June 2019


The Morrison election: What we know now

By Richard Denniss
Image of Bill Shorten on election night, May 18 2019

Bill Shorten on election night, May 18, 2019. Photo by Emma Phillips

Why did low-income voters turn to the Coalition while wealthy urbanites voted Labor?

Under Bill Shorten, the Labor Party came closer to winning the blue-ribbon Liberal seat of Higgins than it ever has before. The electoral margin in many other Liberal heartland electorates collapsed for the second election in a row. Wealthy voters across Australia voted for Labor’s wealth-redistribution and climate agenda. Low- and middle-income voters were scared away from the party promising to close the loopholes favoured by the wealthy, and into the arms of Clive Palmer and Pauline Hanson, both of whom then directed preferences to the Coalition. As a result Scott Morrison is still prime minister.

What the hell just happened?

Despite leading in the polls for two years, when it came to “the only poll that counts” there was a 0.9 per cent swing away from Labor, and Morrison delivered a devastating blow to the entire progressive movement. The Labor Party framed the election as a referendum on climate policy and wages. The victorious Liberals framed the election as a test of economic management, having doubled the public debt in their six years in office. Well played.

In some ways nothing much has changed. The Coalition was in narrow majority government after the 2016 election and will hold a narrow majority after this election as well. And just as it had needed to cobble together crossbench senators to pass bills through the upper house before the election, the same is true today.

But so much has changed. Morrison promised to have no effective climate and energy policy, to do nothing about wages growth and to cut spending on public services. And while there is no mention of mandates in the Constitution, there is no doubt the Coalition will now find it easier to do more things than anyone thought possible when parliament last sat.

How did it happen? How did every pollster in the country spend a year calling a swing to Labor, when in the election there was a swing away? The only person I know who really saw it coming was my boss, Ben Oquist. I’ll explain how he knew shortly, but beforehand, a confession. I was completely wrong. In fact I was so convinced Labor would win that, well before the election, I pitched the idea of writing an essay for The Monthly on how Bill Shorten won.

But miracles happen, and writing this piece about why Labor lost is my penance. Hopefully we can all learn something useful from time in the wilderness, but we will need to look carefully. The stakes are too high to simply look away.

The clearest lesson from this election is that good old-fashioned scare campaigns work. The Liberal Party spent the election talking about Labor’s plans to introduce death duties (it had none), to tax retirement (in fact, to remove tax refunds from the 4 per cent of retirees who pay no tax but still get tax refunds), to tax rents (which negative gearing proposals would not have led to) and to tax cars, saying that even people who don’t have electric cars will have to spend thousands of dollars installing car-charging equipment in their homes. And Clive Palmer spent $60 million reinforcing those messages. The Liberals claim that all is fair in love, war and elections, and that “Labor started it” by suggesting the Liberals planned to privatise Medicare (as opposed to parts of it). But where does that leave Australians who believe in honest politics and elections as contests of ideas?

I’m not sure the 2019 election result means Australia is inherently more conservative any more than the 1993 election result meant Australia was inherently more progressive.

So what do we know?

We know swinging voters do not vote with their material interests in mind. Swinging voters in low- and middle-income seats like Lindsay in Western Sydney and Herbert in Central Queensland voted to protect the franking credit rebates and superannuation tax concessions that flow overwhelmingly to the wealthy residents of wealthy blue-ribbon Liberal seats like Higgins. And swinging voters in those blue-ribbon Liberal seats swung overwhelmingly to the party promising to tackle climate change and provide free healthcare to all cancer patients. North Queenslanders who rely far more heavily on the Great Barrier Reef than coal-mining for their jobs voted for coal and climate policies that will do the Reef, and their tourism industry, enormous damage. And Clive Palmer helped the Coalition he once spurned to win a scrappy election. Who said voters only think about themselves?

What else do we know?

