AUSTRALIAN POLITICS 2024 – JENNIFER HEWETT

As Australians came out of their holiday season for 2024, it was increasingly clear that the cost of living had become a nagging sore for the federal government of Anthony Albanese. With a backflip over the Coalition’s promised tax cuts due in mid-2024, there seemed to be a pause in the negativity flowing to the government. Would the year pan out to be a turn around of feeling or more bad news to come? To assess where politics might be at as 2024 began, Joe Hildebrand, Australian journalist and television and radio presenter, and Jennifer Hewett, National Affairs Columnist for The Australian Financial Review, addressed The Sydney Institute on 7 February 2024 to reflect on the year ahead.

AUSTRALIAN POLITICS 2024

JENNIFER HEWETT

It is great to be here again after quite a break. This topic is pretty broad, and as the promo for this event explained, 2024 has begun with a bit of a bang for the Albanese government, rather than the usual summer torpor.

I’m a bit weary about predicting the year ahead in politics, or anything else, given all the unknowns and the recent track record of experts, particularly in economics, predicting anything at all. But the key theme of this year is, the government wants to be seen to be doing things. Yet it’s also showing a relative lack of interest in major reform with short term politics trumping long term policy, and the problems in implementation.

In general, Labor’s modus operandi remains various ministers operating in a disconnected, often contradictory, way, although under the general rubric of fairness. It is this rather than signalling any comprehensive or coherent strategy to grow the economy. But still, it’s very clear this week that Labor’s mood has dramatically improved since its about turn on tax cuts. That’s evident in Albanese’s much more aggressive and livelier demeanour in parliament, boosted again by the likely deal on industrial relations changes today.

Chalmers and Albanese are counting on steadily improving the outlook for inflation, and therefore interest rates, with cuts to come in the second half of the year to make everybody feel better. Most people were confused about what the government was doing, and certainly what it was doing for them. The cost-of-living crisis became code for a government not living up to its promises, and not in control of events.

Complaining about nine years of Coalition in action wasn’t enough anymore. Labor has been finding the hard, slogging work of delivering in government, particularly in a gridlock federal system, is frustratingly slow, and often doesn’t progress you very far. Even assuming you have a clear plan, which Labor didn’t appear to have at all. Then there are nasty surprises. The government’s inept response to the High Court’s decision on immigration, leading to the release of people in detention, was particularly damaging politics. It underlined the claim to incompetence, or the fact that Labor could be trusted on border security in all the marginal electorates it needs to keep onboard.

This compounded growing anger over the increased costs of rents and the dire housing shortages, with Australia’s unprecedented high immigration levels – over a record 500,000 last year – sharing the blame. For that reason alone, the timing of the Christmas break was particularly fortuitous, with everybody switched off. One senior Labor figure said to me this week, “Just imagine what would have happened if the High Court decision had been now rather than November.” But that’s then, and this is now.

The timing of the Dunkley byelection – you probably don’t know where it is, but it’s just south of Melbourne – on 2 March was shaping up as a potential disaster for the Albanese government. That’s in total contrast to winning the Aston by-election last year in a triumph. Peter Dutton is hardly popular in Victoria, nor is the Coalition really able to frame a coherent, positive narrative itself. But it was getting some cut through, and the sense of grievance with the government was growing.

So, Albanese decided that insisting his word was his bond wasn’t worth it, not in the face of selling the idea of fairer tax cuts for 84 per cent of Australians. After the Coalition made the only logical choice to back in the tax cuts, he’ll still make much of the victory. The $16/week that people say will be for the average earner isn’t much. But it still gives Albanese and the government an easy story to sell, and a definition that they’ve been lacking.

We should also note that although the Stage 3 tax cuts and the original tax cuts were the result of the Coalition government, the revised tax cuts means that most people will be getting a lot more than $16/week; they’ll be getting the combined effect. They’ll thank Labor for it, many of them. Even if they say it’s not enough. Certainly, it means that Labor is being encouraged by the early polling in Dunkley and also the reaction. It’s banking on the fact that people don’t like politicians that much anyway; they don’t trust them that much, and they don’t expect integrity. So, the immediate political cost is far outweighed by keeping the Dunkley seat safe.

The next down payment on getting Labor’s momentum back, and hopefully more popularity, will be the budget in May. There’ll be more handouts. The rationale that the government only changed its mind on Stage 3 because of the broader economic situation changing, and global circumstances, is complete bunk. And everybody knows it. But, integrity, it turns out, is a very malleable concept, even if it was used to great effect by the Teals and Labor against Morrison at the last election.

The catch is that all these tactics go to the grim outlook for any long-term economic policy reform under this government. Working for the AFR, you would expect me to say that. This may be just like the last government, but there’s far less excuse, given the numbers in the Senate and the ability of a Labor government to – if it’s proposing some sensible economic reform – get the Coalition onside a bit more than Labor’s ability to scream about how unfair it is. That will be tested, of course.

A sensitive Jim Chalmers claims the result of the tax changes is delivering reform as well as relief. He’s very keen to stress that. But he knows that any reform aspect of Stage 3 was always very modest; now more so. It’s mainly just a temporary return of some of the worst of bracket creep. There’ll clearly be no attempt at large scale reform packages to try and alter Australia’s unduly heavy reliance on income tax, and making what is already a highly progressive income tax system even more so.

