Victoria: A Labor state in revolt — that could spell trouble for the PM
Former Victorian Liberal premier Jeff Kennett is convinced that the level of anger at Victoria’s Labor government could cost a considerable number of seats at the federal election.
Victoria is a state in economic and political revolt. And it is no longer just a provincial insurgency. For Anthony Albanese, Labor’s assumed stronghold is evolving into one of his greatest electoral dangers. For the first time in more than three decades, Victoria can be observed through the prism of a state that alone could decide the result of the coming federal election.
Western Australia delivered Albanese victory in 2022, yet Victoria could snatch it away in 2025.
This is a rich irony. Victoria is an urbanised electorate running off a services sector economy absent of mining while WA is a mining state funnelling its riches into urban wealth.
The Victoria problem is a reality that has been dawning on Labor and Liberal strategists alike for some time.
The antipathy towards the post-Andrews state Labor government is palpable, and as tangible as the cost-of-living malaise that federal Labor owns nationally.
It’s not hard to see why. Of all the states, Victoria is a province in acute decline.
Gross state product, a measure of the state’s economy, fell 1.2 per cent per capita across the year. This is the worst of any state apart from WA due to sectoral weakness in parts of the mining industry.
Business insolvencies in Victoria are at their highest. In the September quarter 1038 businesses were lost – 70 per cent more than in the corresponding period a year earlier. The unemployment rate is rivalled only by the Northern Territory, and Victoria’s net debt as a share of GSP is the highest in the country.
These developments were hardly unforeseeable but for many Victorians they have become as unforgivable as the potholed roads that litter the state.
This could have profound consequences for the Prime Minister. The spectre of the 1990 federal election now hangs over the Albanese government like Damocles’ sword.
Former Victorian Liberal premier Jeff Kennett is convinced that the level of anger at Victoria’s Labor government could cost a considerable number of seats at the federal election.
“It is my view that come the federal election, when it is held, the Coalition will pick up a considerable number of seats here,” Kennett tells Inquirer this week.
“Victoria has the capacity to give to (Peter) Dutton, for two reasons – leadership and a growing detestation of local government.
“There is a lack of understanding among those commentating on politics; the mood is savagely growing against the Victorian government. My synopsis is that people will vote for leadership, vote against a government that seems to be failing them, hence that when we go into a federal election, there will be an ingredient for a federal outcome where people have the opportunity to vote against the way they are being treated by the local government
“For people to change their vote, it doesn’t happen overnight but it has been building up. The federal election will give them the first opportunity.
“One ingredient that no one has tapped into is that there will be a component of the campaign that will be a referendum on the Victorian government. I have no doubt. I am and have been now watching nearly for a year the tsunami that is building up.
“The failure of the current Victorian Liberal Party through their vacillations is having no effect on how people are considering their options, and certainly not for the federal election.”
In 1990, after almost a decade of the Cain government, Victorians rebelled against a long-term state Labor administration that had virtually bankrupted the state.
They took out their frustration federally on Labor before turning on the Kirner government two years later after state Labor’s primary vote collapsed to 22 per cent. The risk for Albanese of a similar rebellion should not be underestimated. The timing is not dissimilar. Victorians won’t go to a state election until 2026.
And as 1990 proved, the pollsters’ premise of vertical political differentiation can be upended.
The most recent Newspoll demographic analysis demonstrates this point dramatically. Victoria has become federal Labor’s problem child.
Labor’s two-party preferred vote in Victoria at the May 2022 federal election was 55-45, while its primary vote was 33 per cent.
The earlier April to June analysis for 2024 had Labor still on a primary vote of 33 per cent to the Coalition’s 36 per cent. But with the strong Greens’ support, this still gave Labor an advantage of 54-46 after preferences.
By the middle of the year, this had contracted to 31 per cent Labor and 38 per cent Coalition.
In the latest survey, which rounds out the year, this is now a 30-39 per cent proposition.
