The keys to Australia's economic recovery

Alex Joiner, Chief Economist at IFM Investors

• The impact of JobKeeper ending and rolling lockdowns on the Australian economy in 2021.
• With safe harbour provisions ending, are we likely to see a flood of insolvencies this year?
• The role employment growth will play in Australia’s recovery.

Kyle Rodda, Market Analyst at IG

• What is driving the Bitcoin rally and is it sustainable?
• How equity markets are looking in the early part of this year.
• The strong outlook for the Aussie Dollar.
• Commodity prices are at the highest level since the start of 2020, how will this flow through to resources stocks?

Eliza Owen, Head of Australian Research at CoreLogic

• With Australian home values rising 3 per cent in 2020, what was behind the housing market’s resilience?
• Will the housing market’s rebound seen at the end of last year continue into 2021?
• Why regional markets outperformed the capital cities in 2020.

Josh Butler, Political Editor at The New Daily

• The growing pressure for the Federal Government to bring forward the vaccination process.
• The biggest political fights to look for in 2021.
• How long will Anthony Albanese last?
• When will Scott Morrison call the election?

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AG: Hello and welcome to the first Talking Finance of 2021. I’m Alex Gluyas and today we’re joined by Alex Joiner, who is the Chief Economist at IFM Investors, to look at how Australia’s economic recovery will unfold this year particularly given the rolling lockdown situation we’re in and the fact that JobKeeper is set to finish in March. For a look at the markets, we’ve got Kyle Rodda, Market Analyst at IG, to make sense of Bitcoin’s meteoric rise and how he’s viewing markets in the early part of this year.

Eliza Owen also joins us, she’s the Head of Australian Research at CoreLogic and she takes us through the latest housing data. And we’ve got Josh Butler, the Political Editor at The New Daily, and he looks at the growing pressure for Scott Morrison to bring forward the vaccination process and his thoughts on what to watch for in the political space in 2021.

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AG: And now for a look at the economy, here’s Alex Joiner, Chief Economist at IFM Investors. Alex, just looking ahead, we’ve got JobKeeper finishing up at the end of March and JobSeeker was reduced just before Christmas. We’ve also seen that rolling lockdowns could be something that we’re going to have to continue to deal with until people are vaccinated. How are you seeing these factors affect Australia’s economic prospects in the early part of this year?

AJ: Well, I think this recession has been interesting because household income has actually been increasing while we’re in the depths of a recession and having the unemployment rate rising. That’s really been around the measures that the Government has taken to support those dislocated from the labour force, JobKeeper and JobSeeker. I think it might be a touch too early to remove some of those initiatives because what we know, is even though the unemployment rate isn’t expected to peak as high as the Government first feared it might and the Reserve Bank first feared it might, around the 8 to 10 per cent mark, it is still going to be elevated throughout the course of this year.

We’re going to have an unemployment rate that’s around 7 and getting down to 6 hopefully by the end of the year, which means there’s still a lot of people out there that are going to be unemployed and you just sort of think about how the economy is opening up. Some places can open up and then the other places still face restrictions. We’re seeing some of that now in terms of just the numbers of people that can gather and a number of people that can go to certain things. We know that international borders aren’t going to be open for a while as well, so all the flow-on effects from having international tourists and students spending in our economy and renting properties, these are all going to be areas of the economy that are going to remain a little bit more depressed than the areas that have been able to open up more proactively.

In that context, the unemployment rate may not go down as fast as we would like and therefore, I think it’s pretty important to keep those transfer payments from the Government supporting those people as they find new employment or wait for their employment to come back because we don’t want to see a loss of consumer sentiment, we don’t want to see a loss of momentum in things like retail sales that are actually buoying the economy and seeing the economy perform, overall, pretty well considering what we’ve just gone through.

AG: How costly will it be for Australia’s economy if we do continue to see these rolling lockdowns and sporadic border closures interstate? It does seem that state governments are willing to take these measurements at quite short notice and protect themselves from outbreaks.

