Barring the accusation of the bullying of the late Senator Kimberly Kitchen turning into a political and leadership disaster for Anthony Albanese, I reckon he is a shoo-in to become Australia’s 31st Prime Minister. The polls say so, and so do the bookies!
Trust the polls? I do. Despite “hick-ups” with Scomo’s election in 2019 and Brexit, they largely get it right. Last weekend’s South Australian election was the latest example. The final Newspoll on the election eve had the ALP at 54% on a two-party-preferred basis with the Liberals at 46%, a margin of 8%. With 60% of the vote counted, the actual result is the ALP at 55% and the Liberals at 45%.
This is the same margin that Newspoll has at a Federal level – and it’s been that way for months! More worryingly for Scomo, Albo has recently drawn level in the all-important preferred Prime Minister measure. Further, Scomo’s ‘disapproval’ rating exceeds his ‘approval’ rating, whereas Albo has a tiny net positive score.
If you take more comfort in “following the money”, the bookmakers aren’t in any doubt. Sportsbet has Labor at $1.35 and the Coalition out to $3.00.
Now Albo is no Peter Malinauskas, South Australia’s new Premier. Malinauskas may look like the Kennedy figure from central casting, but he gave one of the most impressive victory speeches on Saturday night I have ever seen. It is easy to understand how South Australians were comfortable voting for him.
Albo hasn’t achieved the same standing as Malinauskas, but he is becoming something of a “known commodity” and is not doing anything to scare the natives. If anything, he is starting to look a tad conservative, but maybe that is something you have to do if you come from the ”left”. More “John Howard” than John Howard.
This ‘soft target’ strategy and the reluctance to upset any voting groups means that it is very hard to know what an Albanese Government would do if elected. Certainly, they will have a propensity to spend more on areas such as welfare, health and education – and possibly a reluctance to do much by way of taxation or fiscal reform to address the budget deficit.
But it’s no certainty they will be a high spending/high taxing government (as their Liberal opponents like to make them out to be) – and so the market’s reaction to the election of an ALP Government might be quite muted. One thing we do know is that there will be another Federal Budget later in 2022, notwithstanding Frydenberg’s attempt to set the parameters next Tuesday – and it may not be till then that we really get a handle on their spending and taxing priorities.
Interestingly, Peter Switzer dug up some research from Lincoln Indicators [1] which showed that a change in Government is not necessarily a bad thing for share markets. In fact, in the 13 elections from 1983 up until 2016 (this included 7 ALP victories and 6 Coalition victories), the average movement in the share market in the period three months after the election was +4.7%. In the five weeks running up to the election, it went up on average by 1.7%. When Hawke was first elected in 1983, the All Ordinaries added 19.8% over the next three months. For Gillard in 2010 (the hung parliament), the market went up by 5.7%.
Companies involved in Labor priority spending areas – health, education, skills training, green energy and infrastructure could be winners – but caution is called for as it may be some months or even years before any initiatives come to fruition. On the other side of the ledger, the “ugly” side of capitalism – the big banks, insurers, fossil fuel companies – could become targets and losers – but again, in the absence of specific policies or commitments, caution is the operative word.
With Albo and his team running a ‘soft target’ strategy, my bottom line for this election is that it is not going to be much of a deal for the market. A reaction to an Albo victory could come later when he details his programme and we find out just how pink he really is, or isn’t.
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