Labor scrapes through in Eden-Monaro
Four days after the voters of Eden-Monaro kept the marginal seat in opposition hands, the Reserve Bank governor summed up the nation’s predicament: we are all flying by the seat of our pants.
Scott Morrison, too, put it succinctly: “This is a global pandemic. There are no guarantees in a global pandemic. You have to deal with the situations that are in front of you.” It is how you deal with these situations, or rather how lucky you are in dealing with them, that can mark a leader up or down.
Governor Philip Lowe, in his statement after the RBA decided to leave official interest rates at near zero, spelled out the challenge: “Uncertainty about the health situation and the future strength of the economy is making many households and businesses cautious, and this is affecting consumption and investment plans.”
“Uncertainty about the health situation” is near hyperbolic understatement. As Lowe noted, “The Australian economy is going through a very difficult period and is experiencing the biggest contraction since the 1930s. Since March, an unprecedented 800,000 people have lost their jobs, with many others retaining their job only because of government and other support programs.”
In such a precarious world, one would have expected voters at the weekend byelection to have turned to the government. After all, the prime minister has near record approval ratings for his handling of the situation. Yet, in the end, they backed Labor’s Kristy McBain, who scraped in ahead of the Liberal candidate, Fiona Kotvojs.
Eden-Monaro, it seems, changed nothing – the numbers in parliament will remain the same – but it also changed everything, making clear the coronavirus-induced crisis has turned old political orthodoxies on their head.
The lockdown of metropolitan Melbourne, and the dramatic closure of the border with New South Wales, is a massive disruption of lives and livelihoods. The state accounts for about a quarter of the national economy. In an expression of solidarity, Scott Morrison reached for one of the most famous speeches of the Cold War, when United States president John F. Kennedy in 1963 identified with the citizens of Berlin divided by a wall. “Ich bin ein Berliner,” Kennedy said in German, which translates as “I am a Berliner”.
Morrison, at his Parliament House courtyard news conference midweek, said, “We’re all Melburnians now, when it comes to the challenges we face. We’re all Victorians now because we’re all Australians and that’s where the challenge is right now.” His words came after an explosion of infections in Melbourne, which by Monday had the Victorian premier sending out an SOS to the rest of the country.
Daniel Andrews spoke with Scott Morrison and the NSW premier, Gladys Berejiklian. He told them the health advice left no option but to embark on a desperate containment strategy. By Wednesday, more than a quarter of Victoria’s 2942 Covid-19 cases had been confirmed in just the week prior. The peak of 191 new cases on Monday was higher than any previous daily total.
The premier’s focus during this latest outbreak was on the Stalinist-style social housing towers that ring inner Melbourne, home to thousands of families from a lower socioeconomic background. Now to be investigated is whether there are any links between the housing towers and the poorly managed quarantine hotels, which have been the source of the virus’s spread in other parts of the city.
But unlike his Victorian Liberal counterparts, Morrison was not pointing the finger at the state’s Labor premier, or blaming him for his handling of the pandemic so far. In fact, the prime minister sounded a realistic warning for the rest of the nation when he said, “Of course there’s always the risk it could happen in other cities.” A grateful Andrews said, “Whenever I needed anything from the prime minister, the answer is yes.” He echoed Morrison’s alert: “The pandemic is not over … We still do not have a vaccine.”
The whole eruption demonstrates the extreme caution politicians of all stripes need when attempting to score political points from this highly infectious virus. Criticism from both Morrison and Berejiklian towards Queensland Premier Annastacia Palaszczuk – for refusing to open her state’s borders – looks very churlish now. Berejiklian tried to explain her volte-face in terms of Victoria’s sudden deterioration; Morrison denies any volte-face. He says that it’s “containment and that’s a different thing”. Not the most convincing bit of marketing.