AJ: Yeah, I think it’s pretty disruptive. I don’t see the economic dislocation that we saw midyear where we saw a negative quarter of 7 per cent real GDP, but it is certainly disruptive and sort of throws sand in the gears of the economy’s recovery. I think what we need to do and what we should really be cognisant of is the fact that when we look at the numbers in Australia and the systems that are now in place for contact tracing and these sorts of things and quarantine measures, we need to put those numbers in context to the restriction that we then apply to that. Australia’s numbers are, on a global comparative measure, extremely low. You look at the UK which is entering these stage four lockdowns – obviously, there’s going to be something in the US that is a more concerted restrictive measures because case numbers in the US are very, very high – Australia’s numbers are very, very low.

We don’t need to aggressively lockdown in my opinion at the cost of the economic recovery, we just need to manage the relatively low case numbers as best we can in order to have Australia getting this momentum into 2021 and a recovery because, as I said earlier, it’s extremely important to try and keep this recovery stable so businesses have the confidence to invest and employ in the economy, because that’s really what we’re going for. If there’s continued uncertainty around just what’s going to be happening with restrictions, then that sort of hampers that effort.

I guess the other thing there that you need to be cognisant of is just when a vaccine will come in the Australian context. Obviously, in the US and the UK, they’re sort of rushing things through because of very, very high case numbers. For better or worse, Australia is being a little bit more measured in its rollout of the vaccine, but hopefully that will come and that will sort of prevent the need for any further heavy restrictions that might impact the economic recovery through 2021.

AG: We had the Safe Harbour provisions which ended on December 31 last year, which may have been arguably propping up zombie companies. Do you think we’re likely to see a flood of insolvencies and what impact is that going to have on the economy?

AJ: Well, that’s thought to be a risk. If you look at the insolvency numbers, they’ve sort of fallen off a cliff. Part of that is, through the recession we didn’t have as many new businesses and obviously when businesses are in the early stages of development, often they fail. There was that part of it, but then there was these provisions that prevented those insolvencies from happening. I guess what the Government should try and do is, we talk about fiscal cliffs – we don’t want an insolvency situation that is one where there is a dramatic rise in insolvencies all at once.

I’m of the school of thought that we don’t want to encourage zombie companies and just have non-productive companies going on forever because that weighs on the productivity of the economy overall and in some ways, facilitated by extremely low interest rate settings that will be with us for an extended period. I think what the Government needs to try and avoid is just any sharp dislocation in insolvencies. If it starts to see that, then maybe take some remedial measures just to stop what would be a flow-on effect to employment and job losses, job losses in very small businesses that you’d want to avoid going through the course of this year because that has the potential to sort of knock the recovery off course a little bit, undermine business confidence and these sorts of things and that’s not what you want to see through the recovery of this year.

AG: Just to tie up what we’ve discussed, how important is maintaining employment growth to sustain an economic recovery, particularly as we have discussed given the rolling lockdowns could continue and the wage subsidies being removed?

AJ: Employment is key. We need that to keep household spending ticking over. We need that to allow households to meet their obligations in terms of paying off their home loans and these sorts of things. Correctly, the Government and the Reserve Bank are almost solely focused on employment and getting the unemployment rate lower. That’s really what we need to see a sustainable recovery in the economy. What we need to see is this transition from reliance on the Government. As I said earlier, household incomes have risen because of transfer payments from the Government, in an environment where wages are very, very low and it will continue to be very, very low.

If you remove these transfer payments prematurely, you’re going to have a big hit to household incomes, so I don’t think that would be productive for the economy, so you need to keep employment growing, try and get that unemployment rate down as soon as you possibly can to get wages growth and then have that self-sustaining wages feeding into spending recovery over the course of this year and into coming years. I think the other thing is, when you really have this opportunity, if you want to put a silver lining on the lack of population growth right now, we really have an opportunity to get the unemployment rate lower quicker than we otherwise normally would.

Because we all know that before this crisis, Australia didn’t have a jobs problem. We were creating lots and lots of jobs, we just couldn’t get the unemployment rate down low enough to get sustainable wages growth because of the labour supply which came from population growth and rising participation. There’s going to be an absence of population growth for at least a little while longer. It would be an opportune time to really drive jobs growth in the absence of labour supply to drive down the unemployment rate. I think that would be something that would be good. Also, it should stimulate debate around how much population growth Australia should actually have.

Australia has been an economy that has been heavily reliant on population growth for a long period of time, is that a good thing to return to. We’ve grown on the back of population growth and let things like productivity growth which are key to long-term self-sustaining economic growth. We’ve let productivity sort of wither on the vine quite a bit. I think the government needs to be mindful of the fact that its job is not done. Fiscal stimulus is one thing that’s relatively easy, you’re just spending tax payers money basically. What the economy needs for a self-sustaining recovery is employment growth and productive employment growth.

