2 hours ago
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April 8, 2026 — 5:00am
Strange things have been happening in Australia while I’ve been off for a few months, taking it easy and having fun in a hospital bed. The most obvious is that we remain terribly unhappy about the cost of living, with the Iran war’s effect on petrol prices giving our money worries an almighty boost.
I read that consumer confidence is at its lowest since we started measuring it.
Sorry, but I’m not too worried about the cost of living. Strangely, it’s a sign of how well we’re doing. If you follow the polling on what people regard as our biggest problems, you’ll know that living costs are always high on the list.
They’re our default setting. If prices are always rising – even if not by much – they’re always something to grumble about. If they’re at the top of the list, it’s a sign we don’t have anything worse to concern us.
For instance, not many people are worried they might be at risk of losing their job. Which matters more – rising prices or having a job so you can pay those prices? Actually, the proportion of Australians who have a paying job has never been higher. The rate of unemployment hasn’t been lower for almost all the time I’ve been an economics journalist.
If prices are rising, it’s pretty safe that wages are too. You shouldn’t need to be an economist to see that what matters more is whether wages are rising at least as fast as prices.
It’s characteristic of human nature to focus on what’s going wrong and take for granted all that’s going right. That’s actually how the human race has survived and prospered: we keep the focus on overcoming our difficulties.
So I think the more interesting developments in recent times have been the parlous state of the Liberal Party and the resurrection of Pauline Hanson’s One Nation.
The shift of voter support to One Nation fits with something we’ve been watching for years: the voters’ growing disenchantment with the two major parties and hence the rise in first preferences going to independents and smaller parties. What’s become apparent in recent days, however, is that this is a much greater threat to the Liberals than to Labor.
Particularly since its sweeping victory at the federal election in May last year, Labor is towering over the Coalition. And Labor is in power in all the states bar Queensland and Tasmania.
It’s hard to see Labor’s dominance declining any time soon. Depending on how bad the fuel crisis gets, it’s possible to see voters turning against Anthony Albanese at the election due in 2028.
But that would be a strange reaction. The problem’s been foisted on us – and the entire globe – by America’s dubious decision to attack Iran. Albanese and his government will surely be judged on their ability to manage and minimise the adverse effects on us. So far, they’ve been doing as well as you might expect.
On the other hand, it’s hard to see the federal Liberals coming out of their dive. Their big problem, I think, is that Labor under Albanese has stolen the middle ground – the sensible centre – that the Libs occupied for so long.
Change may be inevitable, but nobody likes it. The Libs have long pursued a policy of keeping the economy rolling along and making only those changes that have become unavoidable. Labor, by contrast, was long a party of “progressives” who could see a thousand things that needed reforming.
Often, the Coalition’s most persuasive argument at elections was: vote for us if you want to keep out those incessantly meddling Labor people. But that no longer describes the Labor Party Albo leads. His stated goal is to take the Coalition’s position as the “natural party of government”. He’s doing that by governing competently and making as few changes as possible.
Where pressure from people on his own side requires him to stop ignoring problems and do something – on gambling advertising, for instance – he does something, but never enough.
We’re told to expect major reforms in next month’s federal budget, but I’ll be very pleasantly surprised if it does all that needs doing in the various areas it tackles.
The problem for the Liberals is that this doesn’t leave much room for them. When they were switching from Sussan Ley to Angus Taylor, he kept telling us how terrible the Albanese government was. I’m sure a rusted-on Liberal could believe that, but only because they were rusted on. Whatever criticism you have of Albo & Co. – and I have quite a few – his government has been as competent as the various Liberal-led Coalition governments of recent times.
Taylor’s problem is that he must say something that distinguishes him from Albanese, but if he takes the standard approach of oppositions – if you say black, I’ll say white – he’ll be right out on a limb.
He could, for instance, become a climate change denier. Or he could oppose immigration. (The Libs? Opposing immigration? They invented it.)
This could help him get votes back from One Nation, but it would at the same time alienate all the sensible people whose votes he needs to win government.
Some have seen the resurrection of One Nation to be a threat to both the major parties. But it’s taking a trickle from Labor and a flood from the Libs. A vote for One Nation is a protest vote, but it’s a protest against sensible-centre policies. Match One Nation’s offering and the Libs lose more than they gain.
No, I think what we’re seeing is something that’s been observed in other rich countries: the left/right division is being replaced by a division between the well-educated, whose higher incomes allow them to live in the inner and middle rings of cities, and the less-well educated, who tend to live in outer suburbs and the regions.
The teals – independents in well-off former Liberal electorates – are part of this move of the better educated away from the Libs. At present, Labor has most of their votes. There is room for the Libs – and particularly the Nationals – as the party for those who want to pretend the climate isn’t changing and to blame non-white immigrants for all our difficulties. But well-educated voters are too smart to believe that, and they have the numbers.
Ross Gittins is the economics editor.
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