We know that Queensland and Western Australia are different. Labor won a majority of the two-party preferred vote in a majority of the states and territories. But the fact that progressives won more lower house seats than conservatives in New South Wales, Victoria, South Australia, Tasmania, the ACT and the Northern Territory doesn’t matter for the simple reason that the Coalition won 23 of the 30 seats in Queensland and 11 of the 16 seats in Western Australia. The Coalition’s thumping majority in regional Queensland was enough for them to overcome Labor’s comfortable majorities across the rest of the country. Texas prevented civil rights reforms in the United States for a century, and it seems the Australians who have the most to lose from climate change (and who have the most solar panels) have the least interest in addressing it. For now, anyway.

We know that on polling day the people who care the least decide the most.

Most people vote for the same party year after year. Indeed, millions of voters never change their vote at all. Some people spend the election campaign thinking about policies and candidates, and make their mind up close to polling day. The pollsters call these voters “undecideds” and tend to allocate them fairly evenly to the major parties when estimating the final vote. Some voters literally make up their minds while they are standing in the polling place. It’s impossible for pollsters to guess which way these undecideds will jump, and clearly the vast majority of them decided not to vote for Labor.

We know electoral polling doesn’t work anymore. When Hillary Clinton won the popular vote but lost the presidency to Donald Trump the world was shocked. It was possible to blame low voter turnout and the intricacies of the US presidential voting system, but the simpler explanation is that the polls were wrong – just as they were wrong about Brexit, wrong about the last Victorian state election, wrong about the last NSW state election and wrong about Scott Morrison.

We know fear beats hope, but only on the undecideds and not in Victoria. Two years’ worth of polling told us that the Liberal Party’s climate scepticism and hostility to same-sex marriage was driving traditional voters away, and those polls were right. Thirty seats held by the Coalition had swings against the government. But 26 of those seats did not fall on the night. Labor’s “class war” won over a lot of former Liberal voters, but those voters weren’t concentrated in the one area, so Labor picked up few new seats. Who knew broad appeal would be a problem for Labor?

We also know that the media doesn’t handle lies well. As we should have learnt from the experience with climate-science deniers, the media struggles with the competing objectives of “providing balance” and “not providing a platform for bullshit”. The media tends towards the former on the basis that the audience is smart enough to decide for itself, even though the result of such optimism is rising greenhouse gas emissions and declining vaccination rates.

Ben Oquist is one of the smartest people I know. He has my old job leading the Australia Institute. He was right to think that Labor was going to struggle to win the election. Plenty of journalists and politicians asked him for his assessment, and plenty were as unconvinced by his apparent pessimism as I was. Ben and I discussed and debated our relative electoral analyses constantly for the past six months, and, while neither of us ever changed our minds, we were always willing to keep discussing it. Both of us think that debate matters.

I have been involved in a lot of elections and have paid very close attention to many more. Years of dealing with desperately ambitious candidates, desperately insecure candidates and, quite often, desperately ambitious and insecure candidates have hardened my heart and closed my ears to people’s “vibe” and “feelings”. I rightly predicted the election date by ignoring all of the “signs” of an early election. In the absence of access to the parties’ internal seat-by-seat polling, all I had to go on was two years’ worth of published polls showing Labor comfortably in front. Based on all of the available information, I was confident Labor would win. I ignored “signs”.

I was right to ignore my feelings and to focus on the partial information I had, but I was wrong to be so confident in my conclusion. Ben never said Labor would lose, but he remained sceptical that the party would win because no one could provide detailed information on how it would win, while many could provide a flood of information about why it should win. It’s a crucial distinction.

Ben knows how to count. Having worked in the Senate for 20 years he knows better than most that it takes 39 votes to pass a bill through the upper house and that no matter how excited or committed 38 votes for yes are, 38 is a loss. Parliament is an all-or-nothing business.

It takes 76 seats in the House of Representatives to form a majority government in Australia. Over the past six months Ben quietly asked me, and a lot of other people, which seats Labor would win to get them to that magic number. I would rattle off a few seats and he would ask me if I had polling to support that. I’d say no, and the dance would continue. Labor said it was in front, but never convinced Ben it was in front in enough specific seats. Many unions and NGOs relied on the same arguments and lacked the same answers. Someone I love and respect asked me to tell Ben to keep his pessimism to himself. Like all good leaders, he wouldn’t. Right up until election day he was asking journalists, party insiders and others: which seats get Labor to 76?

