Which party will benefit from the recession election?

A recession election is coming. We may not be in an actual two quarter growth draw down by May but will feel like it and will likely to be happening in per capita terms. Here’s my best guess for where we’ll be at by May:

How will this impact the election?

The Coalition is planning to campaign on three fronts:

  • economic management and a surplus;
  • Labor’s supposed tax hikes, and
  • border security.

The first is about to become a liability. It’s all very well to crow about surpluses in the good times but in the bad it just looks like penny pinching. To fix that, Josh Recessionberg will have to swing to a framework of how the surplus has positioned the nation for new stimulus yada, yada, yada. Even if this is couched as tax cuts, it is inherently playing on natural Labor territory.

The second will get a boost. Given the developing downturn is driven primarily by the house price bust, Labor’s negative gearing reforms are going to come under intense attack.

The third leg is neither here nor there but support for mass immigration is also going to come under more pressure as wage growth rolls over. That is again very difficult territory for the Coalition given its years of doing everything it can to gut wages.

For Labor the calculus is a little better. For a start it’s not in government. Second, Keynesian spending suits its brand. As well, it is already campaigning under the rubric of “fairness” which will be reassuring to voters amid a declining economy. Its policies include:

  • tax reform to concessions such as negative gearing and franking credits;
  • low income household tax cuts;
  • better infrastructure and services provision;
  • fairer welfare structures.

Clearly the first will be a political liability as the housing bust worsens. But Labor has already booted these reforms out to 2020 so it can reasonably argue that they are not responsible for the downturn and will be timely by then.

The last three are all well-suited to a recession election as households look to public support as they tighten belts.

There is one other free radical to consider. The lunatic RBA will return soon with more outrageous corruption as it seeks to restore illegal mortgages. That will also help the Coalition as it attacks Labor’s housing reforms. The hapless RBA may also be forced to cut interest rates either before or during the election campaign. That will also favour the government.

In conclusion, I am usually of the view that recessionary conditions favour the incumbent given people turn conservative and risk averse. As well, Labor’s tax reform agenda will become more difficult to sell. Even so, the election is a foregone conclusion and, given the Coalition rabble unable to maximise political gain from anything, any economic downturn will most probably only offer the polity one final reason to kick Scummo from power with a bullet.


  1. Good summary.

    Typically a minor crisis favours the incumbents (as you say, people get conservative and cautious). Whereas a massive crash favours the opposition.

    The one other interesting element will be the Royal Commission outcomes and whether the Government’s response gives more ammo to Labor and its potent attacks that the Libs are too close to big business and the banks.

    • The vibe of this election reminds me of the NSW election in 2010 when Labor was crushed. No one is listening anymore, they are waiting with baseball bats. A falling economy will work against the government because it will illustrate the failures of the status quo.

  2. AUS has already had per capita recessions in the past 30 years.

    low income household tax cuts;

    Income tax cuts have run their course because the income tax free threshold is already at $18k/year. Some handouts are politically viable and some are not. Free food at school is very viable and will also reduce obesity. Would Reusa object to free melons, cherries, and bananas at school?

    There is no point in taxing the rich if the money is going to be used to build road tunnels. The ALP needs to charge foreigners $40/day for a train ticket and $100/day for car parking.

    • I think the problem in Sydney and Melbourne is that the population ponzi has meant wages have been kept low, house prices high and taxes relatively high to pay for the open boarders. The difficulty for young people to purchase accommodation has led to high debt for those people and the bank of mum and dad who do not wish to see their kids be debt slaves. Unfortunately greed and poor policy will see,these people shredded in this property collapse so that the FIRE industries may survive.

      • Absoloodle!
        The people with ‘power’ do just fine thanks – Lawyers. Public Servants, Teachers, Doctors, Unions like Watersiders who can bully the populace, politicians etc etc and, of course, the urban elites in all their forms.
        It’s those already stressed that get it in the neck. The rest don’t give a fig!
        Oh they’ll pretend. We’ll hear ‘because it’s fair” as often as we heart ‘sale on neeeooowwwww!’ but actually nobody will give a damn.

      • Jumping jack flash

        Wage increases are only absent for the plebs and the drones. If you are able to tax the wage capacity before it trickles down, chances are you’ve done quite well from the cheap labour glut. The statistics does the rest.

  3. mild colonialMEMBER

    I think going onto a recession people go labor. How aware they are that we’re receding, in May, I’m not sure. But people losing their jobs and their houses will vote Labor. Which of course is a shame in my opinion but better than voting LNP.

