OPPOSITION LABOR PARTY SET TO WIN AUSTRALIAN

C O N F I D E N T I A L SECTION 01 OF 02 CANBERRA 001671 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 11/20/2017 TAGS: PGOV PREL AS SUBJECT: OPPOSITION LABOR PARTY SET TO WIN AUSTRALIAN ELECTION Classified By: James F. Cole for reasons 1.4 (b) and (d) ¶1. (C/NF) SUMMARY: Absent a sudden, highly unlikely turnaround, the Kevin Rudd-led Australian Labor Party (ALP) will win the Australian federal election on November 24. Although there has been a small shift towards the Coalition since the campaign started, the ALP appears headed to win an additional 20-25 seats in the federal parliament, giving it a 10-20 seat majority in the 150-member House of Representatives. While this would be a narrow parliamentary majority, it would represent a decisive election victory. While the ALP has run an almost perfect campaign with the popular Rudd its centerpiece, the key to its likely victory will have been the sentiment among the Australian people that after 11 years under John Howard, it is time for a change in leadership. END SUMMARY WHERE THE ALP WILL WIN ¶2. (C/NF) The ALP, which currently holds 60 seats in the 150-seat parliament, requires a net gain of 16 seats to form a majority government. Our analysis of each state indicates that the ALP will gain two seats in Tasmania, three in South Australia, one in Victoria, one in the Northern Territory, six in New South Wales, and six in Queensland - a 19 seat gain. There are also several seats in the "danger zone" - the Coalition is in front but the polls are close. Some of these could also fall to the ALP, which could push its total toward 25 seats, perhaps even higher. COULD THE COALITION HOLD ON? ¶3. (C/NF) The Howard government could hold on to power if it is able to keep it's share of the two-party vote at 48 percent or higher, defend some of its marginal seats in Queensland and New South Wales, not lose any seats in Victoria, and perhaps pick up a seat in Western Australia. For this to happen, however, the Coalition would need some good luck and some event that would make the public think twice about a change. Under this scenario, the ALP's two-party vote could be no higher than 52 percent. Unfortunately for the Howard Government, however, the ALP's vote has averaged 54 percent in the polls since Rudd became Opposition Leader last December. POLLS AND BETTORS POINT TO COALITION DOOM ¶4. (SBU) The last change of government was in 1996 when there was a 5.3 percent swing to the Coalition. For the Coalition, there are ominous parallels with that election. In the year preceding both elections, the Opposition maintained a significant lead in the polls: around 54-46. During the 1996 campaign, the Newspoll conducted a week before the election had the Opposition leading with 54 percent of the two-party vote - the same figure for the corresponding Newspoll in 2007. In a fanatical gambling nation, the punters are also betting heavily on a Labor victory. There are three betting agencies in Australia that accept bets on the election. In 81 of the 150 seats, the ALP has a win probability of greater than 50 percent. As of November 21, the three-agency average probability of a Labor win was 77 percent. ALP WINS CAMPAIGN, TOO MUCH BAGGAGE FOR HOWARD ¶5. (SBU) The Coalition's campaign has never gained momentum. Using the slogan "Go for Growth", the Coalition started with QUsing the slogan "Go for Growth", the Coalition started with all guns blazing by announcing a big tax cut. However, the middle weeks of the campaign were dominated by the lead up to, and fallout from, a November 7 interest rate rise. Howard won the 2004 election largely on a promise to keep interest rates low. The 25 basis-point increase during the election campaign gave the ALP ammunition to undermine the Coalition on the economy, it's strongest issue, by reminding voters that interest rates have risen six times since the last election. In the context of the economic management debate, a second key was the ALP campaign launch in which Rudd boosted his credentials as an "economic conservative" by limiting his campaign promises that day to only one quarter of the cost of Howard's. CANBERRA 00001671 002 OF 002 ¶6. (SBU) As has been the case all year, Howard has been weighed down by the baggage of eleven years in office, an unpopular workplace relations reform, and his image as a leader who has passed his prime. Howard's stated intention to retire midway through his next term and hand the Prime Ministership to the not-as-popular Treasurer Peter Costello has been ruthlessly exploited by the ALP as further evidence that Howard is not the man for the "future." SENATE COULD BE A PROBLEM FOR RUDD ¶7. (SBU) The Coalition will likely lose its Senate majority following the simultaneous half-Senate election. The Coalition currently holds 39 seats in the 76 seat chamber. The ALP holds 28 seats, the Green Party four, the Democrats four and Family First one seat. There are 40 Senate spots being contested - 6 from each state and two from each Territory (Territory Senators' terms are concurrent with those of the House of Representatives). While newly-elected Senators take their places in July 2008, new territory Senators take their seats as soon as the poll becomes official. With the Green Party in a good position to win a seat from the Liberals in the Australian Capital Territory, the Coalition could lose its control of the Senate virtually immediately. Even if this occurs, however, the Coalition would have 38 seats until July 2008, giving it the power to block a Rudd government from implementing its program. The make up of the Senate is difficult to predict at this juncture but it is feasible that the Coalition will lose at least two seats in the Senate and that the ALP will be reliant on the minor parties and independents, particularly the Green Party, to implement its legislative program. RUDD WILL SET A PRECEDENT ¶8. (SBU) COMMENT: Rudd has shattered conventional political wisdom. When he became leader just under a year ago, the general consensus was that he could not win the election because a) he would not have time to become "known" by voters; b) winning 16 seats was an insurmountable task; c) economic conditions were buoyant; and d) his "honeymoon" period as new leader would fade by the middle of the year. If Rudd wins, he will have done so with the help of a massive advertising campaign by the unions. The trade union movement, knowing that Howard's workplace reforms would hasten its demise, bet everything it had on beating John Howard. During this campaign the unions and the left-wing of the Labor Party have kept quiet and allowed Rudd to sell an essentially conservative ALP program. If Rudd wins, we would expect the unions and the Labor left-wing to become much more assertive in pushing their agendas. MCCALLUM