Tuesday, March 2, 2010

Newspoll: 52-48 (or some things have changed a bit, some things haven’t)

Today out came the Newspoll that revealed a couple of interesting things. Firstly it showed a 1% increase in both the ALP’s and Liberal Party’s primary votes, but because of a 3% decline in the Green’s primary, the Two Party Preferred changed from 53-47 to 52-48 – essentially no change at all. But the really interesting thing was how little attention this Newspoll received in the media. Two months ago a 52-48 poll would have seemed like a seismic shift in the political world. Now it is reported as a bit of a ho hum. It makes me suspect that 52-54 is here to stay for the ALP.

In fact most reportage was based around how little was the drop in the ALP vote (two party at any rate). This can be put down to Kevin Rudd’s clever managing of expectations. On the weekend he talked again and again about taking a whacking in the polls. It didn’t happen. He did this repeatedly during 2007, and each time nothing happened. Rudd may be having some difficulty managing the expectations of his policy outcomes, but he’s doing fine with respect to the polls.

On the Preferred PM score, Rudd retains a strong 25% lead – 55% to 30%. The 30% is the best done by an opposition leader against Rudd. The question for us all to ask the leaves at the bottom of our tea cup is whether this is but one step on the way to an ever increasing rise, or is this near the summit for Abbott?

In the past two weeks the ALP has been given an absolute bollocking in the media. The press has gone along for the ride on the whole Garrett is responsible of industrial manslaughter for the deaths of four men bit. And on Friday as Newspoll was in the field, Rudd demoted Garrett. So you would have to say the Government could not have had a worse fortnight (other than were it to actually be responsible for four deaths, rather than just have Abbott saying they are). And yet the ALP Primary went up 1% (I know – statistical noise).

So you have to wonder what do Abbott and Co have to do to get in a winning position, because they sure as heck aren’t yet. (Repeat after me – if the Government is in the lead in the polls it wins re-election – in fact in the past, even when Government have been behind in the polls they have gone on to win the election.)

Yesterday Gillard and Rudd brought out the national education curriculum – big policy. The health policy is apparently coming out next (Rudd to give a speech at the National Press club – you can see how important health is, because he is the one giving it, not Nicola Roxon) – bigger policy.

Now Abbott can whinge all he wants about such things being a diversion by the Government from the insulation program, but the fact is they are not. Government is not just one portfolio, and it sure as hell isn’t just one program. The Government is bringing out new policies because that is what Governments do. Is it helping push an issue out of the media cycle? Well yes, and that is a nice for Rudd and Co, and Abbott can cry all he wants, but I say to him – welcome to opposition. Incumbency is very powerful (and if Abbott doesn’t realise that after 11 years of Howard, then he is an utter fool). Sometimes Governments do bring out things as diversions; mostly they just bring out things because they are the Government and Government announce things all the time. Oppositions rarely get a chance to control the media cycle, and when they do they need to do better than they did with Garrett.

Anyone who watched Question Time knows that Abbott and Hunt didn’t get Garrett demoted – it was the endless media coverage. Abbott and Hunt never once troubled Garret in Parliament – and THAT is why he still remains a Minister.

When Rudd demoted Garrett we had some dopey articles written by the likes of Dennis Shanahan suggesting that it would only prolong the issue. Please. The issue is gone – you got a question about insulation? Ask Greg Combet. Abbott complained that Garrett shouldn’t be allowed to “fix” the program. Well he isn’t, so what’s he still complaining for?

Is 52-48 the high point, or first step to 50-50? Well we all have to wait for “events” but looking at how Rudd has been on TV in the last few days – he was having a ball yesterday launching the schools’ curriculum, I think he has got his mojo back again.

The ALP took Christmas and January off – most likely hoping Abbott would shoot himself in the foot. He didn’t, and they started the year very cold; but as they say in footy, premierships aren’t won in February.


The Reserve Bank raised interest rates by 0.25% today – taking them to 4%. imageThe response from the usual suspects was as expected – in fact Michael Stutchbury of The Australian took an interesting tack. This morning prior to the announcement he decided to have fun playing with Kevin Rudd’s apology to voters:

KEVIN Rudd's mea culpa contrition needs to go further by conceding that the government's stimulus interventions have seriously over-reached and now need to be wound back.

The only problem for Stutchbury was that last night (most likely after Stutcbhury had filed his piece) the Governor of the Reserve Bank, Glenn Stevens said this in a speech (also reported in The Australian – in a nice bit of irony):

RESERVE Bank governor Glenn Stevens has backed the government's claim its net debt will peak at no more than 10 per cent of GDP, saying its finances are in "terrific shape".

…. Mr Stevens said Australia had emerged from the crisis in better condition than almost any other country. "We can come out of this episode as the country that didn't have to buy their banks, where government finances are in terrific shape, where the government debt ratio will peak at 10 per cent of GDP, with a strong regulatory framework and where unconventional fiscal and monetary measures worked a treat," he said.

Woops. So much for worries about debt. But of course Stutchbury is now worried about the current account balance (and of course a flexible IR system…) But Stutchbury took his analysis to new heights  of hilarity when in the same edition of The Oz he wrote that the RBA should raise interest rates because of:

the rebound in jobs, housing prices, corporate profits and business investment.

Yes the economy has been badly run by the ALP, and it’s in such bad shape that the RBA must raise rates because the economy is going so well….


Joe Hockey obviously starts each day with a Stutchbury opinion piece, and so when the RBA raised rates, he tweeted:

Rates increase of .25% is latest warning to Rudd on excessive spending He is still spending recession level money for a mild '08 downswing.

construction work done3Yes, the Global Financial Crisis was “mild”. You know why it was mild, Joe? Because of the bloody stimulus spending. Want proof – have a look at this graph (courtesy of Peter Martin). The blue line and red line pretty well stay together – except for during the boom times of 2003 – when private construction was going great guns – and post June 2008 – when private construction died. Without the red line rise of public construction (school halls etc) the building industry would have gone backwards.

If you think that’s a good thing for the nation, raise you hand.

But look, let’s have a look at what the RBA says and see if we can find any Joe Hockey warnings:

Inflation has, as expected, declined in underlying terms from its peak in 2008, helped by the fall in commodity prices at the end of 2008, a noticeable slowing in private-sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand. CPI inflation has risen somewhat recently as temporary factors that had been holding it to unusually low rates are now abating. Inflation is expected to be consistent with the target in 2010.

Inflation is the key. Government spending is really only a factor on interest rates if it is driving up inflation – because interest rates are put up to reduce inflation. Hockey can bang on all he wants about debt. But Government spending is not directly forcing interest rates up. The RBA is putting interest rates up because they can see what the Government's stimulus is expected to do in the future, and thus in a sense can count on that spending. If there was no spending, interest rates would not go up, but then neither would have construction, and neither would have employment, and neither would have GDP. If you don’t believe me, look at the blue line – it went down at about the same time and rate as the interest rates did – ie slashing the interest rate did not cause private sector construction to increase – at best it only stopped it from declining as much as it would have.

And so we get back to the polls. “It’s the economy, stupid” is the one key truth in an election. The ALP still has a very good story to tell (and very little competition from the LNP, thank you Barnaby, Hockey and Tony “economics is a bore” Abbott). There are only two sitting weeks till Budget season, by which time insulation will be long gone, and Abbott will need more than anti-slogans to shift the polls.

What we should also remember however, is that along with the “It’s the economy, stupid” line, the Clinton campaign also had the slogan: “Don’t forget health care”.

That battle is about to begin.

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