My electoral analysis was framed around what economists call a “top down” approach. I assumed that if there was a nationwide swing to Labor, the swings in the individual seats would sort themselves out. Economists use such thinking all the time when they argue, for example, that if the national economy grows rapidly then unemployment will fall across the country. But, of all people, I should have known that there is nothing inevitable about GDP growth creating jobs evenly across the country; on the contrary, most of the jobs created in recent years have been concentrated in our big cities. A bit like Labor’s new voters.

Ben’s analysis was “bottom up”. He focused entirely on how many seats Labor had and how many it needed to win, and couldn’t get straight answers from anyone claiming that the necessary seats were in the bag. His focus on the detail made him question the orthodoxy.

Australia is one of the richest countries in the world, but because we are one of the lowest-taxed countries we feel poor. Most Australians believe that we can’t afford to have the kind of quality public services we had in the 1970s or ’80s. And most Australians take for granted that we can’t afford the kind of services that voters in Sweden, Finland, Norway or Denmark enjoy every day. But most Australians are wrong.

It’s the job of a think tank to flout conventional wisdom, and for more than 10 years the Australia Institute has called on our parliaments, state and federal, to collect more tax and spend more money on high-quality services. Such a progressive strategy was seen as economic and political madness by Labor leaders Paul Keating, Simon Crean, Kim Beazley, Mark Latham and Kevin Rudd.

But Bill Shorten and his team thought otherwise. They put forward a raft of proposals to collect a lot more money and to spend that money on better services. They persuaded a lot of high-income earners in Liberal electorates that such an approach was fair and desirable, and they nearly won the election. But nearly doesn’t count.

Perhaps the cruellest blow for Shorten is that his party’s polling told him he was in front and that people wanted vision. He spent years developing that policy agenda in consultation with his colleagues and experts. He took that advice and lost an election everyone told him he would win.

Shorten’s critics have been quick to argue that he never should have made himself the target, and that only governments should have bold agendas. The concession speeches hadn’t even commenced before the twitterverse was comparing Shorten’s agenda to John Hewson’s spectacularly unsuccessful “Fightback!” plan, which gave Keating three more years, albeit then ushering in 12 years of Labor in Opposition.

So is timidity the new lesson for Labor? I think not.

Kim Beazley and Simon Crean were timid and they didn’t win. Neither did Hillary Clinton. At precisely the time that progressives in the US are calling for a Green New Deal, a raft of progressives inside and outside Labor are sucking air through their teeth and explaining how they always knew that caution trumps passion.

To be clear, Labor lost. But there’s a lot more to the election results than meets the press gallery’s eye, and a close look at those results reveals that boldness has more fans than the headline result suggests.

Labor got trounced in Queensland allegedly for failing to wholeheartedly endorse the Adani coalmine, but significantly there was no real swing to the Liberal National Party in Queensland at all. All that support for Adani boosted the LNP primary vote in Queensland by only 0.3 per cent, while the Greens vote rose 3.7 per cent in the Senate. The Coalition’s $5 billion Northern Australia Infrastructure Facility (NAIF), which would help subsidise the Adani project, won virtually no new voters in the home state of the country’s most controversial mine.

Labor’s woes in Queensland stem directly from the fact that Pauline Hanson’s One Nation and Clive Palmer’s United Australia Party (UAP) had a combined swing to them of 6.7 per cent and fed most of it back to the LNP in preferences. In previous elections One Nation had been more even-handed in the way it recommended preferences, but this time it provided full-throated support for the Coalition. As Palmer said after the election, “We thought that would be a disaster for Australia so we decided to polarise the electorate and we thought we’d put what advertising we had left … into explaining to the people what Shorten’s economic plans were for the country and how they needed to be worried about them … Ninety per cent of [UAP] preferences flowed to the Liberal Party and they won by about 2 per cent, so our vote has got them across the line.”

It’s also important to remember that Queensland Premier Annastacia Palaszczuk had an unlikely win at the last state election after refusing to pass on federal government subsidies to the Adani coalmine.

