Adam Carr's guide to
The 2007 Australian federal election

Hubris and Nemesis:
Five reasons why the Coalition will lose

19 November 2007

Exactly a month ago I predicted that Labor would win the 24 November election by gaining a 5% swing and winning 20 seats. As we enter the last week of the election campaign, that is starting to look like a rather modest prediction. If the most recent Newspoll and ACNielsen polls are accurate, the swing is more likely to be 7% than 5%, and the Labor haul more likely to be 30 seats than 20. I still think it is possible that the much-maligned Narrowing will be seen in the last days of the campaign, but it won't be enough to save the Howard government from defeat. Politically, of course, a miss is as good as a mile. Even if Labor gains only the minimum requirement of 16 seats, Kevin Rudd will be Prime Minister by Christmas and John Howard will be history.

This weekend we are seeing a flurry of "marginal seat polls" of varying degrees of reliability, whose results are predictably contradictory and opaque. As I frequently have to remind enthusiastic psephometricians, polling is an inexact science, and when it is conducted at the micro-level it is even more inexact. All the polls can give us is a general impression, seldom meaningful to within more than a few percentage points. In my view the national polls, broken down where possible to state level, tell us all we are likely to be able to learn from polling.

Nevertheless, the following conclusions based on recent polling would seem to be fairly sound.

  • There are big swings brewing against the Coalition in NSW, Queensland, South Australia and Tasmania.
  • There is a swing in Victoria, but probably not as big, mainly because Labor already holds a majority of Victorian seats.
  • If there is any swing in Western Australia, it will be a small one.
  • The apparent swing actually consists of two swings: a middling-sized one in the traditional suburban and regional marginals, and a larger one in middle-class suburban seats which on paper are fairly safe for the Liberals.

    In October I predicted that the Coalition would lose 20 seats: the first 24 seats on the Mackerras pendulum, minus Wentworth, Deakin, McMillan and Boothby. For the record, the 20 losses I predicted were Kingston, Bonner, Wakefield, Makin, Braddon, Parramatta, Hasluck, Stirling, Bass, Solomon, Moreton, Lindsay, Eden-Monaro, Bennelong, Dobell, Corangamite, Page, Blair, La Trobe and Herbert. A month later, I don't see much reason to change my mind about any of these seats. The Liberals must be given a fair chance of retaining Stirling, although the polling in WA has been very inconsistent. I'm probably a bit more dubious about the Victorian seats than I was in October: Labor can get a 5% swing in Victoria and not win anything. John Howard cannot be entirely written off in Bennelong, although I still think he will lose.

    On the other hand, I gather Deakin is on a knife-edge and is regarded by both sides as too close to call. I also think Nicole Cornes must still be given a good chance in Boothby, partly because of the monstering she has had from the Adelaide press. There is such a thing as a sympathy vote, and I suspect Cornes will get one. Last night a poll was published showing Labor ahead in Wentworth, despite George Newhouse's rather shambolic campaign.

    I should have mentioned in October the possibility that Labor would lose Cowan in WA, due to the loss of Graham Edwards's personal vote. This is still a possibility, although even the most optimistic polls for the Coalition suggest there is at least a small swing to Labor in WA, and that may be enough to keep Cowan in the Labor column.

    Beyond the first 24 seats, however, there is another tranche of seats which recent polling suggests are well within Labor's reach. It seems that a large swing is afoot in Queensland, and that seats such as Bowman, Forde, Ryan, Petrie, Fisher, Leichhardt and Longman are at risk. In NSW, Robertson, Cowper, Macarthur, Hughes and North Sydney are thought to be possible Coalition losses. In Victoria, the suggestions of recent weeks that Labor could make gains in seats like McEwen, Dunkley, Casey and Flinders seem to have faded, but surprises cannot be ruled out. In South Australia Sturt is being hotly contested, and may be a better prospect for Labor than Boothby.

    I suspect Labor is going to win at least some of these seats, on top of the 20 I have already nominated. If pressed, I would nominate Bowman, Ryan, Leichhardt and Robertson as the most likely, but trying to make more detailed predictions is probably pushing the available evidence further than it will go. The parties no doubt have private polling which would give a clearer picture, but selective leaks of "internal polling" are not to be trusted. Nevertheless, there has to be a reason why both John Howard and Kevin Rudd have been campaigning in this second tranche of seats and ignoring front-rank marginals like Kingston, Bass and Bonner.

