For Andrews and Guy, a very different election battle looms

Imagine it’s November 1, 2022, the first day of Victoria’s official caretaker period. The state election is 25 days away. So much has changed over the past year.

The dreaded virus hasn’t gone away. But Victorians are no longer obsessing about daily case numbers, lockdowns, mask mandates, contact tracing and social-distancing rules. People are back in cafes, bars and restaurants, big events are once again brimming and the CBD is slowly grinding back to life.

There is a broad though weary acceptance that COVID-19 will probably be with us in one form or another for years to come. Victoria, like the rest of the world, has simply learnt to live with it. Talk has once again turned to the future.

Daniel Andrews and Matthew Guy.Credit:Fairfax Media

The political battle that both sides of politics waged in 2018 – before the state economy and budget were derailed by the pandemic, before the bitter war in Ukraine, before fires and floods – seems a lifetime ago.

Back then, for the Liberal Party, it was all about African gangs and law and order. What was that Liberal slogan again? “Get Back in Control”. Ridiculous. Four years later, voters have had enough government control in their lives to last a lifetime.

A slogan such as that, bad as it was at the time is today inconceivable. It was a bit like the Abbott government’s 2014 “budget emergency”. It was all about creating the perception of a problem, even if the problem was mostly illusory.

As Liberal elder statesman Tony Nutt candidly put it in his review of the Liberal Party’s 2018 state election campaign: “The focus on ‘African gangs’ became a distraction for some key voters who saw it as a political tactic rather than an authentic problem to be solved by initiatives that would help make their neighbourhoods safer.”

And then along came a whole set of genuine problems. Daniel Andrews and Matthew Guy have been forced to adapt to a vastly altered political landscape.

Unemployment has fallen to near record lows. That’s obviously a good thing. For the first time in many years, workers have been getting decent pay rises. But the state – particularly the health and hospital system – is battling serious skills shortages.

A state government push to hire overseas health workers to tackle shortages in hospitals and clear a huge elective surgery backlog has flagged as other countries also battle to attract skilled health workers. The Andrews government’s infrastructure push is also feeling the pinch and the government has been forced to announce recruitment campaigns to get workers for its big projects.

At the same time, the price of just about everything – from petrol to food to building materials to houses – has been soaring. Home ownership has drifted further out of reach for a generation of younger voters, and inflation has been rising at the fastest pace for years, prompting predictions of higher interest rates.

Housing has moved only further out of reach for young people. Credit:Glenn Hunt

The focus is squarely back on the budget, the economy and, in particular, the rising cost of living. Both sides are now acutely aware of the pressure faced by Victorian households.

The state may be bouncing back, but the climb ahead looks long and steep. The budget remains mired in debt. Net debt as a proportion of the state economy is set to rise to the highest level since the early 1970s, while the annual interest expense as a proportion of government revenue is set to rise to the highest level since the recession of the 1990s, and that assumes interest rates will remain low for the foreseeable future.

For both sides, the idea of repairing the budget by cutting spending has been difficult to grapple with. Annual budget deficits, which flow into the stock of debt, are huge. The hope is simply that the state economy will eventually grow its way out of trouble. But will the economic bounceback prove sufficient?

For both sides, it is all about the future. Andrews remains determined to cast off the dour image built up during the rolling health crises of 2020 and 2021 of a man singularly focussed on keeping the virus at bay.

That means returning to a theme honed during the 2018 campaign to “get things done” and to deliver “for all Victorians”.

The advantage for Labor is that it makes no bones about its willingness to “use the state’s balance sheet” to provide support. The government’s ability to raise revenue or take on more debt has obvious limits (whether these limits have been reached is a whole other question).

For Guy, the task is more complex. It will mean not only mapping out a credible plan to help the state “recover and rebuild”, but also projecting a more progressive image of himself and his party. And, if he hopes to obtain a political advantage, he will need to do all of this wearing a fiscal straitjacket.

It promises to be quite the campaign.

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