It has been dubbed 200. What began as a record eight-week federal election campaign remains undecided, a week after the country went to the polls on 2 July.
So tight is the contest that both major parties, Labor and the Coalition (Liberal and National Party) are within a whisker of gaining the majority 76 seats required in the lower house. There are still six seats that are too close to call.
It has been a huge loss for the governing Coalition, which went into this election with 90 of 150 seats in the lower house. Now, it may not even have the numbers to govern in its own right, with negotiations under way to bring some of the newly-elected independents onside. Three have said they would support a Coalition government, with one, Bob Katter, adding: “If there is the slightest hint of union bashing… all bets are off.” The most likely outcome now is that the Coalition will return to power either with the support of independents, or by a very slim majority.
So what went wrong? In early May, when the election was called, prime minister Malcolm Turnbull was well ahead as preferred leader in the opinion polls. Australians seemed unable to warm to, or trust, opposition leader Bill Shorten. The population was concerned about high housing debt and successive budget deficits. The Coalition, claiming it had the better track record of fiscal management, argued for stability amid global turmoil, particularly with the outcome of the Brexit vote just a week before polling day.
The two parties went into the campaign with different policies in key areas, particularly to the ever-increasing cost of housing. The country now ranks second in the world for housing costs, according to Demographia’s Annual International Housing Affordability Survey.
Media reports stated Australian first-home buyers were increasingly being forced out of the market by property investors taking advantage of tax concessions and out-bidding the average buyer.
To combat rising house prices, particularly in Sydney and Melbourne, Labor vowed to rein in tax concessions, which allow property investors to offset any loss against income from other sources. The opposition said it would restrict negative gearing to new dwellings. The government, on the other hand, said it wouldn’t make any changes to the tax regime and embarked on an effective scare campaign claiming property prices would tumble under Labor, and argued the antidote was to increase supply of housing.
Company tax was another key difference. The Coalition proposed cutting the company tax rate to 25% by 2026-27. Labor, while supporting a lower rate for small businesses, was against extending the same cuts to big business.
But the key area, which cost the government dearly, was healthcare. In the closing weeks before polling day, Labor embarked on a scare campaign claiming the Coalition would privatise Medicare, Australia’s nearest equivalent to the NHS. Despite rebuttals from the prime minister that this was an “outrageous, bizarre” lie, it gained traction, and is now seen as the major component that drove voters away from the Coalition.
Australians turned against the major parties. In Queensland, the country saw the return of Pauline Hanson after 18 years out of politics. Her controversial One Nation party secured more than 5% of the vote in that state. She has called for a royal commission into Islam.
The election’s messy result suggests a more difficult senate for the Coalition, if it can form government. AMP Capital chief economist Shane Oliver says: “Significant economic reform will remain off the agenda.” Echoing that sentiment, ratings agency Standard & Poor’s downgraded Australia’s credit outlook from stable to negative. The country’s coveted AAA rating is now under threat.
Whoever forms government in the next week will have a tough job – a whittled-down majority, a senate potentially more unruly than the last, and a global economy where recessionary clouds are thickening.