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It’s election day in Australia, and all signs point to a close result, with a narrow national lead for the ruling Labor party. Nevertheless, the very narrowness of that lead is a testament to the limitations of an incumbent government campaigning not on its own achievements, but with the warning that its opponent is far worse.

When the election was called five weeks ago, it was widely expected that the new Prime Minister, Julia Gillard, would figuratively waltz to victory. Basking in the glow of a novelty honeymoon, Australia’s first female Prime Minister had outlined a series of tough policies on immigration, and massively scaled back the talk of a new carbon taxes on mining which had so damaged Rudd, effectively leaving little for the opposition to attack the government on policy-wise. Australia had largely escaped the effects of the economic downturn, and the government’s record on the economy seemed solid. Perhaps equally importantly in a system where preference voting is vital to the outcome, Gillard achieved an unprecedented deal with the Greens to receive their preferences in virtually every seat. While Green preferences have traditionally gone to Labor at about a 70/3 clip, it was expected that this agreement would help maintain that level with a massive rise in Green support.

Expectations, however, were to be rapidly dashed. Some of this was an inevitable result of the contradictory impulses inherent in Labor’s campaign strategy. Faced with an opposition leader viewed as non-viable due to his far-right views, the Labor campaign plan seemed to be to actively move right, with Gillard going so far as to repeat Rudd’s position of delaying any action on climate change for the foreseeable future. Yet these impulses were contradictory with an effort to form a de facto coalition with the Greens, and when, in particularly serious case of bad timing, Labor announced its climate change priorities at the same time as the Green preference deal, an-all-out revolt broke out in the Green ranks, with more than dozen local parties refusing to recommend their voters  preference Labor second.

In itself this would not have been fatal. But Gillard and Labor more generally seemed to have no campaign theme, no proposals and no strategy for the campaign other than daring the public to vote for Coalition Leader Tony Abbott, and with Abbott denying the media his usual supply of gaffes, the campaign lacked a storyline. In its absence, Labor lost control of the campaign, as more damaging stories came to dominate. First was the spectacular collapse of the Green preference deal, which by drawing attention to the mutual dislike between Labor and the Greens likely did far more damage in terms of causing Green voters to consider voting Coalition “above the line” than if Labor had left well enough alone.

More damaging still was the fall-out from Rudd’s overthrow. A series of angry and speculative leaks dribbled out. On one hand, there were suggestions that Rudd would return in a new government as Foreign Minister, suggestions that were waved off by Gillard. That might have been the end of the story had it not been for senior Labor officials publicly accusing Rudd himself of leaking the rumors in desperation. A whole-scale feud of competing leaks soon broke out that dominated media coverage. And claims surfaced that Gillard lied to Rudd’s face only days before the coup, accepting a deal whereby he would stand down in the middle of the summer to allow her to take over before an October election, only for Gillard to overthrow him a few days later.

Weeks three and four seemed to bring a rally, where the race, which had turned into a narrow Coalition lead for a few days, swung back to Labor as the government’s campaign turned negative against Liberal leader Tony Abbott, arguing he would be among the most right-wing leaders ever elected in a Western democracy, and pointing to his denial of climate change, and suggestions that he felt “threatened” around gays. These attacks, and possibly the prospect of Abbott as Prime Minister, helped Labor regain a narrow lead, though its position remains precarious.

Labor seems to have seen the damage, and consequent swing, concentrated in Rudd’s home state of Queensland, and all important New South Wales, where a third of the seats are located. While the last two polls, a Roy Morgan and a Essential Research poll, both showing a 51-49 lead for Labor had a national swing of 1.7% from 2007, the swings in Queensland were 3.6% and 4.4% respectively. In New South Wales, the swings ranged from 3 to nearly 5 points. By contrast, Labor was actually recorded as gaining significant support in Victoria and South Australia, as much as a 5% swing in the latter, but the losses in Queensland and New South Wales were more than making up for it.

It is perhaps not surprising, however, that Labor’s losses have been concentrated in Queensland and New South Wales, because the hidden third rail of the campaign is the continued unpopularity of Labor state governments in both States. The Queensland government narrowly survived last year by less than a percentage point against a deeply flawed opposition, and the New South Wales Labor government is facing extermination in 2011 with recent polls showing a 61-39 lead on the two-party preferred vote.

As a consequence, the election is looking less national as the outcome looks to come down to whether the Coalition can gain enough to seats in Queensland and New South Wales to gain the majority, and whether the Labor party potentially gain enough seats in South Australia or Victoria to off-set those losses, with the added potential that 2-3 seats may change hands in Western Australia or Tasmania. In such an environment, national polls might not be the best guide, as there is a strong possibility that the party that wins the majority of the two-party vote will not win the majority. This is far from unheard of. It happened in both 1990 and 1998 at the federal level, and it happened again earlier this year in South Australia, where the Labor government survived a lopsided 53-47 result to hang onto office.

While at the federal level this has favored both parties, there is reason to suspect that in a close result, it will favor the coalition.

Labor 2PP
Coalition 2PP
Labor Seats
Coalition Seats

As is demonstrated, there is a danger zone for Labor in the 51-49 zone, which unfortunately seems to be where they are headed.

Roy Morgan August 18th – 19th
Essential Research August 13th-19th
Newspoll 17th – 18th August
Nielsen 17th -19th August

What’s missing here is the incumbency effect. Incumbency tends to matter more in Australia than in other parliamentary systems and its no coincidence that “minority vote victories” have always gone to incumbent governments. This time it will play to both sides, as the last seat redistribution moved six Coalition incumbents into seats that nominally voted for Labour in 2007, most of whom need swings of less than 1% to hang on. Otherwise incumbency should favor Labour, though state polarization will likely make things worse for the government here, with Labor supposedly writing off as many as ten seats in Queensland and New South Wales, with the expectation of three gains elseware.

That would give Labor 81 seats, at the high-end of estimates, which seem leaning towards the high seventies, but nevertheless a majority. It is still far too close for comfort for those who believed that Abbott’s reactionary social views would result in a blowout. Its worth noting however, that at this point in 2004, John Howard looked to be in a similar spot before rallying and winning his second greatest victory when his opponent proved too erratic for voters. It will ironically be to Howard’s example that Labor will be looking in the next eight hours in order to avoid being the first one-term government in over half a century

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