In his latest look at some of Betfair's lower profile political markets, former career ambassador Pieter Swanepoel assesses the landscape in Australia ahead of next year's announcement of the date for the national general election...
"In some ways, the next election is shaping as a battle between head and heart. According to Bill Shorten, Australian voters could face 'the starkest choice in decades' - either to stick with the low-tax, pro-business growth model, despite its under-performance, or junk all that in favour of a strengthened social safety net, funded by higher taxes on the wealthy and corporations."
How does the Election process work?
The next Australian federal election will elect members of the 46th Parliament, following the dissolution or expiry of the 45th Parliament, as elected at the 2016 'double dissolution' federal election.
Unless there is another double dissolution, the next election must be held between August 2018 and 18 May 2019 for half of the Senators from the six federal States and on or before 2 November 2019 for the 150-seat House of Representatives, and the Senators from the 10 federal territories.
Australia has compulsory voting, using full-preference instant-runoff voting in single member seats for the House of Representatives and optional-preference single transferable voting in the proportionally represented 76-seat Senate.
Who are the main political parties?
The 45th Parliament of Australia was made up of the following political parties, present leaders and number of seats: Liberal/ National coalition (L/NP), Prime Minister Malcolm Turnbull, 76 seats; Australian Labor Party (ALP), Bill Shorten, 69 seats; Greens (GRN), Richard Di Natale, 1 seat; Xenophon Team, Nick Xenophon, 1 seat, and Katter's Australia, Bob Katter, 1 seat.
What are the polls saying?
A voting intention for the House of Representatives, conducted on 20 July 2017, based on a two-party preferred vote, gives the ALP 53% of the vote and the L/NP coalition 47%.
According to a Fairfax-Ipsos poll, published in the Sydney Morning Herald on March 26 2017, support for the Turnbull government has crashed and Labor held a thumping 10-point lead over the Coalition in a two-party preferred vote. At that stage, under a uniform swing, the government would have suffered an electoral drubbing and lost 24 seats.
This national poll of 1,400 respondents, showed that Prime Minister Turnbull's approval rating was 40% (down 5% since November 2016) with 48% saying they disapprove of his performance as Prime Minister (up 3% since November 2016). Opposition leader Bill Shorten's approval rating was 35% (down 2 points since November 2016) with 53% disapproving (unchanged since November 2016).
Why is Labor ahead?
In some ways, the next election is shaping as a battle between head and heart. According to Bill Shorten, Australian voters could face 'the starkest choice in decades' - either to stick with the low-tax, pro-business growth model, despite its under-performance, or junk all that in favour of a strengthened social safety net, funded by higher taxes on the wealthy and corporations.
Amid the torpor bedeviling the global economy, Malcolm Turnbull is searching for a consistent line, declaring himself an "optimist", while warning that household budgets could be further strained, meaning borrowers should be "prudent" about their indebtedness.
Clearly, this sentiment is ill-suited to jolting a flat-lining economy into sudden and care-free effervescence. The personally comfortable Turnbull, with a reported net of over $200 million, might call himself an optimist, but his government's failure to prevent soaring household electricity prices and, more recently, mortgage rates, will most likely entrench voters as pessimists. It is an incompatibility that favours Labor.
Increasingly, an emboldened Shorten is eyeing the redistributive manifestos of Bernie Sanders and Jeremy Corbyn. Shorten's promise to address a "two-class tax system", where high-income earners pay amounts to minimise their liabilities, speaks to a specific grievance of voters. Conversely, Turnbull's plan to cut big business taxes to deliver better wages and more jobs, is counter-intuitive and thus a political liability.
What does the market think?
It is interesting to note that in the build-up to the 2016 election, Turnbull faced a 10% swing against him in his Sydney seat of Wentworth, according to polls which showed that more than half his electors thought less of him since he became Prime Minister. More than 53% of the respondents said that Turnbull failed to live up to their expectations. Asked what issues most influenced their votes, 19% said Medicare, 18% said climate change, 13% said school funding and less than 10% said gay marriages.
While support for minor parties, including the Greens and the Xenophon Team has held firm, it would appear at this early stage, that the Labor Party stands most to gain from the next Australian election.
So what does that mean for punters? Well, as ever the Betfair markets are on the ball and sensing the shift in momentum. That's why Labor are trading at around [1.6] to win the next Federal Election with the men currently in power, the Coalition, available as big as [2.8].
Yes, we've seen some upsets in recent times (Trump, Brexit anyone?) but what the polls are saying now probably suggests that if the elections were tomorrow, it would be Labor in power and the Coalition dethroned. But they're not tomorrow.