Prepare for a lot more tinkering at best, under the banner of fairness. But certainly, the era of grand nation shifting ambition and cutting personal taxes in the nature of Kelty and Keating is long gone. Chalmers is instead crossing his fingers about how long it will take for Australia to follow the rest of the world on curbing inflation and cutting interest rates without unemployment rising too highly. That will provide the political cover they need for anything else; that’s their plan. Then you add in the announcement of things like the inquiries into supermarkets in order to be seen to be doing something on prices. Despite the rhetoric, these inquiries won’t make much difference to prices for consumers, but they’re a useful sponge for complaints, and to be seen to be doing something. So, the government can say, “Look, we’re acting to stop any gauging by nasty big businesses.”

Having a mild summer – although it hasn’t always felt like that in Sydney – has been helpful. It means Labor can at least suggest energy prices may come down rather than keep going up, given the decline in wholesale prices. The continued blowouts and delays in building transmission lines for renewables, and the cost of all that to budgets and the consumers, won’t be apparent – or as apparent – for some time.

Likewise, Labor is confident that the long-term cost to the economy and productivity of Tony Burke’s backward looking industrial relations agenda won’t be apparent either to most people. Unemployment will go up, but hopefully not by that much. In the meantime, its latest rounds of changes will probably be relatively popular with a lot of employees, just as its backing of wage increases has been. The right to disconnect from work – this fuzzy thing that’s just been agreed on today – probably seems like a good idea, particularly to young voters who are always on their tech.

Burke, who is extremely close to Albanese, is keen to give the unions as much of their wishes as possible, that’s very plain. That has as much to do with his own personal ambitions in the future, as flying the banner of restoring real wages or better terms and conditions for workers. But the Liberals remain, at the moment, too scared of the memory of work choices to mount a full-scale attack on what’s going on. To cite their complaints, they also know they don’t have the numbers to block it anyway, given the numbers in the crossbench in the Senate, and that predisposition there.

Unlike much of the rest of the world, there won’t be an election this year, I don’t think. Albanese is not inclined to it, despite some enthusiastic talk from people in his office. But what also isn’t happening, is any real national focus on how to improve productivity and economic dynamism in a slowing economy. Instead, Labor is relying, quietly, on commodity prices staying strong, and the labour market staying relatively strong, in order to keep that revenue flowing in.

What also will not happen are any serious cuts in spending. The supposed curbs or reduction in spending on the NDIS, for example, is really a joke. It’s an expression of hope over experience. There is nothing going on. The government’s budgeting savings in the future that it has no plan, no ability to implement. Certainly, at the moment, there’s no indication that anything’s going to change.

This brings me to another big area of spending where the money and the programs don’t match the rhetoric for all the wrong reasons. Defence spending is massive, even if it wasn’t increased in the last budget. But it’s also massively wasteful and incredibly ill designed. Labor made much of attacking the Coalition for this, and for defence by press release. But it’s just as guilty of repeating that approach. In fact, the record so far, although relatively short, is worse given the urgency of the need, and the inanity of various decisions it’s taken, including the refusal to acquire armed drones anytime soon, or the recent decision to bury Taipan helicopters, rather than supply Ukraine. Richard Marles looks the part, but he’s actually more well known amongst his colleagues for his love of golfing, than for any decisive action by a Defence Minister supposedly facing such challenging circumstances.

Penny Wong, by contrast, also looks and sounds the part, but she does deliver some things that matter, including her regular trips to the Pacific. The contrast with her near invisible predecessor, Marise Payne, is instructive. To a large extent, however, she is still a preacher of foreign policy circumstance. Labor was fortunate, for example, that the change of government gave Beijing the cover it was looking for to soften its rhetoric and its unsuccessful approach to strong arming Australia. But this week’s suspended death sentence for an Australian citizen demonstrates how superficial all that is, and how vulnerable the détente is, given what China is actually doing and what it intends to do. However, Labor has largely continued the Coalition approach of strong rhetorical support for the US alliance, and military cooperation. Although, as we have said, not actually coming up with the hardware or the ability to do much about it.

Just as the domestic political turmoil in the US is complicating Biden’s re-election chances, the war in Gaza is confusing the government’s backing of Israel’s right to defend itself. That includes, for example, Labor’s attempts to assuage sentiments of various domestic constituencies, such as Muslim supporters in Western Sydney, with those of fearful Jewish communities suspicious of any weakening of support for Israel out of sympathy for the plight of Palestinians. The intransigence of Benjamin Netanyahu’s government only makes Labor’s confusion more obvious, and that confusion about the alliance will be exacerbated this year if Trump wins the US election in November.

In short, I’d like to be more positive about the year ahead. After all, it is true that the war has avoided last year’s fears of imminent recession. The soft landing still seems most likely, at the moment. Australia has been expert at muddling through, despite the politicians and warning signs. As Michelle Bullock, RBA Governor said this week, what worries her most is where the next shock is coming from.