    • My view is that the federal election will replicate the Victorian election. Labor to win with carnage to the Coalition and decimation of the Greens. However, there was very little attention given to the legislative chamber in Victoria which now has more micro parties. Of course the major parties don’t like this, but at least one in four people don’t vote for the major parties, so for me it is having the upper house more like voting intentions rather than 2PP.

    • mild colonialMEMBER

      what’s the bet for the entire recession i’m the only person who ever says recede.
      so thanks for the one off choir work.

  4. Yeah but dont forget the rotation of PMs that LNP has had recently and all the scandals. People are just angry ans hare lnp too right now.

  5. both parties will benefit because recessions are periods when money gets transferred from ordinary people into pockets of the rich friends of political parties and when debt gets transferred from the rich to ordinary people

    transfers are going to be huge this time – both parties did great job

  6. Labor. Everyone knows things are getting worse, property prices are cratering, and the incumbent always wears the blame. Add to the fact that ScoMo and his merry band of idiots inspire alternate feelings of dismay and hilarious laughter, and all Shorten and Labor have to do between now and the election is shut up and not get caught molesting say a goat in the middle of Marting Pl and they’re a lock.

    Of course, my money is on the sh1t hitting the fan after Labor sweep to power, so they’ll get caught holding the bag. Not that it matters. The differences between the major parties is naught but cosmetic anyway.

    • Yup!!!
      Plus the fact nobody gives a damn about debt (government or foreign) Labor win by the length of the straight.
      The only thing interesting is what the Labor idiots and their Green/Getup clowns do after that when nothing computes anymore and all the circles never join up.

      • Flawse, I have come to the conclusion that the people who will be hurt badly out of all of this are locals who are under about 35 and are trying to make their way in the world. The irony is they are more likely to have voted green or for the alp as a result of an inadequate education and lack of real life experience. The sinking of the dollar alongside real estate will mean that the artificial impediment to rural industry will be removed. I am however expecting an off shore reduction in price for commodities considering the slump that is anticipated but with an amelioration of that in local currency terms. Your thoughts?

      • Fitzroy
        I should preface all my remarks with ‘Just my current opinion’!!!
        Re rural industries – I think they are about to get a al boost with the (presumed) falling dollar. However, this will not be tolerated by the urban voter as persuaded by the political loudmouths (what is referred to as the elites and their mouthpieces at the ABC and urban media) Note that Sydney/Melbourne/Brisbane and their satellites now constitute 58% of the voting population. There will be calls for price controls on rural basic food products and restrictions on exports to provide urban consumers with cheaper food.
        The falling dollar will generate inflation which for which the powerful will demand compensation. Government spending, in the Sydnel/Melbourne/Canberra/Brisbane axis will just go completely crazy My experience of this is that the end result is the devastation of all and anything productive – especially farming. Costs will rise astronomically.
        The rise in farm costs as a result of the direct effect of the falling dollar will be in the major league. So, heap out of control government and other domestic costs on top and it will spell trouble. That said – would I mind being back on a farm just now? Probably!
        I guess the big question is whether the current model of flogging assets to foreigners to fund all the non-productive domestic investment and consumption can survive a few more years?

        My mind has trouble computing the idiocy of both the position we have allowed ourselves to arrive at and the monumental insanity of the solutions that are currently proposed for the nation – an insanity that is pretty much MB commenters meme.
        In the future I can only see Venezuela – madness. Dante comes to mind.

      • I’ve been waiting about a decade now for our lowered dollar to generate inflation – it always seems to be “just around the corner” but never quite materialises. Indeed, it has spent years mostly UNDER the RBA’s target band.

        I think the answer to this phenomenon of the present cannot be found by looking back in time – because the inflationary episodes of the past occurred in a time when the mechanics of re-distribution were entirely different. Labour simply does not have the power to argue for it’s share any longer. Just because the price goes up, it doesn’t mean that wages do – that dynamic has been crushed.

        Which means that consumers can’t pay what they aren’t earning without recourse to more borrowing – something that looks just about tapped out.

        In short, regardless of what imports might start costing the producer/importer – raising prices is ineffective once it becomes impossible for consumers (most of whom are workers) to keep paying more.

        Capital has largely won the war over labour thanks to the dominance of neo-liberalism – but in a bit of an ironic twist it has defeated itself since much of the spending power of consumers is derived from workers wages. Capital will simply have to bear the cost of a lower currency, this is one hot potato they cannot pass on any more – many will simply run bankrupt if they try to squeeze blood from stones.

      • Exporting to offshore breaks the bonds of Neolibralism though does it not? Not every country trashes its own citizens as much as this one.

