itself from the political fallout coming its way courtesy of the rising cost of living is difficult to know. But let’s hope Labor’s brains trust aren’t simply assuming the public will be understanding. If they are their naivete will soon catch up with them.
Because that’s rarely how politics works. Reason and logic aren’t always the first responses from voters in times of crisis. Certainly not when an angry mob heads to the ballot box.
To be sure the Opposition is at present a rabble, mere leftovers, not seriously in the political contest. But nor do they need to be right now.
Peter Dutton has time on his side to see if he can be competitive against Anthony Albanese, and if he can’t the Liberal Party has time to make a change at the top. Although who exactly they would turn to instead is very hard to fathom.
While Labor hardheads know they have inherited an economic mess made worse by international factors, that reality doesn’t do anything to reduce the stress people are under. That economic stress is only going to worsen in the next few years, as confirmed by the budget.
Real wages going down until at least 2024. High inflation guaranteed across all of next year. Interest rates which have already dramatically shot up will continue to do so in what’s left of this year and next, as house prices plummet. Oh, and unemployment is forecast to rise too.
It isn’t just everyday living costs such as food and petrol that are on the rise. The budget confirmed extraordinary uplifts in energy prices – both gas and electricity. The pressure on average Australian households is going to be immense. In fact it already is.
A generation not used to such a difficult economic climate is about to run into it head on. The risk for Labor is that when they think about that they don’t get bogged down in the details of why it’s happened and who, if anyone, is to blame. They will simply see Labor in power either unable or unwilling to help.
Politics is rarely fair.
Handouts to help ease the pressure are difficult to deliver, and wouldn’t be enough to cover the cost of living rises anyway. They also risk contributing to some of the economic challenges.
The budget is saddled with more than a trillion dollars of debt, growing deficits in the out years, and ballooning costs attached to policies such as the NDIS. And all that is before Labor funnels billions into honouring election promises.
The cost of servicing debt interest payments alone is annually in the tens of billions, before we even consider getting to surplus to start reducing the debt principal.
The structural deficit within the budget is this generation’s economic crisis to deal with, because if we don’t, we can see our economic future when we look at older western democracies in Europe today.
Australia also has an ageing population, don’t forget.
And all of this adds up to tough politics for Labor. It’s not their fault, but it is theirs to fix. And if they can’t fix it they will be judged for their failure, fairly or not, with a different team given a go.
The problem is that the fix will take many more years than the electoral cycle offers. That means if the Opposition uses the cost-of-living crisis to land blows on the government, voters may condemn them long before they see the returns that reform offers.
Besides, electoral rewards don’t always follow from good policy initiatives anyway. Handouts and other bribes are rewarded, but such actions will only make a bad situation worse.
Peter van Onselen is a professor of politics and public policy at The University of Western Australia and Griffith University.
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