Rapid immigration, a surge in property wealth and China’s insatiable appetite for raw materials fuelled a record stretch of developed world-beating growth. — Bloomberg
SYDNEY: Whoever wins Saturday’s Australian federal election will face an inescapable reality: The three pillars of the nation’s 30-year out-performance that gave rise to its “miracle economy” moniker are breaking down.
Rapid immigration, a surge in property wealth and China’s insatiable appetite for raw materials fuelled a record stretch of developed world-beating growth.
Now, the strains are setting in, leaving Labour Prime Minister Anthony Albanese and centre-right opposition leader Peter Dutton pitching contrasting visions to an electorate seeing its living standards go backwards.
It’s an election that’ll be decided in seats such as Sydney’s Bennelong, where a surge in immigrants has worsened a housing crisis, rural electorates like the coal region of the Hunter that’s now grappling with the energy transition and voting districts, including Melbourne’s Kooyong, where a loose grouping of independents has emerged as a third player in Australian politics.
Polls suggest Saturday’s election will be tight, with many pundits predicting the winner will lead a minority government, requiring smaller parties and independents to form a parliamentary majority.
US President Donald Trump has hung heavily over the vote, with both Albanese and Dutton claiming they’re best placed to deal with his tariff salvos and America First agenda.
The economic tailwinds from China’s emergence, rapid population growth and the dividends from reforms in decades past are fading, leaving whoever wins the election with a “herculean task” to convince the nation to shift course, according to James McIntyre at Bloomberg Economics.
“A change of gears is needed if the `lucky country’ is going to keep enjoying the prosperity that many have come to expect,” he said.
“That means tackling challenging reforms that previous governments have shirked for a generation.’’
But it’s bread-and-butter issues like rising energy prices, a chronic undersupply of housing, elevated grocery bills and high interest rates that have dominated the campaign as Albanese pitches cost-of-living relief, while Dutton tries to lay the blame for the country’s woes at the Prime Minister’s feet.
While Australians aren’t alone in feeling the pinch, in the last couple of years they’ve fared worse than global peers.
From the start of 2023 to late 2024, gross domestic product on a per-capita basis declined at a time when the average of the Organisation for Economic Cooperation and Development economies was steadily climbing.
While Australia wasn’t in recession, its people were.
That’s opened the door for Dutton to potentially defeat a first-term government for the first time in almost a century.
A recent poll showed one-in-two people expressed concern at what they saw as the Labour government’s failure to address the cost-of-living crisis.
Among those feeling the strain is Vanessa Cheng, who runs a Japanese-style cafe in West Ryde, roughly 16km northwest of Sydney’s central business district in the electorate of Bennelong.
Since quitting her information technology job to start the eatery back in 2023, she’s seen the cost of essentials from coffee beans to cocoa powder and eggs surge.
Rising rent and energy bills compound that.
“It’s very challenging and my debts are only growing,” said Cheng, who is an undecided voter.
“Sometimes I think why did I even start this cafe. It would have been easier 10 or 15 years ago.”
Cheng said she’d like to see more support for small businesses like hers, including easier regulatory and tax settings.
She pointed out that her father, a first generation Chinese-Vietnamese immigrant, was able to buy a house and support his family without needing help from relatives.
She has given herself three years to turn her business around and repay the money her father loaned to her.
He also came to the rescue when Cheng needed a deposit to buy a house in Eastwood, a suburb dotted with Chinese and South Korean restaurants and grocery stores a few minutes drive from her cafe.
Cheng’s story illustrates the difficulties confronting younger Australians. Based on the pre-Covid trajectory of per capita gross domestic product, every Australian is now A$2,400 worse off each year than they would have been otherwise, estimates Jonathan Kearns, chief economist at Challenger Ltd and previously a senior official at the nation’s central bank.
Bennelong, a Labour marginal seat, spans from the expensive Sydney harbour waterfront suburb of Greenwich in the north to Eastwood – popular with Chinese migrants – in the west.
Data from Digital Finance Analytics showed it’s among the top 10 electorates with both severe mortgage and rental stress, based on how much money households have left after expenses.
There are 22 seats held by Labour, minor parties and independents on a margin of less than 5%.
If the Liberal-National Coalition can scoop up most of those, Dutton will be in a position to form a government.
About 200km north of Cheng’s West Ryde cafe, the old Liddell power station towers over the surrounding landscape in the seat of Hunter.
The generator is no longer functioning. The last unit was decommissioned in 2023, yet it’s emblematic of an energy debate that’s gridlocked policy in Australia for almost 20 years and is again a significant issue in 2025.
The Labour government plans to transform Liddell into a green manufacturing hub, potentially for Australian-made solar panels, providing jobs for miners and other workers connected to the coal industry.
Critical of an excessive reliance on green energy, Dutton has proposed embracing nuclear technology and pledged to turn Liddell into a reactor. The energy impasse has left Australia with outdated power generators and soaring electricity prices.
It’s an extraordinary position for a country endowed with almost every known source of energy: solar, wind, oil, gas, coal and uranium deposits. But the stop-start policy programmes that shift with each change of government have hindered investment.
“There’s no road map,” said Kari Armitage, managing director of equipment supplier Quarry Mining.
“We’re in that phase of trying to fly the plane and build it at the same time.”
Armitage, who wanted to keep her vote in the election private, said no matter who wins there needs to be a bipartisan consensus on energy policy, so that small companies like hers can adapt to the transition.
Jeff Drayton is the mayor of Muswellbrook, a town near Liddell where one-in-five employees worked in the coal industry at the 2021 census.
He said there has been a lot of interest in new industries for the town, including green manufacturing, but without government support and policy consistency, the future remains deeply uncertain. — Bloomberg
