A choice between two lessers
Now that election day has finally arrived, it’s reasonable to ask: How much better informed are voters to make their choice? The campaign has certainly been neither a contest of policy ideas, nor of visions for our country’s path ahead.
Despite the focus on the economy, we have ended up with only broad counterclaims about the economy’s future under one government or the other – the Coalition promising stronger versus Labor’s better.
We needed more about how, given our economy is stumbling towards a housing crisis and, beyond that, another recession with accelerating inflation. Neither side has wanted to address this reality. Scott Morrison has sustained his boasts, without evidence, about how well we are doing – and will continue to do so, if he is re-elected – relative to other developed economies. He has continued to stoke fear about the supposedly dire consequences of a Labor win.
Towards the end of the campaign and faced with his performance becoming a defining issue, Morrison attempted to depict a choice between the lesser of two evils: there’s the devil you know, or the Other One. A desperate, aligned media has painted the alternative as the mad left, an economic novice. Given the lack of policy detail, it’s more like a choice between two lessers.
There has been no sign of leadership for what will be very challenging global circumstances. It’s not just about doing whatever it takes to win – honest leadership shouldn’t just mean being able to win at all costs, or to pull off a “miracle” irrespective of the cost. Strong and responsible leadership sometimes requires statements such as, “I recognise that I need to be honest with you, to tell you something you may not want to hear, and I may need to advocate some policy shifts that will be difficult for you to accept – but I want you to accept that they are imperatives
in our national interest.”
Commentary about the increase in interest rates has been confined mostly to the direct impact on the cost of living, rather than the crisis it may create in the housing market. Many borrowers have taken on bigger loans than they can afford either to service or to ultimately repay. This indebtedness has been compounded by the extraordinary budget and monetary stimulus during the pandemic and the culture of greed in our banks, which was well documented by the Hayne royal commission.
It needs to be admitted that the pandemic led to significant growth in credit issued and debt accumulated. Bank lending to households ballooned to record levels, creating a massive debt bubble.
The impact on the solvency of households, and more broadly on the stability of our financial system, is not to be underestimated. A possible combination of rising interest rates, constrained disposable incomes and falling house prices could significantly compound mortgage stress, curbing household spending and leading to delinquencies. This could in turn damage bank balance sheets, accelerating a slide into recession, if not worse.
It’s reasonable to ask how the government and the Reserve Bank would respond. Most likely, public and political pressure would mount for a pivot from raising interest rates to lowering them in order to avoid a steeper downturn and blowout in unemployment. Such action would then run the risk of stoking a deeper debt crisis, with house prices going up again, more debt and so on.
The Coalition has been reluctant to admit any responsibility in relation to the acceleration in inflation, despite the massive stimulus packages and liquidity injections in response to the pandemic. The HomeBuilder package and Reserve Bank liquidity enhancement for the banks spurred much of the overheating of the housing sector and some of the related supply shortages. It is disturbing that our political leaders and the Reserve Bank have been unwilling to admit to the seriousness of the situation they have created. They don’t appear to see how it may all unfold, let alone offer any detail of how they might handle it.
It’s not just an issue for existing home owners, but also for those entering for the first time what will be a volatile market. Both the Coalition and Labor have offered schemes to assist these buyers, but subsidy-like schemes don’t really help the home buyer so much as allow developers to increase house prices. The Liberal Party has also gone so far, in its desperation, as to allow first home buyers to tap into their superannuation savings for the deposit. As sensible as this may seem to many, it would have serious consequences for retirement incomes well into the future.
The other area of highlighted difference between the major parties has been wages. Unfortunately, rather than engage in a comprehensive debate, Morrison tried to use the issue to wedge Anthony Albanese. As it turned out, Morrison himself was wedged, attempting to suggest Labor “can’t be trusted to manage money”.
When Albanese said he would welcome the Fair Work Commission granting an increase in the minimum wage to match the rate of inflation – currently 5.1 per cent – the Labor leader was pointing to the two-sided nature of the cost of living. He paired rising costs with the context of flat and negative real wages. Morrison wasn’t prepared to express support for any particular increase in the minimum wage, preferring to run the line that employers, especially small businesses, couldn’t afford an increase. His case wasn’t helped by Treasurer Josh Frydenberg paying people some $30 an hour to walk around Kooyong wearing his campaign sandwich boards. That rate is a 50 per cent increase on the minimum wage.
Again, it was easy for Morrison to be tagged as uncaring, lacking empathy. This misstep on wages, together with focus group research, seems to have driven Morrison to claim that, while he had been a “bulldozer”, he would change if given a second chance. I can see the collective eye-rolling of women across the country now.
And voters were left, yet again, with inadequate detail as to the choice of what an incoming government would do on such an important issue. A recent Ipsos poll revealed that both male and female voters are less optimistic about the future, with a third expecting their living standards to worsen over the next 12 months – a turn from positive to negative sentiment over the past year. Female voters are crucial for Morrison, given his track record of neglecting their concerns, and apparently only a quarter of them are now content with their financial circumstances.
Cost of living has emerged as the dominant issue in the campaign, and it was still worsening up to polling day. More data emerged on falling real wages, mortgage rates continued to climb and petrol prices started to rise again, eating into the government’s cut in fuel excise. In terms of the longer-term economic outlook, neither side has actually spelled out any detail on plans for budget repair, to lift standards of living, or a national productivity strategy. We need a national productivity target – say, to double it by 2025. Each portfolio minister could be asked to propose the necessary changes in their portfolio to achieve that objective. This would certainly highlight the important role of education and training – mostly overlooked in this campaign – and prompt a rethink of the recent budget spending on infrastructure, which has been mostly pork-barrelling. Most of those projects were missing from the priority list of Infrastructure Australia.
The Coalition’s endgame has been solely to remain in government and to take maximum advantage of the system to that end. The Liberals and Nationals declined to provide the policy detail to show voters how they would lead our nation forward, or how they would be different in another term.
It is most disappointing that despite the importance and urgency of the climate challenge, the campaign offered very little focus on the issue. It failed to draw out the significant differences of view as to the appropriate policy responses.
The bottom line is the campaign has failed to provide voters with sufficient information to make an informed decision between the main alternatives. It is important that some issues such as housing affordability have been elevated in the campaign, but voters are left with inadequate detail on how the Coalition and Labor would actually deal with the issue. Many questions remain on both sides.
John Hewson is a member of Climate 200’s advisory council.
This article was first published in the print edition of The Saturday Paper on May 21, 2022 as "A choice between two lessers".
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