The Future Political Environment

This week a report was released by the Centre for Independent Studies with the headline on the ABC being:

Coalition faces slim chance of return to power unless it gets young voters on board, says report

While I am generally sceptical of demographic conclusions around attitudes being forecast many years in advance, I have been talking quite a lot about various political scenarios to clients over the last 12 months or so. The political environment affects the legal and regulatory environment that businesses and not for profits my operate in. This means it is worth thinking forward about what might happen.

First of all, some facts rather than projections or scenarios. As the picture in the header shows, the votes of the two major parties has been falling for the last 50 years. There are some bumps and falls along the way but the trend line seems clear. The bottom line (green) shows the share of the vote for minor parties. The major parties only achieved a combined primary vote in the lower house of 68.07% in the 2022 election, with an informal vote of 5.19% and others on 26.75%. This compares to the major parties receiving 76.5% of the primary vote in 2016 and the minor parties 18.45% in the 2016 Federal election. So the trend continues.

The CIS report projects that this may cause more problems in the future for the Coalition parties (Liberal and National) due to demographic changes.

As a general principle voters in Australia vote more for the coalition parties as they get older. My father used to quote to me:

“If a man is not a socialist by the time he is 20, he has no heart. If he is not a conservative by the time he is 40, he has no brain.”

The CIS report indicates that this "natural" drift is happening more slowly in millennials and is going the opposite way in Gen Z:

"Gen Z have entered the electorate at historically low levels of support for the Coalition and are drifting further and further away from it as they move into their mid 20s."

Millennials are moving towards the Coalition as they age, but they come off a low base, and are moving to the right at a much slower pace than previous generations.

Only one in four voters aged under 40 gave their primary vote to the Coalition in the 2022 federal election, according to the?Australian Election?Study?[AES]. That's the lowest primary vote for the Coalition since the study began crunching the numbers back in 1987.

Putting aside the reality that changes like this can alter over time and therefore making 40 year projections is very hazardous we can look at a couple of scenarios about what might happen.

Scenario 1

The ongoing drift of voters away from the major parties continues and results in no major party being able to govern in its own right again.

This is an easy scenario to create from the trend numbers. Despite winning the last Federal election quite easily over the Coalition, the Labor Party has a very slender majority of 77 seats to 74 seats in the Parliament. The loss of one seat would leave them in a 76-75 position, and they would only have a parliamentary majority if they supported an independent speaker. The Coalition only have 58 seats, so they need to win 18 seats to get to a 76-75 position. If the drift away from the major parties continues, it is very plausible that we could never see another majority Federal Government in Australia ever again. A caveat against that in the short term is that the ALP seems to be doing quite well in the polls and may buck against the trend at the next election, but as they say, "a week is a long time in politics".

The consequences of this scenario are that either major party will have to compromise with others in the Parliament to get some legislation through. Given that 14 of the non-major party seats are Greens or Independents (many of which are socially progressive), this is likely to mean a legal and regulatory environment that is far more progressive and "Left" leaning.

Scenario 2

The Demographic shift away from the Coalition stays as the CIS has forecast, and Labor stays in power for several terms (as a majority and/or minority government).

Long-term governments tend to implode as the key players become exhausted and the government runs out of steam. If this happens with the current Federal Labor Government and the Coalition has lost seats due to the demographic change the CIS report is forecasting, then things could get very interesting. With no major party that voters want to shift back to, we could end up with a myriad of smaller parties and independents, a much diminished Labor Party representation that the people do not trust and a much diminished Coalition. This could lead to a significant period of instability, with coalitions of smaller parties and independents forming and re-forming.

So What Does This Mean?

As always, thinking about the future is useless daydreaming unless it leads to action. In this case, these scenarios should lead to at least four actions:

1. Ongoing monitoring of change in the political sphere. No scenario comes true exactly as it is put together (and these are fairly limited scenarios), so keep looking at change in this area and think about what it means for your organisation.
2. The standard process should be not to get too close to one or other of the major parties and maintain close contact with both. So don't be aligning yourself with a major political party. On top of that, start thinking about closer contacts with the Greens, and independents, especially the Tael Independents. Good relationships with people when they do not have power leads to strong relationships when they do have power.
3. The most likely scenario is a more progressive and "Left" leaning Federal Parliament. So start thinking about what that means for your organisation. This is especially true of organisations that are exposed to risk from government policy change. What things should you be doing now or preparing to do in this scenario?
4. Think about major disruptions that could really expose you. A policy change that would not occur in a largely two-party majority government system could suddenly occur where a party needs support from one or two independents to get other legislation through the House. This is particularly true where the Greens hold the balance of power in both the House and the Senate. Easier to get a deal done with one group than two separate groups.

A lot of this is about risk management and preparation for change.

Contact me if you want some help thinking through scenarios on this.

Paul Higgins

June 30th 2023

Note: With clients, I have entitled the overall scenarios here as "Australia is the new Italy" as Italy has had varying governments of mixed parties and has averaged a government every 1.11 years since World War 2

Note: I have been somewhat involved in politics in the past, being President of Country Labor for 5 years in the late nineties and early 2000s. I also ran for Federal Preselection for the ALP twice.