      • Leftee
        I think your analysis is a bit simplistic (that’s not meant to be demeaning – it’s a damned complex subject difficult to address) but in the end the result is somewhat the same. However I suspect that the issues we ae addressing mean a different perspective to the Labour vs Capital framework – which is a bit large for this discussion.

        ‘Workers’ is not some great uniform mass. There are workers with no power. These have more in common with small businesses with no power, or pensioners than they do with Waterside workers et al, public servants and union bosses.
        Whereas Union bosses, public servants and powerful unions actually have more in common with big business, government, media and the powerful end of town generally.

      • About the discussion

        About Gail Tverberg
        My name is Gail Tverberg. I am an actuary interested in finite world issues – oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

      • Andrew LeesMEMBER


        “Capital has largely won the war over labour thanks to the dominance of neo-liberalism – but in a bit of an ironic twist it has defeated itself since much of the spending power of consumers is derived from workers wages.”

        An outcome that was predicted in a book written more than 20 years ago by a labor politician whose name escapes me, but then argued again a few years later by Bob Ellis in his book “First Abolish the Customer : 202 Arguments Against Economic Rationalism”

    • (not wishing to make light of anyone’s personal circumstances but) it seems Albo and his now ex-missus may have concluded that Shorten will win and win strongly thereby ending Albo’s short to medium term ambitions for the top ALP job.

    • caught molesting say a goat in the middle of Marting Pl

      I love how there are options. A sheep? Alpaca?

      “Your honour, that ruminant was asking for it. Immodest herbivores are nothing but so many plates of uncovered meat.”

      • My place of employment, many years ago, was sharing the local Court House. A bloke got dobbed in bt his missus for being intimate with a goat. While waiting for the case to come before the court, the goat was tethered around the Court house and, frequently, on the front lawn. One day shortly after the situation arose, I was walking back to the court house with the local Sheep and Wool Adviser when, passing by the goat tethered on the front lawn, he made the observation “Strewwth! It’s not even a good looking goat”

      • Gotta provide options, some people are pretty xenophobic and bigpoted.

        Maybe I should have said “licking a doorbell for 3 hours” (google it, mostly SFW but enormously lolwut)

      • lol

        And I thought this was an inclusive society. Was it consensual? How did the goat respond?

        Was there something missing with the missus. Did she sue the hubby or goat for loss of conjugal rights?

        Its a pretty mixed up world. May be there were extenuating circumstances.

        Who are we to cast the first stone?

  7. Hill Billy 55MEMBER

    Ladies and Gentlemen, in the Recession Election, I give you Toowoomba. All that is bad about Australia in a microcosm of greed and rent seeking. It has one of the highest construction workforces as a percentage of total employment in Aust. The Brisbane West airport is a shining light of the PPP that the neolibs are so proud of. Looks private, but survives on extortinate rents and charges set down by a Public Tribunal

    The new through road is one of the few deliberately built Toll roads outside the Capital cities. They have now the highest mortgage stress (as measured by Digital Financial Analytics) in the country.

    They provide many services to the farms and mines west, vis, doctors, hospitals, schools, Accounting and Legal and, of course, charge accordingly.

    Looks nice, but rotten to the core. Go Australia!

    • Toowoomba will be fine; plenty of work opportunities within the enormous take-away industry up there.
      Well over 160 places to flip burgers at, for a population of around 150k. Was astonished by the number of options up there recently I did a quick list….

      7 subways
      6 McDonald’s
      6 red rooster
      4 KFC
      4 Dominos Pizza
      3 super roosters
      3 donut kings
      2 hungry jacks
      2 Pizza Hut
      2 nandos
      2 Guzman Y Gomez
      2 cold rock
      1 Oporto
      1 hogs breath
      1 grilld
      1 snitz
      1 wendys
      1 sizzler
      1 baskin Robbins
      15 chinese take aways
      14 Indian take aways
      11 fish n chips 
      12 italian
      10 japanese
      2 other mexican
      2 Vietnamese
      1 middle eastern
      1 korean
      35 burger places
      8+ hotels

      I’m lovin’ it!

      • Hill Billy 55MEMBER

        Yes, I’ve noticed that. How many of them will be closed once the construction boom goes? I should have added the take aways to the list of rent seekers.Of course, then the loanlords (that was an interesting mistake, I meant landlords) will be screaming whhooocoouldanode!

      • St JacquesMEMBER

        Now that’s what I call a consumption based economy. Now how about the weight loss, fitness and health related businesses that are there to round out the local economy?

      • I used to drive Canberra to Brissy a bit back in the 90s and there was a Red Rooster in Toowoomba that would ALWAYS get my money. Hot chicken roll, chips and a deep fried pineapple fritter. Thank YOU.

