We hear a lot about the so-called two-speed economy these days but Julia Gillard is grappling with a more immediate problem, a two-speed electorate.
In fact it is `the’ challenge vexing the new PM and her strategists and probably goes a long way to explaining her last minute hesitation in actually pulling the election trigger.
First, to the economic side. This week we saw more evidence of the perverse effects of that two-speed economy via an extraordinary _ for which you can read transparently political _ economic ``update’’ just two months after the May Budget.
We learned for example, that Australia’s growth forecast has been down-graded albeit fractionally _ from an expected 3.25 per cent this year to 3.0 per cent. Yet curiously, despite this more modest expansion, the jobless rate will continue to drop from its already super low 5.1 per cent, down to 4.75 per cent later next year.
This is, to all intents and purposes, full employment and it is truly remarkable given the experiences of comparable economies in the wake of the global financial crisis. On top of this, Australian Government net debt is set to peak at just 6.0 per cent in 2011-12 and come back to 5.3 percent after that.
This compares with chronic debt and deficit problems abroad and an average collective net debt of over 94 per cent for other major advanced economies. So strong is Australia’s performance that the federal Budget will now stride more confidently back into the black by 2012-13.
What was a relatively pale projected surplus of $1.0 billion in that year has already been tripled to $3.1 billion. The basis for Treasury’s new optimism? In a word, China. Demand from China principally, is the key to the two-speed economy. It explains how Julia Gillard was able to stitch up a deal with the miners which was markedly more gentle on them than the tax Kevin Rudd was pursuing and yet which still comes close to achieving the same revenue target. And it explains how even as ordinary consumers close their wallets and worry about the future, a classic portent of a contraction, employment grows and revenue floods the federal coffers.
This brings us to the two-speed electorate. Just as the two economies make policy settings problematic _ the booming export driven resources sector and the far less robust domestic economy _ there are two distinct groups in the community as well. And Labor needs big chunks of both to retain office.
These constituencies are on the one hand, the leafy, mostly tertiary educated inner cities, and on the other, the sprawling outer-suburbs of our major centres where most people live and where many marginal seats are located. In the former, comparatively comfortable voters worry about the big issues of principle such as social justice for refugees and global warming.
They willingly recycle their bottles and newspapers, watch the ABC, and may even take in the odd foreign language film. They are global citizens and were disappointed with the outcome at Copenhagen and rocked further by Labor’s subsequent going to water on the issue. In previously safe Labor seats like federal Melbourne, Grayndler, and federal Sydney, some are thinking of voting Greens.
In the case of the latter, the teeming masses in the middle to outer-suburbs typically live more work-a-day lives. Many of these people resent being told how well the economy’s travelling because they feel they are missing out. Their concerns tend to be more earthly as they grapple with rising costs for food, petrol, public transport and housing. It is here that, according to the research of both major parties, ``anxieties’’ are higher too about supposedly queue-jumping boat people and it is here that these concerns are conflated with greviances over straining transport and health infrastructure, and a generalised feeling of being left behind.
Reasonable or not, Julia Gillard’s challenge is to address these concerns and design a political message that keeps as many of these anxious voters in the Labor tent. Hence her moves to toughen border protection rhetoric and embrace what is basically a re-packaged version of John Howard’s ``Pacific solution’’ by using third country processing of refugee applications.
The trick is to craft a manifesto agreeable to two very different constituencies who favour polar opposite policies and regard each other as either rednecks and xenophobes or latte-sipping lefties.
If there is an answer to this diabolical conundrum, my guess is that it lay in the idea of ``sustainabilty’‘. And the signs are already there. Kevin Rudd’s ``big Australia’’ is out of favour as is his recently crowned idea of a population minister. Julia Gillard’s first act was to re-title and presumably re-task Tony Burke as Minister for ``Sustainable’’ Population. It is small but important difference and one designed to send a very different message even if it is audible mainly to dogs. Ditto the quick and spirited defence of those ordinary folk in the `burbs who feel nervous about being overrun. They are not racists, Ms Gillard re-assured them even before being sworn in.
If there is a small area of overlap in the right v left or inner-cities v outer-suburbs, it is in the view that the environment is under stretch from population pressure.
Thus Ms Gillard will look to bridge the two communities under the intellectually respectable rubrik of sustainability: sustainable environment / sustainable energy / sustainable population. We are already being invited to embrace the future and to move forward. She has been hammering this theme now for some time. But this is just the rhetorical ground-tilling. Expect to hear plenty about the concept of sustainability too between now and polling day. It’s a message carefully calibrated to mean different things to different people.
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