Australian Election 2013

Every three years, Australians are forced to vote for members of federal parliament. Most elections are predictable, but the last two have been surprising to say the least. In 2010, no major political party had a majority in the lower house, resulting in a hung parliament. A few independents held the balance of power, the majority of which supported a Labor government. For numerous reasons, the Labor government became unpopular, which is why a few days ago, the Liberal and National coalition were given a decent lower house majority in the 2013 election.

The general consensus among pundits is Labor lost the election due to its infighting, while the Coalition presented a small target and a popular policy campaign. The Coalition’s lower house majority was largely expected, but what was unexpected was the number of primary votes going to the Palmer United Party and the preference deals that resulted in minor parties elected to the Senate. This post will cover why Tony Abbott’s campaign was so effective and how Kevin Rudd employed the same strategy in the 2007 election. It will then analyse the swing to the Palmer United Party and what this means for the future of Australian politics.

I'm Checking In!

When I first heard about the Hotelling model in university, I thought it might explain the vacancy rate of a fancy Westin Hotel. But what it really explains is how two agents maximise their market share. The practical example is two ice cream trucks on a stretch of road parallel to a beach on a summer’s day. Both the beach and the road parallel to it, are exactly 1000m and beach goers are evenly distributed across the beach. Ice Cream Truck X (now known as X) parks itself 250m from the east end of the beach while Ice Cream Truck Y (now known as Y) parks itself 250m from the west end of the beach. There is a 500m gap between the two trucks. Beach goers standing in the middle of the beach (500m from the east and west end) are indifferent to which truck they buy ice cream from because each truck is 250m away. A beach goer at the east most end of the beach, prefers truck X since it is 250m away while truck Y is 750m away. Similarly, for a beach goer at the west most end of the beach will prefer truck Y because it is closer.

X realises that moving to the middle of the beach (500m from either end) results in more customers. Someone standing in the middle of the beach now prefers X to Y since X is right in front of them. Someone standing at the east more end of the beach still prefers X to Y since X is now 500m away but Y is still 750m away. Y also realises that moving towards the middle of beach results in more customers so now Y parks right next to X in the middle of the beach (assume that they are both right in the middle). Now people standing in the middle of the beach are indifferent between the two trucks since they are both right in front of them. A person at the east most part of the beach is indifferent since both trucks are 500m away and the same goes for someone at the west most end of the beach.

A is Ice Cream Truck X and C is Ice Cream Truck Y

What this model demonstrates is that the optimal location of an ice cream truck is right next to each other. IT IS NOT IN THE MIDDLE. The middle is the result because both ice cream trucks rationally play this strategy. For example, if Y was irrational and for some reason stays 250m from the west end. X just parks 251m from the west end and captures 749m of beach while Y is only left with 250m.

Hopefully all of this made sense because this is exactly the same strategy used in a political system that is a two party system. However, in politics it is more commonly referred to as Median Voter Theorem. Essentially, both parties converge towards the median voter’s policy preferences.

To capture the most votes, A and B move towards the median

The Real World

Tony Abbott leads the centre-right coalition which is the standard conservative party that claims to believe in free markets and family values. However, Abbott’s move towards the median voter resulted in a massive welfare scheme (Paid Parental Leave) which is funded by a tax on large businesses. The median voter also cares about cuts to government spending which Labor tried to exploit with their claims the Coalition would “Cut, cut, cut …” where … is public sector jobs, education and health spending, economic growth, small babies, you name it. In the end, the Coalition’s budget was marginally better than Labor’s which neutralised the major cuts to spending scare campaign. Abbott also watered down his commitment to a surplus claiming a return to surplus “within 10 years”. As you can see, the welfare scheme funded by a new tax and the lack of major spending cuts is more to the political centre than to the “political or economic right”.

We saw the same thing in 2007 when Rudd’s policies were similar to Howard’s and because of this he was called “Me Too” Rudd. Ross Gittens, who I disagree with on a lot of things, covered this “Me Too” strategy here. 

The same occurs in the US Republican primaries where potential nominees try to out-Republican each other in the primary campaign. Then the winner becomes the Republican Presidential nominee and has to moderate their policies to appeal to the median voter who is undecided between a Republican or Democrat president. 

Does that mean we are doomed to have two parties that are identical on most issues with a few issues here and there to differentiate them? No, because the further to the centre the two parties go, the further away they are from the ends.  This allows minor parties room to move in and capture some of the electorate. The lack of differentiation between the two parties is the reason Clive Palmer’s Palmer United Party (PUP) received a large primary vote given the party was only registered a few months ago. Even though PUP’s policies were populist (cut taxes and increase spending), a lot of the electorate felt disenchanted with the major parties and voted with their votes!

What the PUP?

The Palmer United Party has stunned the political establishment by commanding 5.5% of the primary vote, which was more than the Nationals 4.4% primary vote. They fielded candidates in all 150 lower house electorates and senators in every state. Running on a highly populist campaign of lower taxes and more spending, PUP was the perfect protest vote for voters apathetic to the major parties. There was also millions poured into the campaign by its alleged billionaire leader, Clive Palmer. Despite PUP’s electoral success, cracks have already emerged within the party after the surprising result. Funnily enough, when candidates are recruited a few months before the election, party loyalty is probably lacking. Enter Jacqui Lambie who has already shown insubordination to the party by contradicting her party’s policy of abolishing the carbon tax. 

Earlier in the vote count it looked like Jacqui Lambi would be elected but that now looks unlikely.

Election Junkie 

The election had me captivated and probably too captivated. The best result to come from this election is that Liberal Democratic Party was elected in NSW to the senate. The LDP is a libertarian party I strongly endorse since I hold libertarian views. That means 6 years of a libertarian senator!

This election has really been about the rise of the minor parties and the backlash against Labor and the Greens. Hopefully this election marks the downfall of the big three parties, with Labor receiving its lowest primary vote in 100 years, the Greens vote down 3.4% since last election, the Liberals only picking up a 1.8% swing and minor parties holding the balance of power in the senate. Who said Australian politics is boring?

Lower house votes