And let’s not forget that Queensland voters are volatile. In 2012, Campbell Newman’s LNP government won a landslide victory and was expected to govern for up to three terms, with a massive swing of almost 16 per cent that saw Labor reduced to just seven seats. At the following election both Newman and his government were booted out in surely the most dramatic reversal of political fortunes in Australian political history. Unfortunately for most newspaper readers, some election analysts have short memories.

Supporting Adani didn’t win the Liberals new votes across Queensland but it certainly lost them a lot of votes in the southern capital cities. And if the mine goes ahead it will likely cost them even more in three years’ time.

Here’s a Labor advertisement that, in hindsight, it should have run:

If your mum got cancer, could she afford tens of thousands of dollars to fight it as hard as possible? Labor wants to make all cancer drugs free and the Coalition wants to give $77 billion in tax cuts to those on $180,000 or more. The choice is clear. Vote Labor.

Not all fear campaigns are based on lies.

Australians are understandably afraid their loved ones might fall ill. And they are understandably afraid of having to choose between meeting their mortgage payments and paying for life-saving medicines. Labor went to the election promising $2.3 billion to make that fear go away – but it barely talked about it in its ads.

Childcare costs working families far more than electricity bills, and Labor went to the election promising to make childcare free – but it barely talked about it in its ads.

The Coalition didn’t bother to say how it was going to fund $300 billion of income tax cuts for the simple reason that it knew no one really cared. Donald Trump is now running a budget deficit of $1.1 trillion per year while claiming it’s okay because he used to be a property developer.

So, again, what the hell happened?

Labor was out-campaigned. The once fearsome “ground game” of the unions and GetUp was more sizzle than democracy sausage. The Liberals have quietly succeeded in building their own armies, largely off the back of specific church and migrant communities. And while the Liberals had one main message, Labor had many.

In hindsight, the biggest mistake Labor made was to spend too much time talking about all the revenue it planned to raise and not nearly enough time talking about what it wanted to spend it on. While its tax agenda was progressive, Labor’s messaging still tried to make a virtue of its fiscal conservatism. To prove it was “good with money” Labor always linked its new spending to its new taxes. To prove it was a “good economic manager” Labor promised to use much of the new revenue to deliver bigger budget surpluses and a smaller public debt. One thing is clear: voters don’t care about budget deficits any more.

In the six years after then opposition leader Tony Abbott declared we had a “budget emergency”, the Coalition handed down six budget deficits that added a combined $201 billion to our public debt. But no one other than Labor seemed to notice. After decades of allegedly neoliberal politicians telling low-income earners about the need to tighten their belts, the election campaign saw the Coalition announce an orgy of debt-funded tax cuts. And it won. Labor was punished for its conservatism, not its class war.

In short, the Liberal Party talked about its plan to spend hundreds of billions of dollars on income tax cuts and the Labor Party spent the whole campaign talking about how it would fund new spending initiatives that few people had heard of or understood.

The amount of revenue governments collect is important, as is the manner in which they collect it. Taxes on carbon pollution are far more efficient and equitable than taxes on fresh food, which is why the GST has so many exemptions. But the fact that Labor had clear plans to collect more revenue, and to reduce income inequality in the process, does not mean that it made sense to focus on those plans and not on how new services would let a Labor government improve people’s lives.

As one of the architects of the idea that ended up becoming Labor’s biggest revenue measure – the $11 billion plan (over four years) to abolish tax refunds to people who pay no tax – I can honestly say that I never expected it to wind up at the centre of a national election campaign. Not because I think it’s a bad idea – and not because I think political parties should hide their plans the way Abbott hid his plans to slash spending back in 2013 – but because I can say with confidence that almost no one knows what an imputation credit is, and everyone knows what cancer is.

Peter Dutton’s primary vote in the Queensland seat of Dickson went up by 0.9 per cent. As did George Christensen’s in the seat of Dawson. The so-called member for Manila literally spent more time in the Philippines than he did in the federal parliament, and his electorate rewarded him with a primary vote increase. Such outcomes are hard for many to comprehend, but while they make for powerful stories, they don’t provide a powerful description of what happened on May 18.

