What we’ve learned from the Albanese experiment

Illustration by Johannes Leak

Australia in 2022 embarked upon a new national experiment – a Labor government under a down-to-earth progressive political veteran, Anthony Albanese, who just managed to form a majority government in May but who governs with an assurance that has surprised his own party.

The lesson from recent weeks is that what began as a cautious, even tentative government, has begun to reveal its true character – a government with the audacity and reforming mission to change Australia’s national direction, its priorities and its governing ­values.

Forget the modesty of its ­“safety first” election mandate. At year’s end, the story is that Albanese Labor has the will, the momentum and the parliamentary control to offer a new pathway for the nation.

This is partly a pre-planned agenda but mainly a response to structural challenges Australia faces – including inflation, energy costs, lagging wages, struggling living standards, the climate-change transition, a deepening US alliance and fresh openings with an assertive China that has revised its tactics.

The four standout Albanese departures from the Morrison government are in foreign policy with energetic diplomacy restoring communications with China, in energy policy with a sharp reorientation away from fossil fuels to renewables, in industrial relations with Labor revealing its ­fidelity to trade union interests and the feminised workforce, and creation of the National Anti-Corruption Commission.

Yet Labor will stand or fall on the ability of its Treasurer, Jim Chalmers, to navigate the inflation challenge, deliver tangible gains to households and fund strong government services amid a budget facing structural deficit pressure. In effect, Labor needs to find a new social contract if it ­expects to become a long-term government.

His 26 years in parliament have fashioned Albanese into an astute, crafty and cunning chief political executive, chronically underestimated, a PM who could be mistaken for your local shopkeeper, but whose entire career has been based on patience and a long-run outlook. Albanese, a fixer and facilitator for most of his time in parliament, emerges as a PM ready to delay, consider and then strike, a mixture of prudence yet resolution. Anxious to reassure the public, he shuns radical action yet is ready to embrace ­radical action.

Anthony Albanese, with Treasurer Jim Chalmers during Question Time, has turned orthodoxy on its head since his elevation. Picture: NCA NewsWire / Gary Ramage

On display is the rich political dividend from low expectations. The public gave Albanese a grudging win last May over Scott Morrison and has been pleasantly surprised by the result – so far.

Albanese defies the image of heroic Labor leaders who won elections to become prime minister – Gough Whitlam, Bob Hawke and Kevin Rudd – who saw ­themselves as figures of destiny or the smartest person in the room, or both.

Yet Albanese has turned the orthodoxy on its head. Having fallen over the line with a two-seat majority, Albanese governs with a confidence that reveals the true nature of the 2022 election – it wiped out the Coalition and delivered a progressive majority ­in both houses of the national ­parliament. Australia awaits its remaking at the hands of Albanese Labor.

Albanese has reshaped his political image but remains a fervent progressive. That progressivism is disguised by his backing for strong national security, a deeper US alliance and fiscal responsibility.

Yet his government has forced through parliament its 43 per cent emissions-reduction target by 2030, doubled down on a rapid transition to renewables, intervened in the gas market with price controls throwing into doubt the future role of gas, secured an industrial relations law that includes multi-employer bargaining for which it has no mandate and in defiance of the entire employer community, has signalled its abject distaste for the stage three personal income tax cuts it pledged to honour, and seeks a de facto protection racket for the big super funds in terms of disclosure and transparency.

Labor’s cultural agenda is ­ambitious yet still evolving. Its centrepiece is the proposed voice to be constitutionally enshrined, with Albanese selling the idea as an exercise in recognition and politeness to Indigenous Australians.

He plays down its essence – an Indigenous body sitting next to the House of Representatives and Senate offering advice both to parliament and the executive on any issue affecting Indigenous peoples, a radical change to our Constitution and government.

How would the voice have worked a fortnight ago with the gas price bill, given the legitimate interest Indigenous communities have in gas development and ­policy?

Labor has now facilitated a renewed debate on the future of Australia Day by allowing local councils to move citizenship ceremonies to another day, a decisive boost to the anti-Australia Day lobby. It is guaranteed to fuel ­momentum to change the day while Albanese maintains the fiction that nothing has happened.

Albanese with Yolngu People during the Garma Festival 2022 at Gulkula on July 29.

Albanese pledged “safe change” in the campaign. But that’s not the world of today – it is defined by disruption, a Euro­pean war, great-power competition, a global energy crisis, rising interest rates, cultural hurricanes, post-pandemic adjustments, and unpredictable risk.

Labor governs in an era of uncertainty, volatility and changes in sex, gender and racial norms. Its task is to strike the balance ­between stability and change.

The epic issue for Albanese is whether he can break the cycle of prime ministerial disruption and short-term disappointments that have been the story since John Howard’s 2007 departure.

For the past 15 years – a period of five PMs, from Rudd to Morrison – no PM has been re-elected, and only Morrison even survived for a full-term.

For Albanese, the test of success is breaking this cycle. That means delivering greater governing stability and getting an agenda through the parliament. It requires not just re-election in 2025 but re-election with an increased majority. It means putting down governing roots and laying the foundations for a long-term ALP government that changes Australia decisively, in contrast to the internal havoc of the Rudd-Gillard years.

Nobody expects the Coalition to win the next election but the danger for Albanese is losing some seats and being forced into minority government. That would be humiliation – a failure by Labor to be re-elected in its own right. It would confirm Australia’s plight as a fractured nation with declining support for the major parties, and Labor driven by weakness into minority government based on compromises with the Greens or other crossbenchers.

Albanese, therefore, seeks a consolidation based on a new electoral coalition: delivering tangible economic gains for working and middle-class people, rebuilding a sense of trust in government, being credible in tackling climate change, improving core services in health, childcare, the NDIS and aged care, appealing to the under-40s and women with a progressive agenda, using union support and staying responsive to the business community.

