Two
issues have dominated discussion in Canberra this week – the tenth
anniversary of the election of the Howard Government and Labor divisions. The
two are obviously related. The Wheat Board has ranked a poor third. But there’s
also been a whiff of a fourth issue that hints at Howard’s eventual demise – if
Labor can just avoid disintegrating.

We all
know the old maxim that says oppositions don’t win elections, but governments
lose them. And we should look at what happened when a Liberal government that
were seen as competent economic managers were defeated.

The
polling shows that people don’t particularly like John Howard – or trust him –
but are happy with the way he’s running the show.

Jeff
Kennett still lost in 1999 with a strong economy. What happened, though, was
that in 1996 there was what you might call a “cultural’ swing against him in
safe Liberal electorates. This spread more widely in 1999 and ultimately cost him
government. The “doctors’ wives” are sneered at – but is the way they voted in
blue ribbon electorates in 2004 a harbinger of a future swing?

Well, here we have to factor in the economy. What if people only
tolerate John Howard because of the state of the economy? What happens if it
goes off the boil? All Kim Beazley needs to do is look half decent and keep the
party quiet for a while.

There’s been some interesting economic talk around lately – like a
piece by David Uren in The Australian at the beginning of the month that picked
up ideas from Ross Garnaut, headed “Resources boom opens great divide”:

The resources boom is
cleaving the economy in two, with unsurpassed prosperity in the west and
stagnation in the industrial capitals of Sydney and Melbourne. There is growing evidence
that the resources boom will continue. Some argue it could last for years. The torpor in the east is
also showing signs of settling in for the long term, with unemployment creeping
into the suburbs.


Figures
out on Monday
showed manufacturing conditions weakened
last month after production and employment both weakened, thanks to large falls
in new orders, exports and inventories.

Yesterday’s national account figures showed
the economy is struggling to hit its recent average closer to four per cent,
even though the mining sector is enjoying record prices.
Manufacturing woes cut 0.2 percentage points from overall growth.

AAP ran these lines from ANZ senior
economist Mark Rodrigues:

The economy
really ground to a halt in the second half of 2005. The story of the
two speed economy is still there.

Household
consumption did pick up a little bit but growth is overwhelmingly being driven
by business investment and that in turn is being driven by a
once-in-a-generation commodity price boom.

Absent that, you
really wonder what would have happened to the economy had we not had this
commodity price boom … you would have been talking about an economy in
recession.

Of course, there is no mining boom in NSW
and Victoria. The two largest states are in recession – or close to it.

John Howard is a lucky Prime Minister. Just
as the air has rushed out of the housing bubble, commodity prices have come
along to keep the economy puffed up. Maybe he’s making up for a run of bad luck
in the eighties – but what if it goes bad again?

Brian Toohey is a wise old beast. He picked
up this theme in not just one, but two columns over the weekend. He wrote in
the Fin Review:

The coalition could slide from office if the
pleasures of strong growth are not available to distract voters.

The political implications of RBA governor
Ian Macfarlane’s prediction of a continuing moderation in economic growth have
been lost in all the hoopla about John Howard’s alleged invincibility after 10
years in office. Yet the opinion polls repeatedly tell us Howard’s electoral
success is underpinned by voters’ sense of confidence, even contentment,
associated with 14 years of impressive growth.

The point is not that a poorer economic
performance, of itself, necessarily threatens the government’s electoral
survival. Rather, it means it will no longer be easy for the government to fall
back on its economic record in order to deflect voter dissatisfaction with
other aspects of its performance.

In contrast, when the economy is humming
along sweetly, a government’s best friend – voter apathy – is most likely to
decide election outcomes…

His
conclusion? “Despite the prevailing mood that Labor is irrelevant, the coalition
government is not invincible.”

He
developed the theme further in Sunday’s Canberra Times:

Howard… has the
advantage that comes from rarely appearing flustered when a crisis hits. The
implicit message to voters is ”Don’t worry about this, I’ve got it under
control, you get back to enjoying life”. Although terribly frustrating for
Labor sitting on the Opposition benches in Parliament, it is not surprising
that this message can have a receptive audience after Australia has enjoyed 14
consecutive years of economic growth. The average growth rate of a sprightly
3.75 per cent a year has allowed Howard to make several proud boasts. One is
that household disposable income has increased by more than a third in real
terms over the past decade. Another is that real wealth per head has more than
doubled over the same period. Meanwhile, unemployment has fallen to 5.1 per
cent from a high of 11.3 per cent under Keating and Australia
now ranks third on the UN’s Human Development Index, which covers areas such as
educational achievement, life expectancy and income per head. These figures
might not be at the forefront of everyone’s mind, but the general picture
creates a reassuring backdrop to whatever immediate political predicament might
be facing the Government…

And Toohey’s conclusion there? “Most of the
good economic news appears to have already occurred.”

If economic growth drops, it won’t be a
financial catastrophe. “But it is likely to undercut the claim of a superior
economic performance which has been the bedrock of the Government’s electoral
appeal. In these circumstances, other issues could give Labor an added bounce
before next year’s election…”

Issues like how we rate John Howard on trust
and popularity.

Peter Fray

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