Nationwide there was a near-identical primary swing against both the Coalition (0.7 per cent) and Labor (0.9 per cent), and while the LNP collected 23 of the 30 Queensland seats, they did so off the back of a tiny 0.3 per cent swing. The UAP and One Nation gave the Liberals their northern landslide.

In the seat of Kennedy, the boundary of which surrounds where the Adani mine will be located, the Liberal vote fell by 5.3 per cent. In neighbouring Leichhardt, the Liberal vote fell by 2.3 per cent and Labor picked up an extra 1.3 per cent. While it’s true that Labor’s vote fell 12.1 per cent in Christensen’s seat of Dawson, all but 0.5 per cent of that formerly Labor vote shifted to One Nation and UAP. The results were similarly lacklustre for the LNP in Capricornia.

While big swings to One Nation and UAP helped the Coalition snatch an unlikely victory, those same trends spell big trouble for the Coalition in the coming years. One Nation, UAP and other populist parties including the Shooters, Fishers and Farmers Party are an existential threat to the Nationals, and to the Coalition more broadly.

Over the past 30 years regional Australia has been hit hard by privatisation, free trade agreements, cuts to welfare and other Liberal Party policy favourites. Outside of the capital cities unemployment is much higher and average incomes much lower, and that gap is rising. Pauline Hanson and Clive Palmer know how to turn resentment over that undeniable fact into votes, and so does Barnaby Joyce. The trick is to blame the Greens and environmentalists for putting trees ahead of farmland, fish ahead of irrigators and the changing climate ahead of coal jobs.

Blaming a political party that has never been in office for regional Australia’s problems takes chutzpah, but it works a treat … except in Sydney, Melbourne, Adelaide, Hobart, Brisbane and Canberra, where the vast majority of Liberal voters live and vote. And as the substantial primary swings against the Liberals in seats like Goldstein, Kooyong, Curtin and Warringah show, the Coalition junior partner’s determination to go to war with the natural environment is coming at a huge cost to the Liberal Party’s safest seats.

The Nationals have always done a good job of blaming everybody but themselves for the problems in their electorates, but in Hanson and Palmer the Nats are meeting their match. Joyce’s inevitable run for deputy prime minister will be a boon for the Nationals in their fight against the other minor parties, but his bombastic determination to rage against the 21st century will help ensure that voters in once-safe Liberal seats continue to shift their votes to Labor, the Greens and independents.

If Labor waged a class war in the 2019 election, it was the least successful in history. There is no doubt that Labor planned to collect significant amounts of revenue from high-income voters and there is also no doubt that many high-income voters were unfazed.

In fact, the 10 seats with the biggest swing to Labor had median incomes that were 40 per cent higher than the 10 seats with the biggest swing to the LNP. Even on the issue of franking credits, the 10 electorates with the biggest swing to Labor get four times the amount of franking credits each year as the 10 seats with the biggest swing to the Coalition.

The Coalition’s scare campaign about the impact of Labor’s negative gearing and dividend imputation policies worked best in electorates where voters owned the least shares and the fewest investment properties. Seats with a higher proportion of renters were more likely to swing to the Coalition when it was Labor trying to crack down on the tax concessions that deliver so much to landlords. Well played, Coalition.

Voters in Liberal electorates were unenthusiastic about Scott Morrison’s tax cuts as well. Of the $300 billion to be spent on income tax cuts, at least $77 billion will go to those earning more than $180,000 per year, the vast majority of whom live in the inner-city Liberal-held seats that swung heavily to Labor. If Shorten was waging a class war it seems that those blue-ribbon seats are full of enthusiastic class traitors.

And then there is Tasmania. Incomes in that state are far below the Australian average and while 4 per cent of Australians earn more than $180,000 only 1.5 per cent of Tasmanians do, which explains why the entire state will receive less benefit from Morrison’s income tax cuts than a single wealthy electorate in Sydney. But the poorest parts of Tasmania swung heavily away from Labor.

So what’s to be done? What should people and political parties keen to reduce greenhouse gas emissions and income inequality do next?

