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How Labor lost the federal election SO badly

Leader of the Opposition and Leader of the Labor Party Bill Shorten, flanked by his wife Chloe Shorten concedes defeat following the results of the Federal Election at Hyatt Place Melbourne on May 18, 2019 in Melbourne, Australia. Source: Getty Images

The Coalition did not win the election, Labor lost it.

The tally since 1993 for Labor is a devastating seven losses out of nine Federal elections. By the time of the next election in 2022, Labor will have been in Opposition for 23 of the last 29 years. Miserable.

The reasons for Labor’s 2019 election loss are much more than the common analysis that Labor’s policy agenda on tax reform was a big target that voters were not willing to embrace.

Where the Labor Party also capitulated and have for some time was in a broader discussion of the economy where it failed dismally to counter the Coalition’s claims about “a strong economy”.

In what should have been political manna from heaven for Labor, the latest economic data confirmed Australia to be in a per capita recession. This devastating economic scorecard for the Coalition government was rarely if ever mentioned by Labor leader Bill Shorten and his team during the election campaign.

This was an error.

If Labor spoke of the “per capita recession” as much as the Coalition mentioned a “strong economy”, voters would have had their economic and financial uncertainties and concerns confirmed by an elevated debate on the economy based on facts.

This parlous economic position could have been cited by Labor for its reform agenda.

Voters should have questioned and doubted the Coalition’s “strong economy” slogan. If Labor had campaigned on the per capita recession, it would have been in touch with people’s financial insecurity and made voters think twice about the economic management credentials of the government.

As part of this use of facts on the economy, Labor could have highlighted the productivity destroying collapse in business investment under the Liberal’s watch. As a share of GDP, business investment is at a 25 year low, back at the level prevailing in the early 1990s recession.

Campaigning on this fact could have undermined the perception that the economy and business does well under the Coalition. There is no record of anyone in the Labor leadership group mentioning this, even once.

While wages growth was a top tier issue in the election, Labor struggled to show how it would restore wages growth. This cost it dearly.

For Labor, there was a bit of fluffing around with restoring penalty rates and wage subsidies to childcare workers, but it completely and utterly ignored the proven driver of accelerating wages – growing the economy faster.

To tell voters how it could have helped spur economic growth and as a result deliver a pick up in wages, Labor could have spoken of reform to the Reserve Bank of Australia including a reinforced commitment to the existing 2 to 3 per cent inflation target as a means to achieve this. Further, it could have also ramped up its plan for immediate income tax cuts and have them skewed heavily to low income earners who would spend that extra cash and kick start the economy.

These are relatable issues and policy changes that could have seen Labor as the party of strong growth, with a simple and understandable plan for lower unemployment and higher wages growth.

Labor could have even embraced a target for the unemployment rate – something like 4 per cent for 2022 as a show of confidence in its ability to grow the economy and boost wages.

Part of a stronger growth plan could have also reiterated and highlighted enhanced economic linkages into Asia, which is still the fastest growing part of the global economy. Voters know how important Asia is to Australia and it would have been relatively easy for Labor to use this narrative to communicate with the electorate.

`The Coalition’s “strong economy” claims could have been further demolished if Labor campaigned on the current wealth destruction from the collapse in house prices. Prices are down more than 10 per cent, wiping off over half a trillion dollars from wealth.

They could have also spoken of the 1.8 million Australians currently unemployed or underemployed as a sign of a weak, not strong economy.

These are telling facts on the economy that Labor rarely raised in the campaign.

It cost them the election not to campaign heavily on the economy.

The problem with Labor’s willingness to campaign on the economy dates back to former leader Kim Beasley who in the early 2000s, distanced Labor from the massive reform success of the Hawke / Keating era. Labor was meek in the wake of a Coalition campaign at that time about interest rates and Labor’s role in the early 1990s recession.

Labor is still scared.

A large majority of voters judge the Coalition to be better managers of the economy than Labor. This is despite the facts of GDP, employment growth and wages show Labor to be at least as successful in managing the economy.

If Labor want to win the 2022 election, it needs its leader and economic ministers – whomever they are - to be mongrels on the economy. To take the data on the economy and when it is bad, call it out loud and clear.

The gap in the electorate’s perception on which side is the better economic manager widened against Labor in the recent campaign.

If it had campaigned on the economy, the per capita recession, household wealth destruction and the 1.8 million Australians not working the number of hours they would wish, the election result might have been very different.

It all goes back to one of the best lessons in modern politics – It’s the economy, stupid!

Stephen Koukoulas is no nonsense economist who calls it without fear or favour. He is currently Managing Director of Market Economics as well as being a Research Fellow, Per Capita. Stephen is also a keynote speaker at Ode Management.

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