We need the reforms that will come from the Government on the fiscal side because we know that monetary policy can’t really do too much more and certainly can’t do too much more around productivity. We need those reforms and they’re going to be vital for a sustainable recovery that goes beyond 2021 and into coming years.

AG: Alex, thanks very much for your time.

AJ: Any time, mate, thanks.

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AG: And now for a look at markets, here’s Kyle Rodda, Market Analyst at IG. Kyle, I wanted to start with your thoughts on the recent Bitcoin rally, which we’ve seen reach record levels. What’s your take on it in terms of what is really driving this Bitcoin momentum, and is it sustainable?

KR: I’d like to sort of separate it into short-term and long-term perspectives, just because it’s such a divisive subject and it does elicit pretty strong passions amongst advocates of Bitcoin and those who sort of suggest that it’s just a fad. I think in the last couple of weeks, my point of view has been that we have seen some speculative behaviour starting to derive price action again and not exactly like the end of 2017 where it was outright mania. But there are sort of shades of mania in the market at the moment where Bitcoin’s becoming a bit of a fad trade once again and that’s probably driven the price in the last couple of weeks to the record highs that we’ve seen.

In saying that, I don’t think that necessarily diminishes Bitcoin as an asset to hold particularly in this environment. I think there were some reasonably strong fundamentals underpinning the long-term outlook for Bitcoin and a lot of that’s obviously around liquidity. Financial markets which are obviously being supported by central bankers and this sort of whole notion that even at an institutional level as we’ve seen in the last couple of months, that investors are looking at ways of diversifying themselves, looking at alternative stores of value I suppose, that kind of digital gold argument for Bitcoin.

For me personally, I think the run’s become a little bit overboard in the short-term and we are seeing a little bit of exuberance in the market, but I would provide the caveat that I don’t think that means that necessarily Bitcoin’s not something worth investing in or holding in the long-term. It’s just, again, we’ve probably seen a little bit of mania into the price in the last couple of weeks. Which has probably built off what’s otherwise been a pretty strong fundamental run and a really strong solid fundamental thesis for Bitcoin in the long-term, talking years down the line.

AG: In terms of the broader equity market, how are you viewing things in Australia as we’ve entered into the new year, given rolling lockdowns seem to be something that we’re going to have to deal with until widespread vaccination is administered, and then plus the UK going into lockdown and still a large number of COVID cases in the US?

KR: Yeah, well I think fundamentally speaking, the economic outlook is still pretty solid and that the outlook for equities is still pretty constructive. Of course, we’ve got the common refrain that valuations are so stretched. You’ve got this sort of short-term/long-term dynamic where, like you alluded to, we’re seeing lockdowns being rolled out in the UK, Germany’s even suggested that it might tighten or extend its lockdown. The situation in the United States is probably delivering mixed messages. Obviously, the COVID situation is dreadful but the economic data is a little bit patchy, some saying things are reasonably positive, other things are suggesting that the recovery there is slowing down.

I think overall – and this remains my sort of primary thinking on the matter, is that the Fed and central bankers have done their best to try and take downside risk out of the market and keep things fairly stable. So really, there is the ability for market participants to look towards a future where vaccinations exist, provided that they’re effective and these new strains of the virus don’t sort of undermine that narrative at all. That sort of search for returns and yield in high risk assets, where obviously it’s the only place that yield and returns seemingly can be found, remains in play.

Overall, I think fundamentals remain strong in the bigger picture, that narrative holds up. But again, we’re still sort of relying on the market, looking through some short-term difficulties to remain positive with the view at the end of course that central bank and policy makers have allowed market participants to do that.

AG: And the Aussie Dollar’s looking strong against the US Dollar, so what’s your outlook for that, and what factors are going to determine its strength in 2021?

KR: Yeah, I’m of the personal opinion that we’ll see an Aussie Dollar at 80 cents in the not so distant future, before the middle of the year, perhaps even earlier. What’s driving it at the moment? I think it’s a combination of factors. I think one reason why the RBA embarked on its QE program was to try and lean on the Australian Dollar. From a trade weighted perspective, that’s been reasonably successful, but for the most part the Aussie-US pair has been driven by factors well outside of the control of the RBA and outside, probably in some sense, Australian economic fundamentals. What’s really driving the Aussie Dollar at the moment is broader global market sentiment.

