THE STATE OF AUSTRALIAN POLITICS AHEAD OF THE 2025 FEDERAL ELECTION – FREYA LEACH

As Australians waited to find out whether the prime minister would call an early federal election in 2025 or go his full term till May, opinions varied on what the outcome of that election might be. In this atmosphere, The Sydney Institute asked two younger contributors to the public debate to offer their sense of where politics might be heading in the lead up to any election. On Wednesday 12 February 2025, Joe Hildebrand, Australian journalist and TV show host, joined Freya Leach, Director of the Centre for Youth Policy at the Menzies Research Centre to put their views to The Sydney Institute on the state of the political parties for the federal election in 2025.

THE STATE OF AUSTRALIAN POLITICS AHEAD OF THE 2025 FEDERAL ELECTION

FREYA LEACH

With the 2025 Federal Election fast approaching, Australia finds itself at a political crossroads. The latest polling from Roy Morgan and Redbridge confirms what many have suspected – if an election were held today, we would be heading for a hung parliament.

On a two-party preferred basis, the Coalition leads with 51.5 per cent, while Labor trails on 48.5 per cent. This means that neither major party would win a majority outright – they would need support from minor parties and independents to form government.

When we break it down further:

• Primary support for the Coalition has climbed to 40.5 per cent – a significant shift.
• Labor’s primary vote has fallen to just 29 per cent.
• The Greens are down to 11 per cent, their lowest level since November 2022.
• One Nation has dropped to 4 per cent
• Independents have slipped to 9.5 per cent.

In the outer suburbs, where elections are won and lost, Labor’s primary vote has collapsed to just 27 per cent, and it appears the shift is going directly to the Coalition. In just a few months, Coalition support has jumped from 40 per cent to 46 per cent, a clear sign that Australians are looking for an alternative government. In this next election, every single vote will be up for grabs. The idea of lifelong political loyalty is over.

In 1967, 72 per cent of Australians said they had always voted for the same party. By 2022, that number had plummeted to just 37 per cent. Australians today are far more willing to switch their vote. This is a challenge that both major parties will have to confront. They will need to work hard for every vote.

The fragmentation of the vote, with as much as 30 per cent going to minor parties and independents means that preferences will be very important, as we saw last week in the Prahan by-election.

At the last election, Labor scraped into government with 77 seats, later adding Aston in a by-election, bringing their total to 78. The Coalition holds 57 seats. For the Coalition to win government outright, they need to gain around 19 seats – an enormous task. To finish ahead of Labor, they need roughly a 3.6 per cent swing. To secure a majority government, they need 5.3 per cent versus the last election.

Just looking at Australian political history, the Coalition is unlikely to pull off such a major feat. The last time a first term government was voted out was in 1931. But the last couple years have shown us that history is no longer a reliable guide to Australian politics. Anything is possible.

So, what is the most likely outcome at this stage? A Labor minority government.

Unfortunately, this is the worst possible outcome for our country. If Labor is forced to govern with the Teals and the Greens, Australia will be held hostage by a small group of radical activist MPs. Every piece of legislation will come at a cost – serious, ideological concessions to those on the far left. If you think Labor’s position on Israel is bad now, imagine what happens when they need the Greens’ support to pass every bill.

Now we’ve established where everyone stands going into the next election, I’m going to dive into some themes and drivers we will see emerge. The most important thing to note is that the ideological divide between major parties is the most pronounced since Whitlam won in 1972. The left of Labor is up against the right of the Liberal Party. The philosophical differences between Albanese and Dutton are stark.

To truly understand what Albanese stands for, we need to revisit his maiden speech in parliament in 1996. He described himself as a “Democratic Socialist” – a firm believer in big government, high spending, and public sector expansion. He said: “Governments and commentators must look beyond the bottom line in the monthly and annual accounts. Such an approach distorts the policy-making process to the detriment of medium- and long-term vision.” He also argued that: “Australia must have an interventionist economic policy that is targeted at the specific needs of different regions and communities.”

This is ultimately the philosophy that underpins every decision Albanese makes – a belief in more government, more spending, and more regulation. On the other hand, Dutton represents a completely different approach – one that prioritises fiscal responsibility, national security, and individual freedom. In his 2002 maiden speech, he said, “I am a strong advocate of the rights of the individual and I am certainly an advocate of minimalist intervention by government in our lives.”

This philosophical contrast impacts every aspect of policy that Australians will be evaluating when heading to the ballot box. The number one issue that will be front of mind for most voters is the cost of living. Here we see the ideological difference between Albanese and Dutton on full display.