    It is quite possible we will see the Coalition retain some relatively marginal seats (Deakin for example) while losing seats previously regarded as safe (Ryan for example). This is because, as I mentioned earlier, there are two distinct swings going on. There is a swing in the outer suburban and regional seats, mainly among socially-conservative wage- earners (the demographic once known as the "Howard battlers"), which is overwhelmingly driven by economic issues, and there is a swing in the middle-class suburban seats, which is driven by non-economic issues such as climate change. There is evidence that the latter swing is even bigger than the former, hence the risk to traditional Liberal seats in the older suburban areas.

    Where did it all go wrong?

    Now that the question of who is going to win the election seems to be settled beyond debate, and the question of how much Labor is going to win by has been discussed, it remains to ask, why is the Coalition heading for defeat, and apparently a fairly heavy defeat?

    The conventional wisdom is that in the absence of an overarching crisis such as a war, Australian elections are fundamentally about the economy. If the economy is strong, if people feel they are well off and will remain so, they will re-elect the government of the day. This conventional wisdom finds expression in the so-called Sawford formula (after Labor backbencher Rod Sawford), that an incumbent government will only be defeated if two out three economic indicators, unemployment, inflation and interest rates, have risen since the previous election. Since 2004, unemployment has fallen, and interest rates have risen six times. Inflation, depending on which definition you use, has either risen slightly or fallen slightly. While far from a perfect record, on the conventional wisdom this should have been good enough to get the Howard government re-elected.

    My view is that this conventional wisdom is, like much conventional wisdom, only partly correct. Certainly the view that voters have of the economy and their own financial position is one of the factors that decide elections. But it is not the only one. I think there are two others:

  • Do the voters think that overall the incumbent government is "doing a good job," or do they think the Opposition could do a better job?
  • Do the voters think the incumbent Prime Minister is the right person to lead Australia, or do they think the Opposition Leader is a better person?

    The reason the Coalition is losing this election, in my view, is that on all three of these criteria the electorate, or at least crucial sectors of it, has turned against John Howard and the Coalition government since 2004. While they acknowledge the general strength of the economy, they do not feel that the economic future of themselves and their children is secure. They no longer think that the Howard government is overall "doing a good job," and they have decided that the Labor Opposition could do as well or better. And they no longer think that John Howard is the right man to lead Australia, accepting that Kevin Rudd would be as good as or better than him as a national leader.

    There are five specific factors which, in my view, have led to this change of heart by the decisive sectors of the electorate.

    1. WorkChoices: how to alienate your own supporters

    Mark Latham's greatest gift to the Labor Party was the fact that his disastrous leadership led Labor to such a heavy defeat in 2004 that the Coalition was able to win a majority in the Senate. This enabled John Howard to fulfil his 30-year dream of scrapping Australia's traditional workplace relations system. Under the WorkChoices legislation, he replaced it with an American-style system based on a free market in labour, under which unions are banished from the workplace and workers must negotiate individual employment contacts with employers. In this he had the enthusiastic support of Peter Costello, who is even more anti-union than Howard.

    During his eleven years in office Howard, having learned to curb his ingrained ideological zealotry after his defeat in 1987, has generally been guided by a cautious pragmatism. But the industrial relations issue, particularly as it affects small business proprietors, goes to the core of Howard's beliefs. Destroying the unions was the reason he, the son of a service-station proprietor, went into politics in the first place. Having been frustrated for eight years by a hostile Senate, he wasn't going to let the unexpected bonus of a Senate majority pass him by. Under the influence of his equally zealous minister Kevin Andrews, he abandoned caution and pragmatism and pushed the radical WorkChoices changes through in defiance of all opposition.

    Whatever the merits or otherwise of the legislation as economic and social policy, in purely political terms it has been an unequivocal disaster for the Coalition government. The electorate rejected WorkChoices from the start, and by wide margins. Their opinion of it has not improved in the two years since its introduction. And those who have rejected it most vehemently have been the very demographic that put Howard into power in 1996: the socially-conservative working-class voters in the outer suburbs and regional cities, who were alienated from Labor by Paul Keating's "big picture" and were seduced by Howard's "for all of us" campaign rhetoric.

