What strange and puzzling times we live in. Pauline Hanson shot to fame as a disendorsed Liberal candidate before the turn of the century, and I never expected to see the day, 30 years later, where the polls showed her One Nation party getting a fraction more first-preference votes than the Labor government and leaving the Coalition down and out on less than 20 per cent. Hanson for PM?
Meanwhile, it’s a strange and puzzling time for the housing market. Oh, no. The government’s meddling in the budget has house prices falling. Why wasn’t I warned?
I could be wrong, but I doubt we’ll ever see Hanson moving into the Lodge. This is just a further step in the decline of two-party politics. Voters are disillusioned with both sides of politics and looking for some other party or independent to vote for. The sudden popularity of Hanson and One Nation is a sign both sides are on the nose, and voters are looking for a convenient way to protest. If everyone else is piling into One Nation, why don’t I join in?
What in particular has got these voters upset? It could be, as Opposition Leader Angus Taylor argues, voters are angry because Labor broke its promise not to tamper with negative gearing and the capital gains tax discount, but are blaming both sides.
Could be, but I doubt it. The sad truth is that breaking promises is no longer a big deal. Both sides do it all the time and no one’s shocked and appalled to see them do it again. It’s usually just those people whose pockets will suffer from the government doing what it promised not to do who carry on about the sanctity of political promises.
So, is it all those who know they’ll be paying a lot more tax that have turned on Labor? I doubt it. Unless the piercing cries of pain coming from the big end of town have convinced people on struggle street they’re about to cop it big time, that’s not it.
No, there’s a more obvious answer. Though it gets surprisingly little attention from the media, living standards have been falling for most of this decade. Prices have risen more than wages have, leaving many households struggling to make ends meet. When these people saw that the budget offered no immediate help, they dismissed it as useless.
Well, not quite. According to many policy wonks, the budget’s all-out attempt to fix housing affordability makes it the strongest, bravest budget since former prime minister Tony Abbott’s first budget in 2014. That one too broke many promises – made only a few weeks earlier – in its efforts to reduce the budget deficit. The public reaction was so hostile many of the tough measures were abandoned.
Which to me means it’s vitally important that Albanese and Treasurer Jim Chalmers press on with enacting the budget’s plans to limit negative gearing, end the capital gains tax discount and start taxing family trusts.
Why? Not just because these changes are vital to making home ownership affordable again, but also because, if Albanese abandons his efforts to fix home ownership or even just waters them down, it will show that, in all practical terms, the economy has become ungovernable.
Labor has a mild case of the midterm blues, whereas the Libs’ problem is existential.
Compared with the glory days when Paul Keating pressed on with major reform after reform because “good policy is good politics”, our parties have become afraid to take on anything controversial.
Why? Because it’s so easy for the other side to run a successful scare campaign. Labor promised to change negative gearing and the capital gains tax discount at the 2019 federal election, but lost. It has convinced itself that the Libs’ scare campaign cost it the election.
This, of course, is why, in subsequent election campaigns, Labor has promised not to touch the housing tax concessions.
It makes me wonder whether the only way parties will be able to make controversial changes is to promise not to make them, then break their promise if they win.
What makes scare campaigns so effective, of course, is that voters are so distrusting they’re prepared to believe politicians will do bad things, but never good things.
Two points before we move on. First, the way people say they might vote in the middle of a government’s term isn’t necessarily the way they end up voting at a real election. And with our system of preferentially voting, your first preference isn’t necessarily where your vote ends up.
Second, although it suits some to say both major parties are losing votes to One Nation – which is literally true – with Labor’s first-preference vote on 30 per cent and the Coalition’s on 18 per cent, I know whose problem I’d prefer to have.
Labor has a mild case of the midterm blues, whereas the Libs’ problem is existential. Their problem is not just that they’ve lost lots of voters, but that they’ve gone in opposite directions.
They first lost a lot of their better-off, well-educated city voters to the teals, and now they’re losing outer-suburban, rural and regional voters to One Nation. Whichever side they try to get back reduces their chance of regaining the other. One side wants action on climate change; the other thinks it’s all bulldust.
Turning to the budget’s measures to make home ownership more affordable to first home buyers by reducing tax breaks for people buying houses for investment, after decades of rapidly rising house prices reducing the proportion of households who can afford to own their own home, we’ve now got people recoiling in horror because house prices are falling in Sydney and Melbourne.
Don’t get your economics from real estate agents. To state the obvious: rapidly rising house prices may be good news for people who’ve already bought their home, but they’re bad news for would-be home buyers.
It’s time the young got a go and the well-off found other things to invest in. The new rules will mean a period of reassessment and adjustment. If prices fall a bit, that would be good. But, since housing is a necessity and the number of households is growing, prices are unlikely to fall far. Nor is the sky likely to fall.
Ross Gittins is economics editor.
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