How to deliver economic growth but lose an election

How is it possible to preside over a booming economy and yet still lose a national election?

Australia’s outgoing Prime Minister John Howard may be puzzling over that question as he conceded defeat to the opposition Labor party in just-concluded federal elections.

“I have reformed the Australian economy and left it the envy of the world,” said a subdued Mr Howard as he conceded defeat after 11-and-a-half years in power. He had previously won four general elections and has presided over Australia’s booming economic growth since becoming prime minister in 1996.

Indeed, Mr Howard’s Liberal-National Coalition’s campaign theme was that the economy is safer in their hands than in the hands of an “inexperienced” Kevin Rudd, a former diplomat, the leader of the opposition and now prime minister-elect.

Booming economy but…

Most Australian voters obviously didn’t buy that argument. The Australian Labor Party swept to victory with over 53 per cent of the votes. In the process, as many as six Cabinet ministers and parliamentary secretaries in the ruling Coalition may have lost their parliamentary seats. Even Mr Howard’s own seat hangs in the balance, pending the final tally.

Despite the booming economy, many Australians may not have benefited from it. In a recent speech to the National Press Club, Mr Rudd (picture, left) charged that Mr Howard’s government “has failed to ensure along the way that the boom delivers not just for the national economy as a whole, but for working families and the household economy as well…It is a government that has grown insensitive to the living pressures facing working families.”

The staunchly pro-business orientation of the government may have turned many working Australians against them. One of the most contentious issues in this election was about WorkChoices, a sweeping set of industrial relations reforms pushed through by Mr Howard that was supported by business federations but which critics said hurt workers.

“Mr Howard treats working people as economic commodities,” decried Mr Rudd.

Lessons for Singapore

The results of the Australian elections provide some valuable lessons for Singapore. Just like the outgoing Australian government, the Singapore government has always boasted about its stellar management of the economy and its ability to “deliver the goods” (i.e., economic growth) to the country. It has strongly argued that the only way forward for Singapore is to “enlarge the pie” by growing the economy (read: help big businesses become more profitable) as this will eventually prosper all Singaporeans, including those at the bottom of the pyramid.

This “trickle-down economics” theory in reality is often just that — a trickle. Voters in open democracies have been known to reject this political rhetoric. Back in 2004, India’s ruling party, the BJP, also suffered a shock defeat at the polls despite its slogan of “India Shining” and the “feel good factor” from the economic growth fuelled by the strong IT services sector. Analysts saw the defeat as a result of a backlash from the impoverished masses of people who had not benefited from India’s economic growth.

I was in Australia recently and almost all the opposition television commercials I watched focused on the rising cost of living, reduced workers’ rights protections and higher interest rates. Sure, the war in Iraq and global warming played a part in swinging public opinion against the government, but they were probably minor factors.

The bottom line is that elections, even in advanced democracies and booming economies, are still always fought on bread-and-butter issues. Voters are not impressed by impressive macroeconomic growth figures. The government of the day may claim to have delivered the economic goods, but if those goods don’t reach the doorstep of the average working family, they might be shown the exit door by the electorate, just like in Australia and India.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

7 thoughts on “How to deliver economic growth but lose an election”

  1. Great piece Gerald.

    I was wondering if war-on-terrorism fatigue may have played a mediating factor in Australians voting for change. What are your views on this?

    Notwithstanding the limited involvement of Australian troop participation in the hotspots, Howard’s seeming unconditional and irrational loyalty to Bush may have pushed voters over the fence to the Labor side – igniting some sort of a refocus on domestic issues as you so correctly pointed out. Plus, Bush allies are few and far between at this moment.

    Can the PAP be ousted despite good economic numbers? Well, Singaporeans are a funny lot. I believe the best winning margin post-LKY was in 2001 – just after Asian financial crisis and 9-11. Ironically, economic uncertainty may actually be more beneficial to the PAP.

    I feel neither strong nor weak economic growth will hurt the PAP – stagnation or prolonged mediocrity will.