His success over seven months has been remarkable. Labor’s primary vote has lifted from 32.6 at the election to 39 per cent in the latest Newspoll, with Labor’s two-party-preferred lead now sitting on 55-45 per cent.

Perhaps the biggest surprise is the poise and judgment Albanese has displayed in the job and his success in prime ministerial diplomacy. Witness his bilateral meeting with China’s Xi Jinping, with Albanese retaining Morrison’s strategic policy but transforming the tone of China relations.

Albanese meets China's President Xi Jinping in a bilateral meeting during the G20 summit in Bali in November.

The question cannot be avoided: will Albanese return to earth with a thud when the political honeymoon wears off, or does Australia now have a new style of ALP prime minister with the right mix of pragmatism and principle for a successful long haul? The ­answer should come in 2023.

In addition to Albanese’s assured performance, the quality of the cabinet looms as a plus. The standout is Foreign Minister Penny Wong, disciplined, focused and energetic, now rewriting relations with China. The most aggressive, polarising minister is Energy Minister Chris Bowen, aware that while everybody else can wax lyrical about higher emission reduction, his job is actually to deliver them.

But the pivotal figure is Chalmers, who brought down a cautious budget this year with promises of more action and reform in 2023. As Treasurer, he faces an ongoing diabolical task – he must oversee the Reserve Bank’s quest to beat back inflation and then engage with an agenda that limits spending but revives economic growth and living standards.

The crunch on cost-of-living pressures, energy prices and rising interest rates comes next year. The RBA has lifted the cash rate from 0.1 per cent to 3.1 per cent, with more increases to come.

The pain for home mortgage holders coming off a fixed rate will be intense. Labor admits, despite its gas and coal price caps, that energy prices will still rise. Inflation is expected to peak at 8 per cent in the December quarter. Economic growth will decline to 1.5 per cent over the coming year. “Inflation is the dragon we need to slay,” Chalmers says.

He’s right. It is a tribute to Albanese and Chalmers that despite such economic pressures, Labor’s political standing has risen. This was far from a certainty. Few people would have predicted the trend – rising inflation and interest rates along with rising political support. How long can it last? The labour market is tight and wages will continue to rise, though still in negative territory in real terms, given inflation.

During the rest of this term, Labor will face dire budgetary trade-offs. While helped in the near term by a revenue surge off the back of high commodity prices, Chalmers must deliver responsible budgets while accommodating huge spending pressures from the NDIS, healthcare and Medicare, aged care and the defence portfolio.

Albanese won the election on a compassion agenda; he can trim spending but he cannot retreat from Labor’s social-policy commitments.

Albanese wants to avoid the class-warfare syndrome that plagued Labor under the previous era of Bill Shorten’s leadership. Picture: NCA NewsWire / Martin Ollman

At the same time, Albanese pledges to expand the defence budget as his deputy leader and Defence Minister Richard Marles foreshadows a new defence doctrine – deterring an enemy at some distance from Australia – requiring a defence force able to project power and supported in the future by nuclear-powered submarines.

The contradictions are too great. Something has to give. The fiscal logic is inescapable. Under Labor, Australia will become a higher-spending and a higher-taxing nation. Indeed, bigger government has arrived. It is Labor’s inheritance from the Morrison government and the trend will be enhanced.

Fiscal drag is likely to become Labor’s not-so-secret revenue-raising instrument. Chalmers rules out a new windfall tax on the resources and gas companies. He wants to avoid the class-warfare syndrome that plagued Labor under the previous era of Bill Shorten’s leadership. Yet upgrading of the Hawke government’s petroleum resource rent tax still sits on the table. Given Labor’s fierce resistance to any expansion of the GST, the certain prospect is that income tax, already carrying too much of the overall tax burden, will be expected to carry more.

The Treasurer was successful in 2022 in managing public expectations downwards. “Australians know there are hard days to come and hard decisions to accompany them,” he said in his budget speech. Yet during 2023, the government will assume full political ownership of economic and energy outcomes. The pivotal issues are where inflation settles and how bumpy it remains, and how Chalmers manages with a budget containing a structural deficit running at about $50bn annually.

Albanese’s challenge is to find a reconciliation between the compassion agenda on which he won the election and the imperative for Labor to become a government of economic authority delivering tangible benefits.

Albanese and his ministers luxuriate in the idea they are restoring trust and integrity to politics after the Morrison era and the rise of the teals with their moral-based politics. Labor loves to cast itself as a government of adults. Indeed, Chalmers said post-budget that Albanese, by changing the tone of politics, had changed its substance. This went to “how a government ought to behave, how a cabinet ought to operate, how we discuss issues, how we deliberate, and how we come to decisions”.

Albanese, many of his ministers lived through the Rudd-Gillard era and know the obligation they now face.

Labor’s obligation is to deliver higher standards in public life. But the ultimate standard is good government. It is a long time since Labor delivered sustained good government at the national level.

Like Albanese, many of its ministers lived through the Rudd-Gillard era and know the obligation they now face. The issue for Labor is whether in the 2020s, with a low primary vote and a narrow parliamentary majority, it can surmount such obstacles to become the successful long-term administration that Albanese so desires.

The conundrum at the end of 2022 is still alive: what is the real nature of Albanese’s government? Is it modern contemporary or old-fashioned nostalgia?

Labor promises a hi-tech, pro-productivity, high-skilled future but plays with a “back to the future” IR model, an expected higher tax burden, faith in state power, and increasing regulation to solve nearly all problems.

Addressing his Jobs and Skills Summit, Albanese said it was time for participants to end “playing our greatest hits, rehashing the same arguments or reheating old conflicts”. He seeks to move Australia into a new future, yet Labor also remains attached to its mythological past.