It’s a winter of discontent for one political contender. It’s not Labor

As federal parliament goes into its winter recess, only one of the three main contenders is feeling the cold.

Remarkably, the Labor government is recovering. And, after Pauline Hanson went over the top, One Nation’s support appears to have peaked. A cooling, but no chill.

The Coalition, however, seems to be in cold freefall. Still. “We still don’t know how low the Coalition vote will go,” psephologist Antony Green tells me.

It’s only a little over a year into a three-year parliamentary term, so current standings do not guarantee future results. But it’s been a highly irregular year of profound change. Political structures, not just cycles, have changed.

The Coalition broke itself in two, twice. For no important reason. It was a startling self-indulgence of political vanity and stupidity. And its supporters took the cue. If their parliamentary representatives didn’t value the Coalition, why should their voters? Liberal supporters, in particular, rushed to One Nation.

For the first time since the current two-party system took form with the Liberal Party’s inaugural victory in 1949, one of the duopolists has been displaced in the opinion polls.

And, for the first time since the Hawke-Keating tax reforms of 1985, a government has made clearly redistributive change to the tax system. Redistribution always provokes a revolt by those who are having their advantage redistributed to others.

So it’s fascinating to see the political effects so far. Labor’s budget not only redistributed income from investors to workers, it also committed a big breach of trust.

Anthony Albanese had made a promise – 50 times over, he reckoned – that he would not make any changes to capital gains tax and negative gearing. And then he broke it.

The Coalition, One Nation, the media generally, leapt on the lie. All fair, too. It was a deep breach of faith in a country that didn’t have much left.

But, beyond the broken promise, the investor class cried foul. The Australian Financial Review and The Australian took up their cause, backed up by the entire Murdoch media and 2GB, most avidly. Scorching social media campaigns roasted Albanese.

The budget changes also redistributed home buying opportunity from investors to first home buyers.

Albanese said this was necessary so first home buyers could “get a crack” at owning their homes. The whole country knows he’s right. The market was broken.

Since the Howard government introduced the capital gains tax discount in 1999, home prices have surged by 400 per cent. Almost twice as fast as incomes. Pricing young people out of the market.

Who benefited? According to the Treasury, 83 per cent of the benefit of the capital gains tax discount under the Howard system went to the wealthiest 10 per cent of taxpayers. Investors, mostly, certainly not first home buyers.

But now, amid the change, the uncertainty and the effects of higher interest rates, real estate prices are quivering. And the Coalition and most media outlets are hyperventilating. Again.

So it’s surprising, and perhaps amazing, to see that Labor’s polling support has recovered. In three national polls this week, Labor’s primary vote has improved while One Nation’s has slipped. After briefly being eclipsed by One Nation, Labor is again in the lead in Newspoll, Essential and Redbridge surveys.

In Newspoll, for instance, Labor gained 3 percentage points to stand at 33 per cent. This is higher than it was at the start of the year and not much behind its election-winning performance of 34.5 per cent last year. The other two polls assign Labor 30 per cent. (The fourth poll published this week, by Sky News, had Labor gaining but One Nation gaining, too.)

“Labor has lost bark, as all governments do, especially when they’ve essentially broken a promise, but they’re still in a relatively strong position,” says Green.

Why? We’re left to guess, but it does seem that a few Labor voters who were flirting with One Nation have returned to the ALP. It doesn’t hurt Labor that it has managed the fuel crisis brilliantly. But inflation is still too high, steadily eating away at living standards, and it’s not slowing.

It’s too early to conclude that Labor has managed to get away with breaking its promise. But, in his first term, Albanese gambled by breaking his promise on the Stage 3 tax cuts and won. He was re-elected with an enlarged share of the vote. Which seemed to show that the people will allow a prime minister to break his word if it’s for a good cause.

With the Stage 3 tax cuts, the good cause was to redistribute a large part of the benefit from top earners to ordinary workers. This time around, it’s to do something important to repair a shockingly unaffordable housing market, to fix the unfairness warping the Australian fair go.

