Rate cut election

Weaker than expected annual growth figures combined with the Reserve Bank leaving the door open on a February rate rise have led to speculation the Albanese government may hold off for a May election. The latest conjecture follows the release of the weakest economic growth figures outside of the pandemic lockdowns since the early 1990’s recession. RBA Governor Michele Bullock kept rates on hold for December at 4.35 percent, remaining at the highest level in a decade. However, economists predict a February rate cut is only a 50-50 proposition but expect at least a .25 percent cut by April 2025 and half a percent by May. Though the Albanese Government has been relying on its Stage 3 tax cuts and energy bill rebates to provide cost of living relief, nothing would compare to the impact of a downward interest rate trend.

Poll gap closes

The latest Newspoll in The Australian has seen Labor claw back ground on the Opposition to see the parties neck and neck, going in to a pre-election summer holiday break. The two parties were 50-50 on the two-party preferred vote in a poll taken from Dec 2-6, after a dramatic finish to the parliamentary year which saw more than forty pieces of legislation pass parliament. While economic news showed government spending was seeing Australia barely avoid a technical recession, voters were benefitting from the rollout of Stage 3 tax cuts and energy bill relief. The Coalition had led Labor 51-49 since early October on a two-party preferred basis. Even with the Labor vote lifting, the mostly likely election outcome is still a minority Labor Government, in an election due by May 2025. In an examination of the two leaders character traits, Opposition Leader Peter Dutton was seen as the more experienced, decisive, and stronger leader, while Prime Minister Albanese was seen as more trustworthy, likeable, and caring. The two leaders were neck and neck at 43 points apiece on the significant trait of who was viewed as more in touch with voters. Opposition Leader Peter Dutton has dropped three points on the better prime minister rating from 41-38 with Prime Minister Anthony Albanese remaining steady on 45 percent.

Strike Plan

Defence Industry Minister Pat Conroy has announced the Albanese Government will rapidly push ahead with equipping the Australian Army with a second long-range fires regiment. In line with the priorities of the 2024 National Defence Strategy, the Government will select from two options – the Precision Strike Missile and the Naval Strike Missile. A competitive evaluation process will occur over the course of 2025.

Tomahawk Test

Hobart Class destroyer, HMAS Brisbane successfully fired a Tomahawk missile during a test and evaluation activity conducted off the US west coast. Deputy Prime Minister Richard Marles and Minister for Defence Industry, Pat Conroy issued a joint statement which said Australia had become only the third country to acquire and fire a Tomahawk cruise missile. With a range of 2,500km, the Tomahawk allows maritime platforms to conduct long range strike against land targets. Australia is one of only three nations, alongside the US and UK to acquire this capability. The Albanese Government is investing $1.3 billion. More than 200 missiles will be acquired to be deployed on the Hobart class destroyers and future Navy platforms including the Virginia class submarines and potentially the Hunter class frigate.

AUKUS Review

The operations of the Australian Submarine Agency (ASA) are being subjected to a review, following concerns about the agency’s performance. Former Defence Secretary, Dennis Richardson was appointed by Deputy Prime Minister Richard Marles to review the structure, staff makeup and direction of the ASA amid growing concerns over its performance within government. The ASA was formed in July 2023 as the lead Australian agency overseeing the $368 billion nuclear submarine program. The ASA has an annual budget of around $330 million and almost 700 full time staff. The ABC reported in September that one of the ASA’s most senior technical directors had quit, amid wider morale issues within the organisation. Since September, the ASA’s deputy director general responsible for policy and programming implementation, David Hallinan, had also quit and was now working in another shipbuilding role. Liberal Shadow Defence Minister Andrew Hastie accused the Albanese government of launching yet another review without a deadline. Mr Hastie said the government had announced “short, sharp reviews” before only to have them drag on for months.

Narrow Path

Liberal moderate and Shadow Minister for Government Services and the Digital Economy, Paul Fletcher will quit politics after 15 years at the next election, opening up his seat to challenge by a Teal independent. The loss of Fletcher and Senator Simon Birmingham who quit a fortnight ago, simply adds to the mass exodus of Liberal moderates in the 2022 election where key lower house seats were lost to Climate 200 Teal MP’s. Opposition Leader Peter Dutton will also have to undertake a significant frontbench reshuffle in the wake of the latest departures. Bradfield was a safe North Sydney Coalition seat until 2022, when Teal candidate and climate change finance specialist, Nicolette Boele helped reduce the Liberal margin from double digits to just 4.2 percent. Ms Boele will run for the seat again in 2025. The Coalition is expected to run trade lawyer and former Coalition ministerial staffer, Gisele Kapterian. Opposition Leader Peter Dutton needs more than 20 seats to win government in his own right and has declared the former blue ribbon Liberal Sydney seats of Mackellar and Warringah as two must wins if the Coalition is to form government. Mackellar is held by Teal, Sophie Scamps, and Warringah by Teal, Zali Steggall.