In other words, the two-party-preferred contest in Victoria between Labor and the Coalition is at 50-50 for the first time in recent memory. In terms of swings since the last election, this represents an almost 5 per cent swing against Labor in the state with the second largest number of electorates at 38.
Unsurprisingly, the Liberal Party federally, despite the disastrous state of affairs within its state division until now, believes the hunt is on in Victoria in a way that it hasn’t been for decades. For Dutton, the change of state opposition leader on Friday represents a new stability pact for the party in Victoria and one more aligned with the federal conservative position.
It also has ensured the infighting didn’t continue into a federal campaign. As one senior federal Liberal MP says, it has moved the centre of gravity for the party out of the east of Melbourne and into the suburbs.
There has been an almost mythical notion about Victorian voters. John Howard once described Victoria as the Massachusetts of Australia.
And while it may be true that there has been an institutional neglect of Victoria federally from the Liberal Party for decades, Howard’s pejorative assessment that assumes that Victoria is the country’s most progressive state is rejected by Liberal and Labor strategists alike.
The leftist voice from the inner city may be loud but the quiet voters of the outer metropolitan suburban seats of Melbourne are no different to elsewhere in Australia.
Replace the seat of McEwen with the NSW seat of Hume and state differences evaporate. Aspiration and disappointment are shared in equal measure.
The question becomes one of whether the Albanese government has done more to aggravate or alienate suburban Melburnians than anyone else.
A clue to the answer is also contained in the Newspoll demographic analysis, which shows that voters aged 35 to 49 – middle Australia with a mortgage – has been gradually peeling away from Labor for the past 12 months, to the point that the Coalition and Labor are now tied.
This is a significant shift in a group among which Labor had maintained a clear advantage following the previous election. It is this group that most pollsters recognise as the critical swinging vote demographic. They change election outcomes.
Albanese’s problem is just how much will Victorians be willing to also vent their spleen at a federal election in protest against the state government. They have form.
Federal opposition leader Andrew Peacock managed to win an extra eight seats from Labor in Victoria in 1990, which almost cost Bob Hawke the election.
Of all the seats that changed hands at that election, half were in Victoria and all went from red to blue.
Victoria rebelled against Labor at a state level, took it out on Labor at a federal level, and almost changed the government on its own.
The fear that this could happen again is not only a hope of the federal Coalition but a legitimate concern shared by many on the Labor side with an acute sense of history and a deeper understanding of Victorian politics.
No one has suggested that the size of the 1990 revolt in Victoria would be repeated this time around. There is more chance of the Coalition winning three seats in Western Australia than six in Victoria, one Victorian Liberal says. But the economic conditions are ripe for a repeat of a 1990s realignment of Victorian politics with a long-term and economically destructive Labor state government in Victoria dragging on the federal vote at a time of high interest rates.
Added to this is the significant lack of stature Labor now suffers from in Victoria at a federal level, with the retirement of Bill Shorten.
But for Dutton to win the next federal election, he will have to do what no other Coalition leader has achieved in recent memory.
The federal Opposition Leader’s proposition is to convince Victorian voters that they should elect a Liberal conservative Queenslander as prime minister.
Few would have put money on that happening until now. Even Queenslander Kevin Rudd could win only two seats in Victoria amid the landslide victory of 2007.
This shift in the federal dynamic makes Victoria central to the outcome of the next election.
With the federal Coalition drawing level with Labor in Victoria on a two-party preferred basis, at least four Labor seats are at risk, and potentially more.
And without winning sufficient seats in Victoria, Dutton has no chance of victory. Put another way, Victoria and NSW are his only pathway to victory.
In this context, the next federal election is fundamentally different from those of the past. Howard gave up on Victoria and saw NSW, Queensland and WA as the gateway to conservative political prosperity.
But the Coalition has become seriously competitive in a raft of Victorian metropolitan seats.
Labor’s gambit is that Dutton’s brand of politics has rarely if ever been embraced by Victorians. It is deemed by some as too aggressive.
Kennett as premier, for example, was a defender of multiculturalism in the 1990s, triggered by the first wave of Hansonism.
