The grand Labor ascendancy begins this week with the sittings of the new parliament. The size of Anthony Albanese’s majority surely means a Labor government for the next six years – and that may not be its limit. This is an occasion of Labor triumph but, equally, of Labor challenge.
It will become a time of historic definition for Labor. Its true character, beliefs and relevance in the 21st century will be revealed, precisely because Labor has a commanding position of power unrivalled since John Howard’s 2004 victory.
In politics, victory creates expectations. And big victories create big expectations. This mood is accentuated today given Australia’s underperformance for so long with living standards stagnant, business investment weak and a public stuck in a mood of resentment and frustration.
The first big lesson from Albanese’s May 2025 election victory is that his second-term performance must exceed his first-term performance. If that is not realised, the second term will be deemed a failure. Albanese, his cabinet and the Labor Party are on notice. This looms as the most important moment for ALP governance since the Hawke-Keating era that began 42 years ago. Such opportunities for Labor typically come around only in each half century.
This judgment derives from the clear political landscape Labor faces. In the new 48th parliament, Labor commands the Coalition 94-43 seats in the House of Representatives – a larger majority than Tony Abbott enjoyed in 2013 – while in the Senate Labor can form a majority relying on the Greens or the Coalition, a highly favourable situation.
No government for 20 years has faced such exceptional opportunities for executive and parliamentary action.
The 2025 election broke the cycle of narrow election victories that plagued Australia for the past decade. This was the decade of miserable equivocation by the public. Each of the previous three elections – Malcolm Turnbull’s 2016 win, Scott Morrison’s 2019 win and Albanese’s 2022 win – saw governments fall over the line with perilously narrow majorities and unconvincing mandates. Weak majorities necessitated caution and complicated political management.
Albanese has broken free. The victory over the Coalition in 2025 has been astonishing, given that a week before the election Newspoll said only 39 per cent of people believed the government deserved to be re-elected. But when the crunch came, the public had far more reservations about Peter Dutton than Albanese. The widespread 2024 expectation of a minority Labor government was dissolved.
Albanese believes the keys to his success lie in the stability, discipline and delivery of his first term – neither transformational policy nor path-breaking innovation. He got close to the people, offering practical gains. It’s a long list – lower interest rates, real wage gains, increases in the minimum wage, support for Medicare, boosting paid parental leave, energy bill relief, more funds into the care economy, cutting student debt, better childcare and backing renewable energy.
The paradox of Albanese is on display – he is a big winner who likes to play down expectations, the reverse of Gough Whitlam. “Let’s not get ahead of ourselves” is his constant refrain, exceeded only by his mantra “no one left behind, no one held back”. The spin is non-ideological, down-to-earth. He likes to be Mr Practical.
The trap for Albanese is that his victory is wide but not deep – based on preferences, not primary votes, where Labor polled a still dismal 34.56 per cent. Australia is a more fractured nation and that makes politics more volatile. It means Labor’s executive flaws and any policy mediocrity will be ruthlessly exposed.
The second big message is that Labor’s 2025 election mandate cannot do the policy job for Australia. More of the same won’t work. The Labor orthodoxy – state paternalism; bigger, more interventionist government; more red and green tape; more pro-trade union IR laws; tinkering around tax reform; bigger and expensive social agendas, witness universal childcare in the wake of the NDIS; ongoing energy price escalation; scepticism about markets and lip-service towards the lack of private sector investment confidence – all constitute entrenched ALP policy attitudes that cannot tackle the source of Australia’s long underperformance.
That Albanese and Jim Chalmers have committed to an economic roundtable – designed to produce new ideas – testifies to the defining reality. The Treasurer has put on the table our long-stagnant productivity failures and the need for budget repair, the assumption being that fresh policy approaches are needed and welcome.
There is a conga line of experts, institutions and officials calling for action – from former Treasury boss Ken Henry to the Commonwealth Bank, to Productivity Commission chairwoman Danielle Wood, with Chalmers hoping the roundtable makes a “big contribution” to the future of economic reform. Everyone will look for policies that inspire consensus – but consensus is a rare commodity these days. If Labor decides to be strictly limited to consensus, it is destined to disappoint.
This penetrates to the third big lesson from the Labor ascendancy – ultimately the government must lead. There is no other option. The Albanese government must decide how it intends to lead, how it intends to reinvent Labor faiths and policies for a new phase of history. This won’t be easy, given the last PM who tried bold reform was Abbott in 2014 and ended up losing his job. Yet Albanese is a conscript of the times; his responsibility is to address the nation’s challenges.
The story of Labor’s governing success, whether John Curtin, Whitlam, Bob Hawke or Paul Keating, has been the ability of such leaders to reach outside the Labor orthodoxy, to break free of the standard Labor dogma, to find fresh policies and strike a new synthesis – initially resisted within the party – that both advanced the national interest yet still honoured Labor values.
Can Albanese Labor rise to the occasion? Albanese’s fate at the opening of the new parliament is to lead a different Labor Party. The left is now the majority force in the caucus and in the party rank and file, a major historical departure. In a sense Albanese recognises this with his recent phrase “progressive patriotism” – the progressive in deference to the majority ideology of the party these days but the patriotic testifying to his desire to govern for the entire country.
A great Labor experiment is about to unfold. Put brutally: does an ascendant centre-left Labor government possess the will and ability to fashion a new reform model tapping into the advantages of AI, easing the income tax burden on individuals, navigating the restructuring of the energy sector, delivering a more competitive, flexible and productive economy, securing a more sustainable budget and imposing limits on big spending social policies?
That’s the task. Sustainable gains in living standards can’t be confected. The ascendant Labor Party arrives at a time of immense national challenge. It is the beneficiary of Albanese’s brilliantly successful political strategy from his first term – but having won the politics, the question now being asked of Labor is the quality of its governance.
There will be a temptation to dodge the hard truths. After all, with the Coalition depleted and near broken, a second term of safe politics, cautious policy and incremental delivery of benefits should be enough to secure Labor’s third term. But that temptation should be resisted. It won’t be enough for Australia or be enough to terminate our cycle of underperformance.
Labor needs a new economic growth strategy. A post-inflation boost won’t do the job. Nor will reliance on public sector activism. Pivotal to Labor’s second term agenda will be whether Chalmers emerges as a Treasurer of authority and whether Albanese and Chalmers can agree on a dynamic agenda. That’s always the question for Labor governments; it’s the test Labor sets for itself. It’s the test the nation will impose on Albanese Labor.
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