A second term for Labor? The delicate balance between governance and political values

The clarity of Labor’s agenda over the next six months will be critical in shaping the next election and defining this government’s legacy.

The Labor government’s strategy for securing a second term in office is slowly unfolding amidst a complicated political and economic landscape. As the current parliamentary term continues, Prime Minister Anthony Albanese’s announcement to the Labor Caucus about “crafting” their next-term offer has sparked discussions on timing and priorities, suggesting a pre-emptive move towards election readiness. While no election is imminent—more than likely to be held after the Queensland election in October this year and further complicated by seat redistributions yet to be announced by the Australian Electoral Commission—the announcement suggests that Labor is preparing its electoral strategy and policy outlines for its second term, if it manages to get there.

Economic management remains a critical aspect of the government’s agenda, with recent inflation figures rising to 3.6 per cent, slightly above the target band of 2–3 per cent. This economic indicator not only reflects the immediate financial health of the nation but also influences public perception of the government’s competency. Inflation, coupled with ongoing issues such as housing affordability, domestic violence, and energy pricing, forms a significant part of the government’s current challenges that will undoubtedly spill over into the next term.

These persistent societal and economic challenges highlight the balance that the government must maintain between managing immediate political issues and establishing a long-term vision and the government’s effectiveness in addressing these issues will play a crucial role in its re-election campaign. However, the focus on early campaign strategising—although the current term could potentially extend to September 2025, it is highly unlikely—also highlights the inherent difficulties of three-year electoral terms. Such terms often see substantial policy implementation constrained by the need for continuous electoral campaigning and in contemporary politics, as soon as one election concludes, governments begin their campaigns to win the next, creating a never-ending cycle.

The political dynamics within Australia also suggests a landscape where Labor must navigate not just opposition from traditional parties such as the Liberal Party but also manage the rising influence of smaller parties and independents. The spectre of a minority government after the next election looms, with potential scenarios involving negotiations with disparate groups, from Green-leaning independents to hard-right figures such as Bob Katter and One Nation, complicating future legislative processes. This environment requires Labor to not only solidify its base but also strategically appeal to a broader electorate to prevent erosion of its majority. As this term progresses, the clarity of Labor’s agenda and its execution will be critical in shaping the electoral outcomes and defining the government’s legacy.

Ideological shifts: Labor’s governance challenges amidst discontent in the ranks

The Labor government’s approach to governance and implementation of policy has led to significant disquiet within its own ranks, particularly among the rank-and-file members who expected a more distinct departure from previous conservative administrations between 2013–22, and the government’s handling of various crises and cautious approach to policy initiatives has frustrated some supporters who were hoping for more transformative policies.

The government’s response to immigration issues, including deportation policies and managing net overseas migration, has become a contentious point, with leader of the opposition Peter Dutton and the Liberal Party intensifying their focus on these issues as a political strategy. This situation, among many others, exemplifies the ongoing challenges faced by Labor in balancing pragmatic governance, vociferous negativity from the opposition, and the ideological expectations of its base.

To alleviate some discontent within Labor ranks, supporters have suggested that the government has spent most of its first term laying the groundwork for a prolonged period in government and they argue that it is in its second term that a more progressive and “Labor-like” agenda will be implemented. However, there is no historical evidence to suggest that a second Albanese term would be more adventurous than the first. For instance, was the Whitlam government’s second term more adventurous than its first term from 1972–74? Was the Hawke government’s second term from 1984–87 more “Labor-like” than its first? Assessing the second term of the Labor government from 2010–13 is difficult, as it was under a different Prime Minister, Julia Gillard.

Will a second term for Albanese result in a shift in stance on Middle East politics, particularly regarding the genocide in Gaza? To date, Albanese has staunchly supported Israel, often ignoring or criticising pro-Palestine advocates in Australia. His response to every massacre in Gaza typically involves a media release carefully crafted not to offend the interests of local Israeli lobby groups. How might this approach change in the future? Typically, a government’s second term is less ideologically ambitious than its first and in any case, Albanese has yet to indicate a clear trajectory that deviates markedly from its first-term agenda, leading to skepticism about whether any dramatic changes can be expected if re-elected.

