(Bloomberg) — Australian Prime Minister Anthony Albanese’s plunging approval rating, stoked by public discontent on everything from inflation to immigration, is set to make 2024 a critical year for his government, as national elections loom on the horizon.
Albanese’s loss of standing has been both rapid and precipitous. This time last year, his approval rating stood at 62%, and he looked on track to lead a long-term Labor government, possibly becoming the first Australian prime minister in two decades to win two elections in a row. Today, he’s polling at a miserly 40%.
The inflection point was Albanese’s decision to push ahead with his pledge to write an Indigenous advisory body into the constitution. It was heavily defeated at a referendum this past October, and opened his government to criticism that it was pursuing minority interests when a majority of households were struggling to make ends meet due to high inflation and soaring borrowing costs.
Now, opposition leader Peter Dutton, a former policeman and defense minister, has begun publicly speculating about the Liberal-National coalition returning to government sooner than many had expected. At the very least, he could push Albanese into a minority government at the next election — due by mid-2025 — given the ruling Labor party’s razor-thin majority.
Albanese now faces a critical test on whether he and his colleagues can regain control of the political agenda next year, said Michelle Grattan, a professorial fellow at the University of Canberra and veteran observer of Australian politics.
“It could be a temporary pit into which they’ve fallen, or it could be the beginning of a slide,” she said.
Wins and Losses
Despite being elected by one of the narrowest margins in Australian history in May 2022, Albanese’s approval rating and his government’s popularity soon soared as he moved quickly to implement election promises, including an independent anti-corruption commission, carbon emission targets and faster wage growth.
The prime minister also demonstrated a deft diplomatic touch, deepening relations with allies and partners like the US and India but also rapidly improving ties with China, which had fallen into a hole under predecessor Scott Morrison. His government even delivered the first budget surplus in 15 years.
Emboldened by this first 12 months in office, Albanese pushed ahead with his most ambitious policy yet — a national referendum on the Indigenous Voice to Parliament in September. Initially popular, it rapidly lost its appeal and took Albanese’s rating down with it.
Grattan said the loss “knocked the stuffing” out of the government psychologically. “It gave Albanese’s authority a knock, especially among colleagues,” she said.
Since then, little has gone right.
The eruption of the Israel-Hamas conflict in October led to extreme pressure on Albanese to either support Israel or the Palestinians. In the interests of national cohesion, he chose a middle road, pleasing no one.
The war also pushed petrol prices in Australia to well above A$2 ($1.3) a liter, intensifying the squeeze on families. Then in November the Reserve Bank ended four months of pauses and raised its key rate to a 12-year high of 4.35%.
Soon after, a new front opened on a traditional vulnerability for Labor: immigration. The High Court ruled, in early November, that the government had to release dozens of long-term detainees. The cohort included offenders charged with crimes like murder and sexual assault, but who couldn’t be deported due to concerns they’d be killed back in their home countries.
Even though it had no control over the decision, it led to accusations that Albanese had failed to keep Australians safe or anticipate the ruling. High octane political battles in parliament — reinforced by a 24-hour media cycle — resulted in rushed legislation that gave an impression of a government in chaos.
By the end of November, Labor’s primary vote had dropped 8 percentage points from a year earlier to 31% and Albanese’s net approval was level with Dutton’s.
Backbench Jitters
Albanese’s lawmakers are starting to show signs of uncertainty, with backbench politicians holding an emergency meeting with Treasurer Jim Chalmers and the economics team in the last week of November.
Labor lawmaker Brian Mitchell was one of those who sought the meeting, concerned that mortgage holders were unfairly bearing the brunt of the fight against inflation. In particular, he was worried about comments by RBA Governor Michele Bullock that there might be more rate hikes to come. The central bank has maintained a hawkish stance even after pausing last week.
“I’m not sure people in my electorate with very high mortgages who are already stretched can withstand another one, two or three 25 basis point rises,” he said.
