Dollars, Donald and who you blame: the key issues that will decide the 2025 Federal Election
The Federal Election will be decided by a few key factors, say experts – and the first big issue is who you blame for your cost of living pain.
Love politics or hate it, you won’t be able to avoid this year’s Federal Election – so get ahead of the pack with this insiders’ guide on the key issues, from the people who cover this stuff every day: the experts at Sky News Australia.
HIP-POCKET PAIN: WHO IS TO BLAME?
Ross Greenwood, Business Editor
How badly do you hurt right now? Has the supermarket shop, paying your power bills, filling your car or managing your mortgage become so onerous that you blame the Government for it? Or do you think it’s all beyond the Government’s control?
The way you answer this might decide the Federal Election. And you can tell by the political reaction to this week’s better-than-expected inflation numbers that senior politicians on both sides are acutely aware of the hurt.
The Government would like to tell you that inflation is something that’s come from overseas; or from the supermarkets. That is has answers, like tax cuts and energy subsidies. The coalition, though, tells you the Government has spent (and borrowed) too much money to quickly bring down the inflation rate: hence interest rates (and the hurt) have remained higher for longer.
The curiosity in both arguments is that Reserve Bank here took an unusual economic step when inflation ran higher. Rather than raise interest rates rapidly, creating a sharp economic downturn, a recession and higher unemployment, as other countries did, we chose to keep rates lower than other places. But rates did rise, which put a dampener on the red-hot home prices here in Australia (which also caused something of a buffer to the higher interest rates). The explanation for the lower rates than overseas was that the Reserve Bank (and Government) wanted to maintain as many people in jobs as possible. Therefore the RBA would allow inflation to gradually drift lower – meaning interest rates would not fall as quickly here as they did overseas.
Now, there is evidence the strategy is working … even as other countries consider the end of interest rate cuts as new economic conditions emerge with Donald Trump’s election victory. But here – and for the election – it comes back to the original question: how badly do you hurt?
DONALD TRUMP’S UNPREDICTABILITY
Annelise Nielsen, Washington Correspondent
When US Vice President JD Vance was challenged to defend returning President Donald Trump’s controversial Defense Secretary pick Pete Hegseth, he unapologetically said “I think Pete is a disrupter. And a lot of people don’t like that disruption. But that disruption is incredibly necessary.”
Disruption is the key word for the second Trump Administration, as they defy federal laws to fire Inspector Generals, cancel DEI programs and carry out what is shaping up to be the largest mass deportation program in US history.
Of course disruption is a far cry from the total destruction we were warned about by Democrats, so maybe we can all take a breath. However that doesn’t mean there aren’t uncomfortable times ahead for the rest of the world, including Australia.
The truth is, we really don’t know how Trump’s foreign policy agenda will play out. And that’s the point. Donald Trump’s unpredictability is one of his biggest assets. The fact he launched and won a trade war with Colombia during a single round of golf on a Sunday shows he knows how to wield that power.
Australia doesn’t have the same advantage as we did last time around. We were early adaptors to the MAGA movement in 2016, before many in the world were taking Trump seriously, because of savvy diplomacy and some astute Australians in the business community.
This time around, after a rough four years of economic malaise and global unrest, and a comeback story that defied the odds, everyone is taking him seriously.
Australian officials in DC are hammering home our $32 billion trade surplus with anyone who’ll listen. But the one thing Trump has promised that our prime minister should take seriously, whoever that may be, is that he sets the agenda. He promised a roaring crowd on Inauguration Day that the “decline of America is over” and he means it.
Trump has the full-throated endorsement of a Republican held congress, and most democrats too, to take on China. Australia should know exactly where our place is in that fight.
FROM BIG MO TO ’BURBS
Tom Connell, Chief Election Analyst
Momentum – or, as it’s come to be known, The Big Mo. It was a term first used in politics by George Bush Senior to describe his 1980 Republican primary campaign. It’s still the most potent weapon to have in a political campaign; and the hardest thing to win back.
Having the big mo almost always ensures victory. Yet the days of nationwide moods appear to be at an end in Australian elections, at least for now. So the major parties are having to more finely target their campaigns, and as a result the campaign will be decided by a series of contrasting skirmishes.
The Coalition thinks it can decimate Labor in the outer suburbs. Cost of living is biting hardest there, and the opposition also wants to tap into the so-called anti-woke agenda invoked by Donald Trump.
Normally the path back to power is concentrated on marginal seats – 5% margin or less – but where the conditions are right the coalition is aiming higher: think Macquarie at 6.3% in outer western Sydney, or Corangamite which takes in Geelong in Victoria, with a 7.8% margin.
The coalition needs to aim higher because it is unlikely to win many Teal seats back, with Curtin in Perth the best chance, although party strategists are hopeful of winning one or two seats back from the Greens in Brisbane.
For the Labor government it feels like an attack on both flanks – the Greens trying to get seats off them for not being progressive enough while the Coalition attacks them for going too far left. It has meant Anthony Albanese is reduced to sandbagging everywhere he goes – trying to hang on to the swag of seats won in WA last time after a 10.5% swing to Labor, having to spend money on inner-city electorates eyed off by the Greens, and on the backfoot in the burbs against an energised Liberal Party.
Arguably all of these problems started when the prime minister handed momentum to the Opposition. In the first Newspoll after the 2022 election Labor led the coalition 56-44% two party preferred, with the PM’s net satisfaction rating at a stratospheric +35%. He whittled away this popularity on the doomed Voice referendum, his net satisfaction at 0% by the eve of the vote, tumbling to -10% in the Newspoll after, and now at -20%. As the old adage goes, he lost his support gradually, then suddenly.