    Work Choices was seen by the "Howard battlers" as a direct attack on their standard of living and on the future well- being of their children and grandchildren. Seldom if ever has a government so directly attacked the fundamental interests of a class whose continuing support was so vital to its own political survival. This was folly of a very high order, driven by an ideological commitment that overrode political judgement: and it should be emphasised again that this was Costello's folly as much as it was Howard's.

    The results were entirely predictable. The polls turned at once. Even under Kim Beazley's leadership, Labor surged ahead, and the Coalition never looked like catching up. The only comfort for the government was the belief that the voters were tired of Beazley and that Howard could again defeat him when it came to the crunch at election time.

    2. Kevin Rudd: the honeymoon that didn't end

    This belief was shared by many in the Labor Party, and the conviction that despite the polls Beazley could not beat Howard led to the formation of a cross-factional Rudd-Gillard ticket, brokered by Simon Crean, to oust Beazley from the leadership, which duly happened in December 2006. Beazley will be remembered as one of the unluckiest men in Australian political history, but he has been around politics a long time and he knows the rules. He was quite happy to see Bill Hayden axed in similar circumstances in 1983, so he can't complain: and indeed, like the good trouper he is, he has not complained.

    The rise of Rudd gave Labor a second opportunity to tackle Howard with a leader of a younger generation. The first opportunity was lost when Mark Latham's consistently poor judgement and his pandering to minority left-wing sentiment instead of pitching to the broad centre (where the votes are) allowed Howard to run an effective scare campaign against him at the 2004 election. No doubt Howard and his attack dogs Peter Costello and Tony Abbott thought they could pull the same trick twice, but Rudd has given them no opportunities to do so. He has been disciplined, consistent, on-message and relentless in his focus on the political centre. He has refused to rise to the bait over any of the "wedge" issues that Howard has dangled in front of him.

    All through 2007 the commentariat and the Coalition parties waited for the Rudd "honeymoon" to end. Even many in the Labor Party thought that the polls would come back to earth once people began to focus on the election campaign and once Howard began to campaign effectively on his strong suits of experience, economic management and national security. But there has been no turn in the polls, as there was in 2004 after Latham's disastrous interview with Mike Carlton on Iraq. There has been no "birthday cake moment," no "handshake moment." The Coalition staged a modest recovery in the polls between April and July, but since August Labor has again held a commanding lead. There has not been a single poll all year in which Labor's two-party vote has fallen below 53%.

    3. John Howard: the man who stayed too long

    Over the last two terms, as John Howard advanced through his sixties, his answer to all questions concerning his retirement was that he would stay as long as the Australian people and his party wanted him too. When it came to the crunch, however, he proved that the second part, at any rate, of this mantra was insincere. By September it was obvious to the majority of Liberal Cabinet ministers that the Australian people were resolved to put the Coalition out of office. It was thus time to say to the Prime Minister that the Liberal Party no longer wanted him to stay and fight the 2007 election.

    But when Alexander Downer did in fact say this to Howard, he flatly refused to go. Since the majority of Liberal backbenchers (fondly known in the Liberal Party as "Howard's potplants") continued to support him, as the man who got them elected and the only leader they had known, the numbers to roll him in the party room weren't there. Peter Costello didn't have the nerve to do what Paul Keating had done in similar circumstances in 1991: blast the leader out by threatening to wreck the government if he didn't get his way. So Howard stayed and Costello was (again) humiliated.

    John Howard is not by nature a vain or arrogant man: far less so than Whitlam, Fraser, Hawke or Keating. One of his characteristics over his career has been his political realism. But since 2004 he has apparently succumbed to hubris. Like Hawke, he became convinced that he and only he could win the election. Like Hawke, he was wrong. But unlike Hawke, he didn't have a rival ruthless enough to depose him. Had he retired gracefully in 2006, undefeated after ten years in office and four election wins, with a solid record of economic management and legislative achievement, he would rightly have been accorded a place second only to Menzies in the pantheon of Australian conservatism. Now he will be remembered as a vain and selfish old man who wrecked his own party through his refusal to see that his time was up.