While there is the prospect of financial relief for households in 2024, even that isn’t straightforward. The previous center-right government had legislated significant tax cuts for higher income earners beginning on July 1 next year. Albanese pledged to support the policy at the last election.
Yet the economic landscape has now changed and there are strong arguments for redirecting some of that largess to lower-income households desperate for extra cash. But any changes could be seen as a broken promise — never taken well by voters.
On the upside, there is potential for interest rates to begin to fall later next year, while a decline in the global oil price should also eventually filter through.
But then there is immigration. It has surged since the lifting of Covid restrictions, putting pressure on housing and infrastructure. As annual population growth has almost doubled from usual levels, public discontent has grown, and conservative parties, for whom migration has long been a powerful weapon, taste blood.
Jill Sheppard, a political expert at the Australian National University, said Albanese’s government is losing its confidence as it reached the halfway point of its term and is “really, really nervous” about making decisions.
“When you start to second guess your decision making ability, then that permeates everything that you do. And I think that’s what we’re seeing,” she said. “From a voter’s perspective, that’s really unnerving.”
Despite his troubles, so far there is no sign of leadership speculation against the prime minister in the corridors of power in Canberra, and Sheppard said Labor was likely to head into the next election with an economy on the upswing. “There’s still a long way between now and the last possible election date.”
The government on Thursday announced a sweeping promise to make groceries, children’s clothing, Christmas trees, restaurant meals and more free from GST/HST between Dec. 14 and Feb. 15.
“Our government can’t set prices at checkout, but we can put more money in people’s pockets,” Trudeau said at a press conference announcing the measures.
The government says removing GST from these goods for a two-month period would save $100 for a family that spends $2,000 on those goods during that time. For those in provinces with HST, a family spending $2,000 would save $260.
Thursday’s announcement also included a rebate for Canadians who worked in 2023 and made less than $150,000, totalling $250 per person.
Here are the items that will be GST/HST-free if the Liberals’ legislation passes.
Groceries
Many grocery items are already tax-free. The Canada Revenue Agency considers most food and beverages to be “basic” grocery items, such as produce, bread, cereal, canned and frozen food, eggs, coffee, milk, and meat.
However, certain categories, like carbonated drinks, candies and snack foods, are taxed.
The government’s tax break will apply to certain items that normally are subject to tax.
These include prepared foods such as vegetable trays and pre-made meals, as well as snacks such as chips, candy and granola bars.
Carbonated beverages, water bottles fruit juices and juice crystals are included, as are ice cream products and baked desserts like cakes and pies.
The government says its tax break will mean “essentially all food” will be GST/HST-free.
Alcohol
The tax break will also apply to alcoholic beverages below seven per cent alcohol by volume, including beer, wine, cider, and pre-mixed drinks.
Normally, all alcoholic drinks are taxed.
Restaurants
Restaurant meals will also be subject to the tax break. It will apply whether you’re dining in, taking food to go, or ordering delivery.
Children’s items
Children’s clothing, including baby bibs, socks, hats and footwear, will qualify for the tax break. So will children’s diapers and car seats.
Children’s footwear and clothing used exclusively for sports or recreational activities will not be included in the tax break. This includes costumes.
Children’s toys will be included in the tax break as long as they’re designed for use by children under 14 years old. These could include board games, dolls, card games, Lego, Plasticine and teddy bears.
Printed goods
Print newspapers will be included in the tax break, but electronic or digital publications will not.
Most flyers, magazines, inserts and periodicals will be excluded.
Printed books will be included in the tax break, including religious scripture. Audio books where 90 per cent or more of the recording is a reading of a printed book are included.
Printed items that aren’t subject to the tax break include magazines where advertisements take up more than five per cent of total printed space, sales catalogues and brochures, books designed for writing on, event programs, agendas and directories.
Other
Christmas trees, natural or artificial, will be included in the tax break.
Puzzles and video game consoles are also included.
This report by The Canadian Press was first published Nov. 21, 2024.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