The good news for Labor is plenty can happen between now and the election: most noteworthy of all would be an RBA rate cut. The bad news is the past is littered with leaders who lost the big mo, and never figured out how to win it back.
THE BIGGEST QUESTION IN POLITICS
Andrew Clennell, Political Editor
The biggest question in Australian politics in 2025 is: will Australia end up with a workable parliament after this year’s federal election? The increasing size of the House of Representatives crossbench – the way that all but one of the federal elections since 2007 have resulted in governments unable to, or barely able to, form a majority – plus polls that show a swing against Labor, but perhaps not enough to tip them out of power, point to the most fraught hung parliament situation Australia has faced in modern times.
A scenario where Anthony Albanese’s government lost 10-12 seats, leaving it at around 66-68 seats, and Peter Dutton managed to win 11, taking him up to around 67 seats, would leave both parties well shy of the 76 needed for a majority in the 150-member parliament.
How could either side of politics hope to get anything done?
For Peter Dutton’s Coalition, a narrow loss might put them in an excellent position to win with a majority next time.
But overall it points to a period of instability in Australian politics the sort of which became the norm in the 2010s. That was the period when we had the Rudd-Gillard, Gillard-Rudd, Turnbull-Abbott, Dutton-Turnbull-Morrison spills.
There is a view in the parliament that should Albanese lose more than five seats at election time, his hold on power will be parlous with some of the view that some of his leadership rivals would seek to pounce on what might be viewed as a poor result.
As they wait to enter the campaign, both leaders seem quite confident of victory. Dutton feels he is coming home with a wet sail, with the trend of polls slowly against Albanese.
Albanese feels once Australians see the choice between a government led by him and one led by Dutton, they will go with the devil they know and he can make up ground in a campaign.
The other big thing to look out for in the campaign is will there be any promise for tax cuts from either major party. Surely with inflation coming down, and after a 2-3 year cost-of-living crunch, this is a policy area where both parties will seek to gain crucial last minute votes.
TEALS, TECH AND TALKING LIKE TRUMP
Laura Jayes, Host of AM Agenda
There are three things you need to know ahead of the election:
Teals. The Teal Independent MPs will likely decide the next Prime Minister of Australia. Let me explain: there are seven Teals in the lower house – and while they insist they are not a party, their views are largely aligned. The polls tell us we are headed for a hung parliament, meaning neither Labor’s Anthony Albanese nor the Coalition’s Peter Dutton are likely to be able to win the 76 seats for majority and govern in their own right.
Enter the Teals: they are likely to play kingmaker – so this campaign they should, at the very least, be outlining their criteria for confidence and supply. Will they negotiate with whichever party secures the highest number of seats? Will they be part of any Labor government that do deals with the Greens? Will they negotiate with Peter Dutton given most of these Teal seat also have a high number of Liberal voters and Labor is a distant third?
All pertinent questions, the answers to which cannot wait until after election day.
Tech. Our political leaders are not talking about one of the most transformative advancement of our lifetime and they should be. Generative Artificial Intelligence will impact every single aspect of our lives and change our economy and society in a most profound way. Not in a decade. Now! It’s already happening.
Our politicians need to catch up and get a seat at the table, or risk being on the menu. This conversation about AI is absent from political debate because it poses risks to job security in many industries. Hiding from it won’t make it go away, instead we need to talk about AI innovation and how we can re-skill the workforce to embrace it.
Will Australia create a national AI strategy to remain competitive? How will Australia regulate AI bias, misinformation and transparency? How does Australia protect itself from AI-driven security threats? Tell us!
Trump-talk. Donald Trump’s political style – populist, nationalist and confrontational – is unmistakeable and by the fact he’s US President again there’s a fair amount of proof that it does work electorally. Yes, Australia is different to the US when it comes to our appetite for division, but I think Australian voters do want a bit more straight talk and decisive action.
This election you should expect to see a hint of the Trump effect. Some leaders will and should feel emboldened to take more decisive action and actually lead rather than run every decision through a pseudo committee process.
SIFT THROUGH THE SPIN
Jack Houghton, Digital Editor and Host of The Media Show
Broken promises are common in politics, but Anthony Albanese’s refusal to admit he was guilty of this offence is an insult to every Australian paying an inflated power bill.
He’s blamed international pressures for the strain on your wallets, seemingly oblivious to the fact that his election promise to reduce your power bill by $275 came after Russia invaded Ukraine.
It was a bold prediction, one which never eventuated.
To this day, our prime minister still has not apologised for using this flawed modelling to swindle votes. How can any voter trust his predictions in the future if we cannot agree this promise was broken?
This election will bring fresh promises and more selective, yet aggressive, economic modelling. Our leaders will go to war over whose plan will solve our cost-of-living crisis, armed with data gleaned from think tanks with vested interests and lobby groups seeking handouts.
All politicians are guilty of this and it is our job to be sceptical.
Labor may have driven the last few years of economic woes but the Coalition will want voters to forget that the brunt of our inflation crisis was driven by irresponsible spending during the COVID years.
Many conservative politicians also turned a blind eye to the erosion of our civil liberties during that sordid period.
How can you trust the Coalition if they do not accept at least some economic responsibility for our contemporary mess?
Unfortunately, many in the media will put their own ideas of morality ahead of these fundamental issues, championing so-called independents who parrot questionable figures about climate change, energy and alleged social progress. Journalists will pretend these politicians, draped in matching Teal uniforms, are leading a kinder form of politics, but they are just as ruthless in their pursuit of power as the old guard, and just as allergic to transparency.
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Originally published as Dollars, Donald and who you blame: the key issues that will decide the 2025 Federal Election
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