We’re still seeing the Australian Dollar trend with strength in US equities, so it’s a sort of a sentiment play, a bit of a play on a theme. That’s more or less why we’ve seen the Australian Dollar move higher in the last few weeks, or at least for some time anyway. Obviously, we’ve got really, really strong commodity prices, so our terms of trade should be fairly solid going into this year and that sort of elevated iron ore price is keeping a bit on the Australian Dollar too. Then you’ve obviously got to weigh the other side of the equation, which is the US Dollar is at multi-year lows and looks like it’s trading lower as well, for good reason – one, the economic outlook globally is pretty solid and that tends to lead to a weaker dollar as capital goes to find returns and risk your assets and risk your jurisdictions.

The other thing too obviously is the Fed’s the biggest gorilla in the jungle, so if they wanted to base the currency to be able stoke inflation and stimulate the US economy, then they’ve got the power to do so. That’s really what’s driving the Australian Dollar, it’s less to do with Australian economic fundamentals and more to do with global market sentiment and a weak US Dollar. But when it comes to the iron ore price reason for the Aussie to continue to push higher, like I said off the top, all of those sort of factors I think will push the Aussie at some point in the next quarter or two above 80 cents.

AG: Just on the US, we saw that stimulus package pass through at the end of last year, but there’s also a lot of focus on the Georgia Senate runoff at the moment in terms of Biden getting that Senate control and being able to push more stimulus through. How do you think markets will be impacted by the outcome of the Georgia results?

KR: Well, I suppose if the Republicans manage to win one of the two seats or both, it’s the status quo outcome and it’s what markets have more or less priced in for the last couple of months. What’s been interesting over the last week or so, probably less, is that betting markets and the pollsters have suggested that perhaps the Democrats could win both of those seats and the outcome of that would be that you’d have a 50-50 split in the Senate with Vice President Harris being the deciding vote in the Senate, which would effectively mean that both chains of congress would be controlled by Democrats and obviously they’ll have Biden in the Whitehouse.

That outcome opens up a bit of a pandora’s box in a way because the markets haven’t, up until the last couple of days, positioned for such an outcome. It probably means more fiscal stimulus and in particular, it opens up the door for direct payments to households to be up from $600 dollars to $2,000 dollars, which would be a shot in the arm in the US economy. Markets will like that, especially if you look at areas in the market that will benefit, it’ll be the small-cap stocks in the United States, you’ll probably see yields move higher, commodity prices as well will probably receive a bit of a boost, the US Dollar would probably weaken further.

The flipside of that outcome though is that markets will have to sort of balance out the risk of tighter regulatory environment for corporates and then, of course, corporate tax hikes as well which will be a bit of a spanner in the works as far as investors are concerned. Like I said, it’s a bit of a line ball as far as what pollsters and I suppose the market, in general, is expecting out of this Senate runoff. Again, if the Republicans pick up at least one seat, well that gives them control of the Senate and that means just the status quo outcome where we just sort of move on. If we do see a Democrat victory, it will require the market to reposition for, again, those likely policy changes that will come through if we do see a Democrat in the Whitehouse as well as Democrats controlling both chains of congress.

It’s a very significant one and one that, again, will probably not spark any sort of a reversal one way or the other in asset prices, but it will certainly change some of the sort of micro-level dynamics that dictate where flow goes in equity markets and dynamics in the currency market too.

AG: You actually tweeted earlier that commodity prices have hit their highest level since the start of 2020. How do you see that flowing into resources stocks this year and I guess, which particular commodities are you thinking will dominate the market this year?

KR: Like you just said, going by the Bloomberg Commodity Index, we’re seeing commodity prices collectively hit the highest levels since the start of 2020, perhaps the end of 2019. I think if you look at the trends at the moment and the way that the recovery is unfolding, this sort of reflation trade is still very much on – and that means a couple of things. Obviously, it means higher bond yields, it means that continued play into value stocks and in particular, it means an increase in the value of commodity prices collectively. As far as resource stocks go, that’s something that’s going to be very, very beneficial.

