Week 3 of the campaign has seen a significant uptick in pace and the range of issues being covered.
While many are at the periphery, climate change and security have escalated, and the economy has the potential to burst onto the electoral stage with a huge spike in inflation. We consider whether interest rates are political, the Solomon Islands and the ALP response, Climate Wars and the Teals, and negative campaigning.
Mr Albanese's absence this week has provided an organic opportunity for the ALP to showcase its broader team. From isolation Mr Albanese has admitted that Labor's campaign spokesperson, Jason Clare MP, is better looking than him.
RBA interest rates decisions. Are they political?
Reserve Bank governor Phillip Lowe said in his statement on the RBA’s 5 April monetary policy meeting, “Over coming months, important additional evidence will be available to the board on both inflation and the evolution of labour costs.”
The minutes of the April monetary policy meeting indicated that inflation data (released on April 27), wages data (to be released May 18), and National Accounts data (to be released June 1) would be key factors in determining the timing of a future rise in the cash rate target, currently at 0.1%.
What has happened since then is a 5.1% inflation rate, which is well outside of the RBA’s 2 to 3 % target inflation range. The next RBA monetary policy board meetings are scheduled for May 3 and June 7.
So in the face of an inflationary spike, will the RBA simply sit tight, white knuckled as inflation careens out of control, until June 7?
It is suggested by commentators that a rate rise on May 3, during the election campaign, is unlikely as it would be seen as political. This is lazy reasoning because a decision on rates must be made solely on the basis of the data and what it tells the RBA about achieving its monetary policy objectives as set out in the Reserve Bank Act 1959:
the stability of the currency of Australia;
the maintenance of full employment in Australia; and
the economic prosperity and welfare of the people of Australia.
In other words, a decision to not change the RBA’s monetary policy target on 3 May, if there is reason to do so, would be a far more political decision and a 5.1% inflation spike is hard to ignore.
The chance of a smaller, sooner rate rise of perhaps 15 or 20 basis points, or even a 40 basis points rise, has increased markedly.
The RBA may have need to employ the rejoinder ascribed to John Maynard Keynes, “When the information changes, I change my mind. What do you do?”
Solomon Islands and ALP response
The Solomon Islands/China security pact has been an ongoing issue in the campaign, with Labor doing all it can to prosecute the case that this is a government failure which has made Australia less safe.
Labor announced a package to extend financial aid to Pacific Islands nations, and to also fund the ABC to re-introduce radio services which were previously broadcast into the pacific, as a means of extending “soft power”.
This has undoubtedly damaged the Government’s security credentials, as evidenced by the Defence Minister’s statement on Anzac Day that we are in a period similar to the 1930s and that again Australia is defenceless.
The Prime Minister said that China establishing a defence base on the Solomon Islands would be a “red line” for Australia. This is clearly a statement intended for domestic consumption, but somewhat difficult to understand how Australia could enforce its red line.
Climate Wars and the Teals
Climate Change has erupted again as a key electoral issue.
In the seat of Flynn in Central Queensland, LNP former State MP Colin Boyce is up against Gladstone Mayor Matt Burnett from the ALP. To be clear, the seat should not be a Labor target based on an 8.7% margin.
During the week Mr Boyce stated that there is “wiggle room” in the Government’s commitment to net zero emissions by 2050. Senator Canavan, whose electorate office is in Rockhampton, backed-in Mr Boyce, saying that the net zero pledge was “dead in the water”.
The controversy from Central Queensland created two dynamics: one which favours Labor and one which favours the Teals.
For Labor, Mr Boyce’s intervention took the spotlight off of the ALP’s commitment to a safeguard mechanism which will encourage emissions reductions from the nation’s 250 largest emitters. Labor has pledged not to impose costs on Australian firms which are greater than the costs on their international competitors.
For the environmentally and socially progressive, but financially conservative Teals, the comments opened countless opportunities to undermine Liberal campaigns in Wentworth, Kooyong and elsewhere which are promoting the government’s net zero pledge as action on climate change. Mr Sharma’s interview on the issue is worth a listen to gain a sense of the damage this may be doing his campaign.
Polling by RedBridge Group in the NSW seats of Wentworth (inner-East of Sydney) and Parramatta (Western Sydney, “Sydney’s Second CBD”), commissioned by Equality Australia, found that only 2% of voters considered trans women playing sport was a significant issue.
In Wentworth the top 5 issues in order were Climate Change, Economy, National Security and Defence, Health and Aged Care and Cost of Living. In Parramatta they were Cost of Living, Economy, Climate Change, Health and Aged Care, National Security and Defence.
The polling suggests that Labor will retain Parramatta, while Ms Allegra Spender is on track to unseat Dave Sharma.
What is the path to victory?... Polls not moving... Go negative?
The Liberal campaign had a tough week 3. Liberal Campaign Headquarters will be considering closely what changes are required for the final three weeks to regain momentum.
Election campaigns are dynamic and very changeable, but another week like this one would see the Liberal Party seriously drifting from power. With polling refusing to shift for the moment, decisions will need to be made about what next.
Generally “going negative” is saved for the final fortnight of the campaign. Decisions will be made about whether it will be necessary to go heavily negative, sooner.
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