In an opinion piece in the Herald Sun, the government’s most senior Victorian minister, Treasurer Josh Frydenberg, quoted the acting chief medical officer, Paul Kelly: “Covid-19 needs only the slightest encouragement to take off and can rapidly get out of control.” In the bigger picture though, cheap politicking does nothing to mask the economic cost of this rampant virus. No one is more alert to the danger than Frydenberg. He lamented that the restoration in confidence as Australia “flattened the curve” and the states began lifting restrictions has been “interrupted by developments in Victoria”. The treasurer quoted his department’s assessment that reimposing lockdowns could cost “the national economy $4 billion a week and Victoria around $1 billion a week”. Consumer confidence, he noted, has fallen in the past two weeks and “recovery is very much a confidence game”.
Frydenberg’s observation about confidence is borne out by the Reserve Bank governor’s statement. The downturn so far is “less severe than earlier expected”, Lowe said. While total hours worked continued to decline in May, “the decline was considerably smaller than in April and less than previously thought likely”. He also noted a “pick-up in retail spending”.
Deloitte Access Economics partner Chris Richardson says the reimposed lockdown risks shattering that fragile mood. But he says that while the impact on Victoria of the new lockdown might impose more economic pain than indicated in his latest business outlook, released on Monday, it will still be a contraction of about 3 per cent. Richardson endorses our political leaders taking the health threat more seriously than some other world leaders. “Good health policy remains good economic policy,” he says.
In the midst of all of this, discerning the political mood of the nation is confusing. Labor’s Anthony Albanese said McBain’s win in Eden-Monaro was “against the odds”. He said the pandemic was creating “a political culture whereby we’re all hoping that governments succeed”.
And certainly, the Eden-Monaro byelection was a close-run thing – if just 454 people had gone the other way, the Liberals’ Fiona Kotvojs would have turned 100 years of byelection history on its head. But the result is basically a status quo result, which shows voters in the electorate now are almost evenly divided on who is best to govern the country. As they were at last year’s election.
On Thursday, the winning margin after preferences was 907 votes Labor’s way, despite a 3.29-percentage-point swing away from the party on primary votes. Some explain this was due to the loss of the popular former member, Mike Kelly, but 3 percentage points is a very high margin for a personal vote. Scott Morrison noted on Monday that the Liberals were the only party in parliament who recorded a swing towards them. It was a very modest 1.35 percentage points, or just 0.37 after preferences.
Why Morrison’s 68 per cent Newspoll approval rating didn’t translate into more votes for his candidate in Eden-Monaro certainly gives the Liberals something to think about. Executive director of The Australia Institute Ben Oquist puts it down to the government not giving the electorate the assurances it wanted on other key concerns.
What mystifies Oquist – after an analysis of undecided voters in the three polls he conducted in the eight weeks of the campaign – is why Morrison didn’t address concerns about the future of the JobKeeper wage subsidy. In the final week, The Australia Institute’s polling found 3400 Eden-Monaro residents were still undecided. Oquist says “more than half of them (56 per cent) wanted JobKeeper extended past the September cut”.
Twice this week Morrison flagged that the treasurer’s economic statement later in the month would continue the wage subsidy. “It’s just the scale of it and how it’s targeted is what we’ve been working through,” he said. And he indicated this to a worried Daniel Andrews. The Victorian premier says he’s “reassured that hardship is going to continue to be the main thing that drives” Morrison and Frydenberg.
Oquist is convinced that had the government been as upfront before last Saturday, “they would have won the seat”. They only needed a few hundred voters to get the message. Especially because in the last days of the campaign, Labor was able to run an attack ad targeting the Eden-Monaro JobKeeper worries.
Labor’s national president, Wayne Swan, says the win shows Labor is “still in the game” and with high-profile community leaders like McBain, the party can win other regional seats.
But there is a lot that can happen between now and a general election due in two years’ time. The government will be losing one of its key economic ministers at the end of the year: its Finance minister for the past seven years, Mathias Cormann. Despite a mixed record on how the money was spent during his tenure – apparently blind to egregious pork barrelling – Cormann is an effective negotiator in the hung senate.
His retirement from politics only adds to the uncertainty.
This article was first published in the print edition of The Saturday Paper on Jul 11, 2020 as "Covered in uncertainty".
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