Critics from within the party also argue that the government has strayed from core Labor values, particularly in areas such as taxation, foreign affairs, and housing. The government’s support for the Stage 3 tax cuts—albeit a modified version—and the AUKUS security pact, for instance, has positioned it closer to centrist or even right-leaning policies, alienating traditional supporters on the left. This perception is compounded by a lack of aggressive action on housing, a cornerstone issue for Labor, traditionally tackled with robust policies by predecessors such as Curtin, Chifley, Hawke, and Keating. Certainly, the Labor government has moved on some of these issues but have they done enough?

The disappointment extends to broader economic and cultural policies, where the government is seen as continuing neoliberal practices that blur the ideological lines between Labor and the Liberal Party which, in turn, shifts national political debates towards “culture war” issues, sidelining the more substantive reforms that are required within Australia. Influential figures within the party such as Jim Chalmers and Katie Gallagher need to assert more influence and steer the government back towards a governance style that aligns more closely with traditional Labor principles.

As the government navigates these internal and external pressures, the challenge remains on how to reconcile the pragmatic demands of governance with the ideological aspirations of its members, and setting a course that will influence its electoral prospects in the upcoming term.

The Queensland election is crucial test for federal Labor’s direction and public support

As the Labor government contemplates its “offerings” for a second term, one influence appears to be the impending Queensland state election on 26 October this year, and the outcome of this election could potentially serve as a barometer for federal Labor’s policy directions, particularly in terms of public support for certain types of government interventions and welfare enhancements.

The strategy of Queensland Premier Steven Miles, including policy announcements such as the “50-cent fares” for public transport across the state—although branded as an election gimmick—highlights a broader shift developing within state Labor at least, where they are moving away from a user-pays approach, to more universal service delivery models in public services like transport, health, and education. And why wouldn’t they? These are the types of policies that the electorate expects to see from Labor governments so it makes sense for the Miles government in Queensland to continue to announce these types of policies. Such measures, which result in community-wide benefits, may inform federal Labor’s policy adjustments or introductions, particularly if they resonate well with voters in Queensland.

However, the broader context of fiscal management and budget concerns still remains a primary focus for the federal government. Despite a performance that many economists suggest has been successful, the general lack of acknowledgment from the media and public could signify a challenging environment for promoting and implementing bolder, distinctly Labor policies. The Labor Party’s apparent hesitance to fully embrace its traditional policy initiatives—often seen as too bold or risky in the current political climate—is also causing frustrations within its ranks.

While the federal government considers aspects like health and education, the Queensland election could serve as a litmus test for the viability of these policies at the federal level. For instance, reductions in healthcare costs, childcare, early education, schooling and student debts could follow the model of Queensland’s transport fare reduction, aiming to reduce the cost of living and increase disposable income for ordinary Australians. The era of cost-based recovery accounting for governments should have ended some time ago—the massive government support provided during the first two years of the COVID pandemic demonstrates that alternative economic models involving government intervention are achievable—and the Labor government has the potential to extend much further along this path.

Could the government consider reducing the GST from 10 per cent to 7.5 per cent to alleviate cost pressures, even if it is only as a temporary measure? Such a move, while likely to be controversial and challenging to implement given its broad economic implications, would signal a strong commitment to easing financial strains on Australians—a key concern that resonates across the electorate.

Federal Labor will be closely watching Queensland politics closely over the next five months and is likely to gauge the public reaction to state-level policies that could end up influencing its own platform. The electoral outcome in Queensland might not only impact their tactical decisions but could also offer a strategic blueprint for reinvigorating Labor’s policy offerings on a national scale, aiming for broader appeal while staying true to core Labor values of universal service provision and social welfare.