Albanese took heart from the rousing welcome that he received at the ALP Victorian state conference in May, spontaneous and heartfelt. A Labor government, acting on Labor values, is celebrated by Labor supporters. Who knew?

“The interesting thing from here,” says Green, who cleared out his desk on Friday after 34 years with the ABC, “with the capital gains tax stuff will be – unless something goes seriously wrong with the real estate market – people will end up not paying the tax and wondering what all the fuss was about”.

Something could yet go seriously wrong with the real estate market. But so far, so good. We see it cooling, just a touch. This week, Cotality told us that median home prices in the two biggest cities had fallen in June, by 1.2 per cent in Sydney and 1 per cent in Melbourne. Cue the hysteria.

The campaign against the tax changes has switched instantly to fearmongering about an imminent collapse in home prices, leaving new buyers deep in negative equity, meaning they have more debt than their home is worth.

Less prominently reported was the fact that this still left the Sydney price higher than it was 12 months earlier, by 0.3 per cent or about $3000. And that Hobart prices were still up by 9.3 per cent on the year, Adelaide by 11.6, Brisbane by 17.4 and Perth by 23.9 per cent.

Most forecasters expect prices to fall in Sydney and Melbourne in the year ahead and to continue rising in Brisbane, Adelaide and Perth. “It’s like they’ve been racing along the highway and have just hit a school zone and had to hammer on the brakes,” says Domain economist Nicola Powell.

“Some areas’ prices were growing over 20 per cent a year, and now they’ll be below 10 per cent, which is a massive slowdown.” Indeed, and a necessary one. Home prices need to run in tandem with incomes, and no faster.

Otherwise, my generation will be condemned for what Ken Henry has labelled as “intergenerational bastardry”. But, in the unlikely event that the slowing turns to a sinkhole, the economy will sink with it and the government will pay the price.

And One Nation? Hanson broke her own winning formula when she appeared at the National Press Club, as I observed at the time.

After 30 years of attacking minorities, she suddenly launched attacks on majorities – Aussie workers are lazy and bosses need more power to sack them; women’s access to childcare and abortion need to be curbed. Interestingly, these comments were made in unscripted answers to reporters’ questions.

Some of the people who’d embraced her in a fit of frustration with the status quo are starting to realise that some futures could be even worse than the status quo.

“One Nation surged, but now we’ve got to the point where they have to go beyond slogans and answer questions,” says Green. And some answers were serious blunders.

Then there was her vision splendid – the “monoculture”. Says Green: “I think it limits One Nation’s growth. There’s general support for multiculturalism in Australia.”

And then there’s the Coalition. Leader Angus Taylor plans to announce some new policies during the parliamentary recess. He has the twin problems that no one is listening and, even if they do, he has an unfortunate knack of seeming false. Even when he’s speaking the truth.

The Coalition’s greatest hope is that he’s replaced by Andrew Hastie. But Gina Rinehart is applying a veto on the former soldier. And the Liberals are pathetic enough to heed it, for now. That will change when their self-preservation instinct overpowers their Gina grovel.

Hit science fiction novel series The Three-Body Problem by Cixin Liu was inspired by a puzzle in classical physics. Where three celestial bodies – say stars – are in a gravitational system together, they behave chaotically, with unpredictable consequences.

But, eventually, the chaos is resolved in one of two ways. In one scenario, one of the stars is flung into oblivion by gravitational slingshot. The remaining two form a stable system. In the other, two stars settle into a stable orbit around each other while the third circles around them but at a considerable distance.

Australian politics is in the chaotic phase. Labor, One Nation and the Coalition compete. One party will be flung into oblivion, or reduced to being a distant star with feeble gravitational influence on the remaining two. In politics, as in physics, it’s wide open.

Peter Hartcher is political and international editor. He writes a world column each Tuesday.

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