    4. Union bosses: the scare campaign that didn't

    John Howard and Peter Costello don't have a lot in common, but one thing they do share is a deep loathing of the organised labour movement. In Howard's case there is no mystery about this: it is a typical sentiment among the Sydney Protestant small business class from which he springs. Quite why Costello hates the trade unions is less obvious. Presumably he didn't hate them during his university days when he was a member of Young Labor at Monash. Later, as an ambitious young lawyer, he acquired a professional interest in hating unions, and indeed he made it the foundation of his legal career, which was in turn his stepping stone into Parliament.

    It's one thing to hate the trade unions, and another thing to assume that everyone else hates them too. Howard is old enough to remember the days when trade union leaders could paralyse public services and shut down whole industries. But those days were brought to end in the 1980s, ironically by a government headed by a former ACTU President, Bob Hawke. The Hawke reforms to the industrial relations system, together with the changes in the structure of the workforce, have reduced the unions to a shadow of their former selves. One consequence of this is people under 40 have no memory of the old trade unions, and hence no particular reason to dislike them. But the culture of hatred of the unions has lingered on in the Liberal Party, and has underlain the Howard government's re-election strategy, to the extent that it has one.

    If the Coalition parties go down to a heavy defeat next Saturday, Kevin Andrews will have to bear a large part of the blame. As the Minister for Workplace Relations Andrews was responsible for not only for the content of the WorkChoices legislation, but for selling it to the electorate. The trouble is that Andrews seems to have no feel at all for public opinion, which is a pretty serious failing in a politician. He did a miserable job of selling WorkChoices, apparently believing his own rhetoric about "union bosses" and assuming that everyone else did too. In January Howard recognised that Andrews had failed and shifted him from Workplace Relations to Immigration.

    Genial Joe Hockey was given the job of selling WorkChoices, but although he has struggled manfully he has never looked comfortable in the job, and has not succeeded in budging the public's hostility to the new laws. Hockey, like Andrews, has simply assumed that the public hates the trade unions, and has railed against "union bosses" with every breath for eleven months. As a visit to the Liberal Party website will show, the whole Coalition campaign is built around the bogeyman of "union bosses." The endless repetition of the (false) assertion that "70% of the Labor frontbench are former union bosses" has been part of this, drowning out whatever positive message the Coalition has to sell.

    The problem with this campaign is that it is based on a false premise: the public does not hate trade unions, has only a vague idea of what a "union boss" is, and doesn't care whether 50%, 70% or 100% of the Labor front bench are former union officials. While most Australian private sector wage-earners no longer belong to trade unions, most are still generally of the view that unions exist to protect their interests. Most public sector workers are still trade unionists, and the fear of the state-level public sector workforce (such as teachers and nurses) of being brought under the ambit of WorkChoices by a re-elected Howard government is a powerful factor in many marginal seats.

    5. Peter Costello: Captain Complacent

    The biggest loser from the defeat of the Howard government will not be John Howard. The Prime Minister is 68, he has been an MP for 33 years and has had 19 years as a federal minister. If he were to win this election, he would retire in late 2009 at the latest, so a defeat will mean only the loss of two years at the end of a very long career. The biggest loser from a Coalition defeat will be Peter Costello.

    A Coalition victory would have put Costello in an unassailable position to become Prime Minister on Howard's retirement: despite the fantasies of some in the NSW Liberal Party, there would have been no credible alternative candidate. A Coalition defeat, however, will almost certainly spell the end of his prime ministerial ambitions. Assuming he becomes Liberal leader after the election, he will face the daunting prospect in 2010 of trying to unseat a first-term government, something that has not been achieved since 1931 (and then only because of the Great Depression). Defeat in 2010 would lead to Costello's inevitable demise as leader. He would be the Andrew Peacock of his day: not an enticing prospect.

    Costello has no-one to blame for this gloomy scenario but himself. As Deputy Liberal Party leader and heir apparent, it was incumbent on him to tell Howard last year that it was now in the interests of the Liberal Party that he, Howard, retire. He failed to do so, leaving the task to lesser lights, who didn't have the clout to get Howard to go gracefully. Next, when it became apparent that Howard would not budge, Costello did not have the nerve to challenge him in the party room, or to resign, or indeed do anything except continue to project his image of smug self- satisfaction to an increasingly unimpressed electorate. This was not just a failure of nerve, it was a failure of leadership.