  8. We can’t cut immigration. Rajiv is a wonderful uber driver, my gardener Wei keeps the outsides beautiful, the kids love the back packer nannies from Europe we’ve had for the cost of a closet room under the stairs, and my investments in various agricultural companies wouldn’t survive without a constant replenishment from fresh workers.

    It also wouldn’t be much fun at the luncheons to not be able to feel superior supporting higher levels of immigration, knowing we’re better than the racist bigoted xenophobic lot complaining about house prices (don’t be lazy and work harder) , public transport (BMW A 3 is a nice commuter), crowded public schools (don’t be a child abuser, send them to a private school).

    My Greens friends, and those wonderful Gardian types, won’t allow Australia to shirk its global responsibility and cut the rather low current levels of immigration.

    • Been working from home and walking to work recently (but on different days obviously!)
      Interesting to see how many houses turn into workplaces for cleaners and gardeners from 8am onwards – probably cash in hand most of the time
      In a recession, those jobs will go extremely quickly, and anyone who hasn’t already got PR will be on their way home.

    • Nice life for some. No doubt this how many in the top suburbs feel.

      But tumbling asset prices will hurt them more than most of us because they own most of the assets.

  9. Jumping jack flash

    If there is a recession then I would think that most people would tend towards the LNP. It has happened pretty much every time.

    But in the slight chance that people have become aware of the ineptitude and impotence of the LibLabs over the past decade, then I’m sure they would try their luck on a minor party. The timing is right. Trump is president after all.

    It actually makes little difference though because the entire political landscape is hobbled due to the worship of Thatcherism over the past few decades. Any government would find themselves in exactly the same position as the most recent LibLab governments – unable to do anything substantial because the power to do anything substantial has been sold off years ago.

    Any government who doesn’t realise that and make it their priority to try to wrest control back through spending, and development of state-owned infrastructure – not (just) roads and bridges, but electricity generators and factories, is doomed to follow the same indolent path as these most recent LibLab governments.

    That’s not to say any elected party wouldn’t just follow that easy path. Who wants to do any work? Its far easier to get paid a huge sum of money for sitting at a desk and checking single-page reports handed to you by the private companies who actually control the country, and filling in the time between elections by getting drunk, shagging staffers, going on dates in Hong Kong, and contemplating and setting up your life after politics.

    • “unable to do anything substantial because the power to do anything substantial has been sold off years ago.”
      Yup!!! I’d just change ‘years ago’ to ‘multi-decades ago’

    • Correction to last line…….. contemplate which donor received the best value from the pennies thrown your way so you can hit them up for a cushy sinecure 🙂

  10. John Howards Bowling Coach

    There is still a large portion of the electorate who mistakenly believe the Liberal Party are competent economic managers so in degrading times I predict there will still be quite a large chunk who vote for them based on this misinformation. The ALP are largely the same and carried on with privatisation and never ever buy pack national or state assets sold of to make the books look better, but somehow they never get the Qudos in Australian voter mind for economic management, it’s still widely seen as the domain of the Libs. Then again, perhaps more people can remember what a damaging and naive plan was set rolling by the Hawke/Keating crew with the end of protection and the end of industry in Australia, as well as ushering the foreign takeover virus.

  11. Come election time, I reckon Labor will benefit from the LNP’s current intransigence to the emerging issues in the economy. Depending how pear shaped it all goes, Labor could neutralise any “better economic manager” attack narrative fast. The Learner and the bloke with two left feet have been on the hustings tell all how wonderful things are when in fact they’re not. Come May, those words will come back to haunt them.

    As for tax cuts, they won’t go far. The ones we’ve had did nothing to lift the LNP’s poll number as to most this was more a claw back than a bonus. Morrison said in May budget the tax cuts were” to help compensate flat wages growth”. So now business has outsourced wages growth to the Government via personal income tax cuts. Great.

    As for border security, everyone’s over that, done to death now that it’s been revealed there are more arrivals by plane than ever before. Dutton’s now a dead weight. The citizenship stripping of Parakash blew up spectacularly in Dutton’s face for him to then to throw smoke with the sex offender registry that invariably blew up in his face again. The best the LNP can do with Dutton is to ship him of with Fraser Anning to a few right wing meetings and spots to 2GB to preach to the converted because no one else is listening. The LNP have given Labor so much of the last few years, the list of material is not a case of what to use, it’s filtering out the what not to use.

    • So now business has outsourced wages growth to the Government via personal income tax cuts. Great.

      Ah fvck me that articulates that very well.