One spluttering economy, two political narratives as parties gear up for poll

Extract from The Guardian

Katharine Murphy on politics

Australian politics

Katharine Murphy

The Coalition and Labor both believe the problems highlighted by GDP figures hold the key to victory

@murpharoo

Sat 9 Mar 2019 06.00 AEDT Last modified on Sat 9 Mar 2019 17.42 AEDT

The Public Purse sculpture in Bourke Street mall in Melbourne this week as the economy moved centre stage in the political debate. Photograph: David Crosling/EPA

Given all the noise, and the contention, it’s hard to imagine voters are absorbing anything much at all from the current political conversation, and the bad news is the shouting will only get worse between now and the end of May.
In that vein, my colleague from the Australian Financial Review, Phil Coorey, recounted an interesting conversation he’d had this week with John Scales, who has conducted political research for several decades. Scales noted politicians were now engaging in what he termed emoji messaging to try and penetrate the consciousness of voters who were actively disengaged.
We can find these emojis, littering the landscape. People smugglers, coming back, because, Bill Shorten. (Angry face). Recession, lurking and ready to pounce, because of Bill Shorten. (Worried face). Asylum seekers, clogging up the health system, because of Kerryn Phelps and Bill Shorten. (Worried face, and angry face, followed by WTF face).

It’s one of those explanatory concepts from a seasoned backroom operator that lodges in your brain because it makes perfect sense – but also feels like the end of the world at the same time, because it means politics is reduced to death by soundbite, at least from now until we all insert our papers in the ballot boxes towards the end of May.
But let’s not talk ourselves to a standstill on this Saturday morning in March.
If you could manage, during this past week, to look through the strange spectacle of Scott Morrison’s day trip to Christmas Island at your expense for the purpose of generating television pictures; Peter Dutton’s increasingly apocalyptic declarations about greedy fake refugees coveting Aussie stuff and storming our hospitals; the friends of Barnaby Joyce trying to blast him back into the Nationals leadership; Malcolm Turnbull lamenting his demise from London; and Tony Abbott backflipping on a backflip – what could be seen was an election debate about the economy locking in to its final shape.
That debate is even interesting.
Predictions are fraught in an environment replete with shape shifters, shriekers and charlatans, but I’ll chance my arm with this one. I suspect we’ll spend more time talking about the economy and economic management than is normally the case in this election cycle, because both sides are looking to avoid being snared in their negatives.
The government doesn’t want to talk about climate change for obvious reasons, and Labor doesn’t really want to talk about boat arrivals. Both sides are content, therefore, to position themselves inside the #auspol boxing ring called the economy, and go toe to toe for the next couple of months.

Scott Morrison and Bill Shorten took the opportunity of speeches to a business summit early in the week to make their pitches on economic management.
Morrison says the Coalition has preserved economic growth, maintained progressivity in the tax system, created the conditions for strong employment growth, increased labour market participation by women, and will deliver a budget surplus in April as its crowning achievement. That’s the positive pitch.
The negative one is global growth is faltering, house prices are falling, and you don’t want to hand the economy to Labor in those conditions, insert (back to our emojis) Scary Face. The prime minister wants to say, without owning it explicitly given the inherent recklessness of the declaration, that Labor will drive the economy into a recession.
Shorten countered by declaring the coming federal election would be a referendum on persistent low wages growth.
Beyond that hot-button issue, Shorten said the election will be a contest about the big systemic questions that have thundered in democracies around the world as they have absorbed the shock of the global financial crisis: is the political system working for ordinary wage and salary earners, and is the economy delivering for that same cohort?

If we then line up the two offerings for a bit of compare and contrast, Morrison’s pitch is the economy is working today (humble-brag face) but tomorrow is a different story – so don’t hand the economy to Labor.
Shorten is asking a different question of voters, which is the empathetic one: do you think the economy is working for you?
Labor strategists believe Shorten’s question is the zeitgeist question, and if it frames the economic conversation over the next couple of months, it will propel the ALP to victory federally in late May, even though economic management is not a traditional strength of Labor’s politically. A recent Newspoll suggests that voters continue to trust the Coalition more with economic management than they do Labor.
Interestingly, both sides think the less-than-stellar GDP figures published this week will work for them in the looming contest.
The government thinks the evidence of a softening domestic economy underscores its core message about the risks of a change of government. Senior people think the numbers are galvanising enough to make voters think twice about lodging a protest vote.
Labor, for its part, thinks the new snapshot of the performance of the economy amply makes the case for change, and reinforces its core pitch, which is the economy might be working for someone, but it sure isn’t working for you.
The new national accounts indicate compensation per employee went backwards in real terms, and in response to that persistent reality, my colleague Greg Jericho pointed out this week that Australian households are increasing their spending by less than at any time since the Coalition was elected in September 2013.
Labor is happy to talk about wages growth, both because it’s an easier row to hoe than its more controversial tax and revenue measures, which some voters will applaud, and others will hate; and because it is happy to go to an election telegraphing worker-friendly reform to the industrial relations system, because it will resonate, and it will also get the union movement out campaigning around the country, which is a significant structural advantage Labor enjoys on the ground.
Shorten can point to specific measures to boost pay packets – restoring lost penalty rates, changes to the regulation of labour hire, a “living wage” (which just means giving the Fair Work Commission some new, worker-friendly principles to guide its minimum-wage decisions), and reforms to boost the bargaining power of unionised workforces through as yet unspecified changes to the bargaining system.
Wages are fertile territory for Labor. The government can’t easily match the opposition in this space and activist policies to boost wages would drive its business constituency, which is already viewing this Coalition government through entirely gritted teeth, into a state of outright apoplexy.
The government will try and neutralise Labor’s positive political messaging on wages with arguments that the ALP will drive up cost of living pressures, which will eat up the extra dollars in your pay packet.
Morrison will declare Shorten is pursuing these measures, not because he’s trying to help workers, but because he is a patsy of the union movement. It seems almost certain that the government will throw in some tax cuts in the April budget in lieu of a wages policy, and also use the economic statement to try and reinforce its fiscal credentials by handing down the much telegraphed surplus.
If that government fightback doesn’t work, and Shorten goes on to win the May election, the downside risks of presenting yourself as the empathiser-in-chief, and the one-man solution to wages stagnation, present themselves only once you win office.
Given how worried job-insecure workers are about their pay packets, you can guarantee that voters will come knocking on the door of any future government that over promises and under-delivers on wages growth.
There will be a reckoning.

But now, we are getting way ahead of our story.