    cheers,
    Unfortunate Singaporean

  2. To an extent I think you are correct however 2 important things to note are:
    1. In Western Australia the liberals won 10 compared to 4 for Labour with 1 seat remaining undecided (SWAN which is 50.01% to Labour as I write this). WA is the powerhouse of the Australian economy and the region where the benefits of macroeconomic growth has been best felt. Additionally it is where the AWA’s (WorkChoice) were best utilised as the Mining Companies has to negotiate favourable terms to keep running. This flowed on to other industries so that in the NW school cleaners, who are on AWA’s, can earn more than the teachers who are on EBA’s negotiated by the Unions.
    2. This was not an issues based election. There were no defining issues that separated the parties. Some will note climate change as an issue but didn’t try to understand the Liberal policy which was very similar to Labour if you take out signing Kyoto. Some might say the IR laws was the defining difference however again the Labour policy has shifted so far from it’s pro-union roots it is closer to former Liberal policy than not. The election was won by taking the emphasis away from the party and onto the individual. Australians are weary of Howard/Costello more than they are of the Liberal party policies. For this reason the Labour party ran a presidential style election campaign where the focus was on Kevin Rudd and not the Labour party. The advertisments were always a comparison of the two leaders – young and fresh versus old and stale. That this election was the “Me too” election bears out this fact. “Me too” on policy but “Look at me” on personality. People were weary of Howard/Costello and the only way to change was to change government. With the opposition saying, “We’ll keep doing what they were doing,” it made the decision easy for a lot of people. The proof will be in the coming months as we will see if the Labour party really has moved to a centrist position or whether it was simply using Rudd as the acceptable face of a still union dominated party.

    You talk about the same fate befalling the former BJP dominated Indian government. I wrote about this at the time http://tinyurl.com/ynu726 and noted that the economic upswing certainly improved the lives of many people, but the majority of Indians were still not middle or upper class. They were/are rural villagers or urban slum dwellers. They could see the impact of the upswing around them (fashion, increase in cars, increase in costs, etc) but they have not experienced it. They are the majority voters. In Australia’s case most people are better off than they have every been at any time in the past. Unemployment is down, interest rates are still relatively low, people are living longer and generally get bored more quickly than ever before. It will be interesting to see how long Rudd’s sheen lasts. I wish him well.

    NB:AWA – Australian Workplace Agreement (individual); EBA – Enterprise Bargaining Agreement (collective)

  3. Unfortunate S’porean – I don’t think Howard’s pro-Bush stance was the reason for his loss. Rudd is almost identical to him in that respect. Just after winning the election, he emphasized the centrality of the US-Australian alliance. They have no choice. I’m told that their real fear is their huge neighbour up north.

    You’re right about the PAP, I feel. Situation is quite different here.

    thebyleduct – excellent analysis! It should be a post on its own! Yes I did notice that it was very personality based. I guess Australia can afford it because truth be told, the two parties (Liberal/Labor) are very similar anyway. (But can you explain to me why the more conservative party is called “Liberal”???)

  4. Gerald if you can explain the reason why the liberal party are conservatives then you will be doing better than most. It is a long lesson in Australian political history. The best wikipedia can do is say, “Liberalism in Australia has been notably lacking in a coherent philosophical underpinning: it is strongly pragmatic, rather than ideological, defined chiefly in antithesis to Labor.”

  5. Hi Gerald,

    Troop withdrawal was also a part of Rudd’s campaign. That had to play on voter psyche…to some extent at least. :)

    “They have no choice. I’m told that their real fear is their huge neighbour up north.” – interesting, care to elaborate?

  6. An Australian once said that the US alliance is important because of the fear of Indonesia. I don’t know how rational that fear is. But I guess if you consider that Indonesia’s population is 10 times Australia’s, there could be some basis for this fear.

    Perhaps my Aussie friends would care to comment on this?

  7. Let me offer 3 thoughts on this (thoughts only because I am not and never have been party to the strategic decisions made at a political level).
    1. Australia’s fear has more to do with mass illegal migration (similar to Mexican’s crossing into the USA) than any strategic US alliance. The stretch of sea between the two countries is of course a limiting factor. However most Australian’s, let alone foreigners, do not realise the extent of contact between Indonesians and Australians over the years which has led to towns between Darwin and Broome being very multicultural.

    2. The AUS-USA alliance needs to be justified by certain political groups. The reasons behind this need make for a complicated story of smoke and mirrors, the need to have an enemy, and historical political differences. The statement you quote seeks to justify the alliance through fear of Islamic extremists (Bali bombings etc) coupled with illegal migration (Asian invasion – historically Japan in WW2) and the negative perceptions of Indonesian military (due to the history of confrontation over East Timor, journalists murdered etc).

    3. In the 1960’s a regularly published pamphlet was distributed Australia-wide dealing with prophesy. One of these had a prophesy with an map of the north of Australia blackened out. The prophesy dealt with the taking over of the north of Australia by a foreign force which was religious in nature. Last year when the Indonesian government cracked down on particular Islamic militants images where shown of the inside of one of the rooms. On the wall was a map – the same as the one distributed in the pamphlet 40 years prior.

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