11 July 2016

A collapse in trust: Australia’s 2016 Federal Election

Written by: Dexter Gillman, Account Executive at Edelman

General, Government Affairs, News, Public Affairs, Reputation

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Back in March, the release of our Trust Barometer showed a sharp decline in trust throughout Australia, including government. Edelman Australia CEO Steve Spurr observed, “trust in all institutions has mirrored the volatility that has characterized recent politics in Australia.”

Less than six months later we have endured an election that saw both major parties receive some of their lowest shares of the popular vote in living memory. Not to mention that over a week later the Australian Electoral Commission is yet to formally declare a winner.

In the week following the election result, Edelman hosted a Soundbites session focused on the underlying causes of the country’s political gridlock, drawing upon the sharp insights of an experienced and deeply knowledgeable panel including Sam Crosby, Executive Director of the McKell Institute; John Scales, Managing Director of JWS Research; and, Nic Jarvis, Head of Public Affairs Edelman Australia.

From Nick Xenophon’s NXT to Pauline Hanson’s One Nation, voters are rushing towards minor parties and single-issue politicians. We are hardly alone in this respect. In fact, we may even be late adopters. Europe has been rocked by a surge in support for right-wing fringe parties; Britain has voted to leave the European Union; and Donald Trump will soon be the Republican Nominee for the presidency of the United States.

It seems that in democracies across the world, trust in government is a commodity in short supply.

The panel agreed that we are moving away from the traditional twin pillars of Australian politics. Whether it was the length of the campaign, a lack of consistent and bold leadership, policy reversals or untrustworthy party leaders, we can no longer take the two-party system for granted.

So what happened?

This election showed us that scare campaigns could still be immensely effective. Malcolm Turnbull barely spoke about Medicare, and never gave any indication that his party’s policy was to privatize it. But did voters believe him? John Scales, Managing Director of JWS Research, shared the results from the first major post-election survey, which his firm conducted. It showed that 38% of voters said Medicare was the most import issue when choosing how they voted. This was second only behind hospitals and healthcare at 39%. By comparison, 30% said that they valued employment and jobs the most.

Unfortunately for the Coalition, 30% said that they valued employment and jobs the most. Only 4% cited innovation. This shows the downside of a major campaign platform that fails to resonate with the needs of voters. As Nic Jarvis, head of Public Affairs at Edelman Australia, asked, can the 50-year-old factory workers really relate to campaign slogans about the need to be agile and nimble?

In another indictment of the Turnbull campaign, JWS Research’s survey found that 23% of voters decided who they would vote for on the day of the election. This has to cast serious doubt over the wisdom of Turnbull’s decision to run an eight week campaign. On the other hand, this data confirms that Labor seemed timed their scare campaign to perfection.

What about the impact on business?

As the panel pointed out, we now have a politically divided country. We have a Coalition government that has claimed victory, yet will have to manage deep dissent within its ranks and rely upon cross-bench support in the Senate. We also have an emboldened Opposition unified under the leadership of Bill Shorten.

With this in mind, foreign investors and companies have reason to fret over foreign ownership laws. A number of the Senate cross-bench have voiced their opposition to foreign ownership and free trade agreements, and last year the Labor party initially set out to block the China Australia Free Trade Agreement. With these factors in mind, some commentators are questioning the likelihood that both houses will ratify the Trans-Pacific Partnership. Even if he does have a mandate to govern outright, Malcolm Turnbull can just about say goodbye to his proposed company tax cut from 30% to 25% over the next decade.

One lesson from the panel was that we need to be more prepared to call out false narratives when we see them. John emphasized Bob Katter’s claims that Chinese investment was taking over the country. It is not. Sam Crosby, McKell Institute’s Executive Director, reflected on a survey he had been involved with in Victoria where a significant number of people surveyed believed that all immigrants entering Australia are Muslim. This is far from the truth.

We will not know what impact the election will have on foreign businesses, foreign ownership and future free trade agreements until we know the full makeup of both houses. Until then we will have uncertainty. We also know that we live in an era where reform minded politicians and party leaders are in short supply.

So what happens now?

The panel uniformly agreed that Prime Minister Malcolm Turnbull will, one way or another, reach enough seats to form government. As has since become clear, Turnbull looks set to win with a majority of one or two seats. Yet this election was anything but a victory for the Prime Minister. His popularity has sunk dramatically since he took over last September, his own party is deeply divided with many against him, he was comprehensively out campaigned by Opposition Leader Bill Shorten, and any majority in the House of Representatives that he ends up with will be wafer thin, bidding farewell to any chance of a progressive agenda.

Not to mention his double-dissolution gamble has backfired spectacularly as the Senate now looks even more chaotic!

Perhaps the one key takeaway from the 2016 Federal Election is that trust in government and politicians is, if not already there, on its way to an all-time low in Australia.

Dexter Gillman – Assistant Account Executive, Edelman Australia

dexter.gillman@edelman.com

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