The first thing progressive voters must do is remember that winners (try to) write history and, in turn, progressive voters must ignore those telling them that the only way to get what they want in the future is to stop demanding what they want. On the contrary, the only way to get, and keep, what you want in a democracy is to build a powerful case that unites a broad church of supporters. Intriguingly, Shorten has already succeeded in winning over a large number of high-income earners to Labor’s tax-reform agenda. The challenge now is how to win over the biggest beneficiaries.

Making mistakes isn’t a disaster, but failing to learn from them is. The kind of top-down analysis that says Labor should abandon popular reforms and make itself a small target is the same kind of top-down analysis that led so many people, myself included, to believe Labor was going to win comfortably. It’s possible that Labor’s “class war” cost it the election, but those arguing that case need to explain why high-income earners were more likely to swing to Labor than low-income earners.

It is possible that Adani cost Labor a huge number of votes in Queensland, but those arguing that need to explain why Annastacia Palaszczuk snatched an unlikely victory in the last Queensland election on the back of her opposition to public money for the Adani mine.

We need to work from the bottom up. But it is not just the electoral analysis that needs to be bottom-up. With three years of Barnaby Joyce and Matt Canavan holding back federal climate policy, Australians interested in reducing greenhouse gas emissions are going to need to embrace action at smaller scales. State governments, local governments, communities and individuals can and do make a big difference, not just to how Australians behave but also to how they think.

Decades of budget cuts and efficiency dividends have crushed the notion that high-quality, low-cost public services might improve people’s lives. Shorten offered voters a Scandinavian level of public services but it seems likely that many Australians, particularly those on low incomes in northern Tasmania, simply can’t believe that a government would give them free childcare and free healthcare if they have cancer.

But the task of lifting Australians’ ambitions can’t be left to progressive political parties. Non-government organisations that want to provide better services need to overcome cynicism in the community that such services just won’t make a difference to their lives. It seems you can’t be a high-tax country if you aren’t a high-trust country, and trust in Australia is at an all-time low.

And just because the Morrison government doesn’t like renewable energy doesn’t mean that Australians can’t, or won’t, invest tens of billions in reducing emissions in the next three years. The Tesla big battery, which Morrison derided as about as useful as the Big Banana, delivered a $22 million profit in 2018, and helped to lower market costs and keep the lights on.

Thanks to an ambitious territory government, the ACT will be powered by 100 per cent renewable energy by 2020, as will Parliament House. There is nothing to stop other state governments pushing for ambitious action. Fossil-free superannuation funds such as Future Super have been growing rapidly in recent years and no doubt many of those wealthy former Liberal voters will now be looking to shift their retirement savings in the same direction that they just shifted their votes. Support for climate action doesn’t stop at the polling booth.

There is nothing to stop state government, local government, community and individual efforts to reduce emissions and boost renewables. And there is no reason to believe that unemployed north Queenslanders will always think that an automated coalmine will improve their lives (even if building one annoys some environmentalists down south). Change is inevitable, it’s just the timing we are haggling about.

Elections matter. Australians faced a clear choice in May and, by a slim majority, they freely chose inaction on climate change, inaction on wage growth, and tax cuts over public services. Supporting democracy means supporting the legitimacy of that choice, but participating in democracy means setting out to shape the questions, and the answers, that will define the next election.

Shorten suffered a narrow defeat in an election where the gulf between parties was as wide as has been seen in decades. But while it was bold to seek to close loopholes and oppose tax cuts for high-income earners, it wasn’t radical. Most of the loopholes Shorten wanted to close were put there relatively recently by the Howard government treasurer, Peter Costello.

The radical tax policy was proposed by Scott Morrison, who has no details on how he plans to fund $300 billion worth of tax cuts and no precedent for the flattening of our progressive tax scales that he proposes. Australians voted for radical tax policy on May 18 because it was well sold. Progressives shouldn’t let the winners write history, and progressives should never believe that change is impossible. On the contrary they need to get a lot better at selling the real-world benefits that come with complicated tax reform and explaining the real-world costs of the conservatives’ simplistic slogans.

Richard Denniss
Richard Denniss is the chief economist at The Australia Institute.

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