    It's true that Costello did not have the numbers to roll Howard. But leadership is not about accepting the short- sighted inertia of the potplants of the party room. It's about being willing to lead, and to run some risks in doing so. Paul Keating didn't have the numbers to roll Bob Hawke, either. He created the numbers by resigning and threatening to destabilise the government until the Caucus accepted the necessity for a leadership transition from a leader who was probably going to lose the 1993 election to a leader who, as it turned out, knew how to win. That was the standard of leadership set for Costello, and it was a standard he failed to meet.

    Could Costello have retrieved the Coalition's fortunes and seen off the challenge of Kevin Rudd, as Keating saw off the challenge of John Hewson in 1993? Of course, we will never know. Personally I doubt it, since the fundamental reason for the Coalition's loss of support since 2004 has been WorkChoices, and Costello is just as committed to WorkChoices as Howard, and would probably have been no more successful in persuading the electorate to like it than Howard has been. But when a party is headed for certain defeat, it becomes necessary at some point to gamble on a change in the hope that a new leader will alter the chemistry of the contest. The Liberals reached that point in September, and Costello failed to rise to the challenge of the moment.

    Costello's responsibility for the defeat of the Coalition government doesn't end there. In 2004 the Coalition promised that if re-elected they would keep interest rates at a record low. Since then interest rates have risen six times. This has done immense damage to the Coalition in its strongest area, economic management. While the electorate is still somewhat sceptical about Labor's economic credentials, they no longer accept that the Coalition's credentials are necessarily superior. This, combined with the effects of WorkChoices, has precluded the kind of appeal to economic self-interest that was so effective against Mark Latham in 2004. Since Costello has been Treasurer for the past eleven years, he can't evade responsibility for the policies, such as the failure to act on skills shortages, that have caused the inflationary pressures in the economy which have led the Reserve Bank to raise interest rates.

    Costello's hubris found its final expression in his apparently firm belief that the Reserve Bank would not raise interest rates in early November. It was this complacent view, which was presumably passed on as advice to Howard, which led Howard to set the election date for 24 November, in the apparent belief that a long campaign would allow him to wear down Kevin Rudd and regain the ascendancy lost since 2004. Since the platform on which that ascendancy rested was economic management, the interest rate rise in the middle of the campaign dealt that strategy a fatal blow. Long campaigns seldom work to the advantage of incumbents, as Bob Hawke found out in 1984. In this election it has been a serious miscalculation. Would Howard have won if he had gone to the polls in October? Probably not, but he would have had a better prospect of winning without the Reserve Bank's intervention.

    Nemesis comes calling

    The final exhibition of Coalition hubris in this election campaign has been the exhibition following the exposure of the rorting of the "Regional Partnerships" program by Coalition ministers on the eve of the 2004 election. There has not been any suggestion of contrition or acceptance of responsibility from any of the ministers involved, and the best Mark Vaile, the Deputy Prime Minister, could do was to accuse the Auditor-General (appointed by his government) of having a partisan agenda. This is a sensitive subject for the Nationals, because they set the program up, and one of their ministers, De-Anne Kelly, was responsible for the last-minute frenzy of payouts to Coalition members in 2004. But the ultimate responsibility for this abuse of taxpayers' money lies with the Treasurer and the Prime Minister. Vaile has apologised for his attack on the Auditor-General, though not for the actual rorting. Howard and Costello aren't apologising for anything.

    And now comes the reckoning. With only five days campaigning left, and only three days until the end of television and radio advertising on Wednesday night, there is little the Coalition can now do to turn things around. It seems unlikely that five more days of oratory about "union bosses" and Labor's lack of experience will succeed when six months of relentless hammering of these themes has failed. It seems improbable that the public can be persuaded to like WorkChoices between now and Saturday, when many millions of dollars worth of TV advertising, over many months, failed to persuade them. It seems impossible that a government polling between 42 and 46% of the two-party vote can get its vote up to 50% in the last five days, when the polls have hardly moved for months. This government has dug its own grave through its surrender to hubris since the 2004 election. Now nemesis, in the unlikely form of Kevin Rudd, is upon it.


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