Albanese’s solution is energy rebates, wiping 20 per cent off HECS loans and increasing a raft of welfare payments. Since the election, he has abided by his big government philosophy. Labor has spent an additional $347 billion. Growth in total government spending (state, federal, local) accounted for 55 per cent of total GDP growth. True to Albanese’s desire for a strong and proactive public service, Labor have added 36,000 public servants. So, the essential strategy is to spend more and subsidise more, consistent with Albo’s democratic socialism. Dutton’s answer to the cost of living could not be more different. His solution is to rein in government spending in the hopes that will bring down inflation.

Now the question is, which approach will Australians side with – more government or less government? When a government spends money, they do it in one of two ways; they either raise taxes directly, or they tax you through higher inflation. Australians have experienced both. Higher inflation has caused bracket which has resulted in Australians paying 23 per cent more income tax over the last 3 years.

Inflation itself is a hidden tax because it reduces purchasing power and living standards. Since the election, real disposable income has fallen by 8.7 per cent on a per capita basis and Australians have experienced the sharpest decline in purchasing power across the OECD. Disposable incomes are now two per cent lower than they were before the pandemic, but other OECD countries, they are 7.7 per cent higher on average.

So, on cost of living, while Labor has devoted billions to providing cost of living relief, at its core there is a difference in political philosophy between the two major parties. What Labor has not come to terms with is the fact that in this instance, the government spending is the cause, not the solution to the cost of living crisis.

This is not to absolve the Liberals of responsibility for inflation. The extraordinary monetary and fiscal expansion during Covid set our country on a path of high inflation and artificial growth but I’m sure many in the Morrison government would do things differently if they had their time again. Make no mistake, the inflation we are seeing now is a direct result of this government’s spending because it takes about one to two years for its inflationary impact to be seen.

If the Coalition can withstand the scare campaign about them cutting various programs, like Medicare or the NDIS, they will win the cost-of-living debate. Australians aren’t stupid and they don’t reward hand-out politics.

It’s much easier to buy off special interest groups with one-off handouts, like grants. They mean a great deal to a small group and impose only a small cost on the rest of us. Labor has run out of ideas and is now reverting to this strategy. In January, Albanese zigzagged the country on a spending blitz in a bid to win over key special interest groups. In the long-run, this will only compound Australia’s challenges because the government will have to expand to administer these new programs and grants and the additional spending will add up. As RBA Governor Michelle Bullock has warned, big spending will keep inflation higher for longer.

Just a couple of years ago the so-called “Culture wars” were shunned by mainstream politics and relegated to Sky after Dark and fringe right-wing characters. But if the US election proved anything it’s that the culture has shifted, and so has politics.

Like the Democrats in the US, Labor has increasingly shifted away from its traditional working-class, unionist base and embraced the inner-city elite, replacing socialist economics with cultural progressivism. This has alienated many culturally conservative voters who were once loyal to Labor but now feel left behind by its new priorities. The No vote in the Voice referendum was strongest in many traditional Labor areas, proving that the parliamentary Labor Party is disconnected from its own base.

In the long-run, the existential crisis for Labor is that their raison d’etre is becoming obsolete. In 1962, union membership peaked at nearly 60 per cent of the workforce it has now decreased to 13.1 per cent. Younger workers are the least likely to be members of a trade union: with only 7.3 per cent of young adults aged 20-24 being union members. In fact, Gen Z, the under 30s, are becoming the most entrepreneurial generation ever. McCrindle Research found four out of five them would rather work for themselves.

Why is this a problem? Labor’s core offering is its union movement. For idealistic young progressives who are making their way without the protection of a union, if they are going to be left-wing, they will embrace the true progressives; the Greens. Labor risks losing its working-class base to the right on social issues and energy policy, while being outflanked by the Greens on the left.

The new cultural mood of the West, or the vibe shift epitomised by Trump’s election, means a return to common sense social issues, a renewed pride in Western Civilisation and a desire to end a decade of radical woke social policy.

The momentum is with the Coalition. It will be hard for Labor to turn that around. The main question is not whether there will be a swing, it’s how large the swing will be. If it’s over 5 per cent, the Liberals have a shot at pulling off the impossible and forming majority government. It will all hinge on which political ideology Australia buys; the progressive, big government socialism of Albanese, or the austere, conservative liberalism of Dutton.

If Dutton can argue his case and hold the line, I think we will see a change in government on or before 18 May.