At a federal level, Malcolm Turnbull, despite being from NSW, did well in Victoria in 2016. It is a state that tends to lean small-L liberal, is more aligned to climate and environment issues, and has kept a distance from Hanson-style politics.
Yet working families in the outer suburbs are the same demographic as those in outer suburbs in the rest of the country.
There is a falsehood in the assumption that Victoria is some sort of progressive “upside-down land”, as one Labor figure puts it. There was Liberal Party dominance in the state at both state and federal level through the 1990s. The difference is that there hasn’t been since.
For Labor, the danger is in the unknown. How much are these voters in Melbourne thinking about the state government in a federal election contest and how much is that bleeding into the broader party brand?
It would be no underestimation to suggest that significant resources, from both sides of politics, are about to be poured into the southern state.
From Labor’s point of view, Victoria has become the new defensive line. Labor could hold what it has in Western Australia and NSW but lose its parliamentary majority because of Victoria.
“Victoria is being driven by state factors, no doubt; the question is whether when it comes to the crunch, how they will vote at the federal election,” one senior Victorian Labor figure says.
The challenge for Dutton is whether he can elevate the discontent with state Labor and convert that into winning federal seats.
The opposing challenge for federal Labor is to refocus voters’ attention back on to Dutton and have them look past whatever is happening in the state arena.
But it is a risky strategy to assume Dutton is unelectable in Victoria. Newspoll analysis suggests he is no more unpopular than Albanese in Victoria.
In fact, neither is embraced. And the gap between the two leaders has been narrowing in line with federal Labor’s decline.
Dutton and Albanese are both on the same level of negative approval rating. Yet the Opposition Leader has managed to halve the margin Albanese held over him as preferred prime minister in Victoria a year ago.
The Coalition is becoming increasingly optimistic about Victoria and NSW. The list of seats that it intends to focus on includes winning back Aston, which it lost in a by-election in 2023, when federal Labor’s two-party preferred vote in Victoria was 55-45 but has weakened for Labor following the electoral redistribution. Added to that are the Labor-held seats of Chisholm on a 3.3 per cent margin, McEwen at 3.8 per cent and Dunkley at 6.8 per cent.
Outside chances are Bruce on 5.2 per cent, Holt on 7.1 per cent and even Hawke, which also is considered in play now despite a margin of 7.6 per cent. The Liberal Party also is increasingly confident of winning back Goldstein from the teals, as a more likely outcome than Kooyong.
For Labor, there is significant risk in the seat of Wills, in a battle against the Greens.
Then there is the wild card seat of Macnamara. Jewish Labor MP Josh Burns holds the seat by 12.2 per cent. It is a seat with a very high Jewish constituency. Ironically, it was almost lost to the Greens at the previous election.
The Liberals believe the Albanese government’s foreign policy hostility towards Israel and accusations it has failed to stem rising anti-Semitism could change the dynamic of this seat.
Where Labor recognises its challenges in metropolitan Melbourne seats, it views Sydney as safer.
Where it assumes risk is in the more coastal seats of NSW and the Hunter Valley.
The Coalition is understandably more bullish.
The Labor coastal seats include Gilmore on the south coast and Robertson and Dobell on the central coast north of Sydney.
Farther north, the seats of Hunter, Shortland and Paterson are all on the list for both sides.
Yet the Liberal Party, which has learned from its preselection mistakes of 2022, has candidates across Sydney seats it believes are winnable. Howard’s former seat of Bennelong is now notionally Liberal again following the redistribution.
But the Liberals have put Reid and Werriwa in western Sydney on its list of target seats as well. One senior NSW Liberal has suggested Eden-Monaro also could come into play.
There is no doubt that NSW and Victoria are now the two states most important to the outcome. Even if the Coalition wins back three seats in Western Australia, its only pathway to victory and the 21 seats it would need to win to form government in its own right, is through the southeast.
And for the first time in 30 years it is Victorians who potentially hold the keys.
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