I think if you look from the ASX 200’s perspective, something that will really benefit the ASX broadly speaking, as we continue to see strength in the miners, the material space and the energy space as well, I think if there’s going to be anywhere that really does benefit more than most from this reflation trade dynamic or the pickup in commodity prices, it will continue to be the oil price. It’s historically still at very, very low levels. We only saw brent crude climb back above $50 dollars a barrel again last night. If we do continue to see improvement in the global economy and the successful rollout of vaccine, which means that the mobility within economies and then international travel as well eventually to pick up.

That’s going to lead to energy demand so you’ll start to see probably the energy sector and the oil giants benefit from that dynamic as that sort of occurs. But again, overall, we’re on a market that is still positioning for a very big pick up in global economic activity in the year ahead. Commodity prices are in a very strong place and are reflecting that. The ASX200 is weighted towards the commodity complex as it is, as well as the Australian Dollar too will stand to benefit from that dynamic, assuming that everything goes to plan.

AG: Thanks for your time, Kyle.

KR: Thank you.

[Music]

AG: And now for a look at the latest housing data, here’s Eliza Owen, who’s the Head of Australian Research at CoreLogic. Eliza, we finished 2020 pretty strong as CoreLogic reported a further 1 per cent rise in December in the National Home Value Index, meaning that we actually finished the year 3 per cent higher. Given everything that happened last year, it seems Australia’s housing market has been very resilient. What do you put that down to?

EO: Yes, it is a pretty strong result and it almost seems counterintuitive given that we’ve entered the first recession in over 28 years. We’ve seen a lot of job and income loss, but ultimately in our research we’ve found that it’s not uncommon for the housing market to post strong results even in an economic downturn. That’s largely down to factors like the fiscal policy and monetary policy that is enacted in response to economic crisis. So, namely, the reduction of the cash rate to its effective lower bound, sitting at 0.1 of a per cent, that’s led to record low mortgage rates.

For people who still have their jobs and income intact, we’ve seen that these low mortgage rates have really incentivised a lot of people to borrow and buy and that’s something that sort of has sustained housing prices and pushed them up a little bit as restrictions have eased. There are obviously the fiscal policies which have provided a lot of support to renting households, to keeping confidence relatively high as well off the back of the Federal Budget. Then outside of that, I’d say it’s factors such as a quicker than expected economic recovery.

We’ve seen a very strong rebound in consumer sentiment which often correlates with sales volumes as well, so even though we had a big plunge in sales volumes around the strictest restrictions such as in stage two nationally and across Melbourne in the September quarter, we’ve really seen a remarkable bounce back in sales volumes towards the end of the year and over 2020 sales volumes finished 8 per cent higher than what they were in 2019. I think those factors combined and then I guess on the supply side as well a lot of people have decided to stay put during the pandemic and that’s meant that the number of listings coming onto the market has generally been very low during 2020.

At the end of the year, listings volumes finished up about 20 per cent lower than where they were at the end of 2019. So, at a time where you’ve got rising demand off the back of a quick economic recovery, low mortgage rates and a strong mix of State and Federal Government fiscal support, you’ve had very constrained supply which is leading to that momentum as well.

AG: And just on that rebound that we saw in the last few months of 2020, are you expecting that to continue into the new year?

EO: I think it’s likely that it will. Some of these markets certainly have more growth potential, take Southeast Queensland markets for example, where for the past few years we’ve seen very strong internal migration. The Sunshine State has been the biggest recipient of Australians who are moving around from other parts of the country and dwelling values are still relatively low there compared with Sydney and Melbourne. I think where we’ll see people moving from New South Wales and Victoria to the Sunshine State, it’s possible that that movement of people with relatively high incomes will push up prices in 2021. You’ve got markets like Perth and Darwin which are really ramping up off the back of a very long and large correction. I think those markets have more to go in 2021.

I think there are some risks around Sydney and Melbourne property markets, particularly in those inner city apartment markets which have historically been in high demand from overseas migrants, whether they’re international students or longer-term migrants, because we are still seeing international border closures. Demand in those inner-city apartment markets is likely to remain subdued and of course, you have the added threat of these new COVID clusters in New South Wales, which could see a slowdown in economic activity as well as real estate transaction activity. But overall, I think as things are at the moment, it’s likely that we’ll continue to see an upswing at that more broad based national level through 2021.

AG: You also reported that regional housing values performed really well and in fact, actually regional markets outperformed the capital cities. Is that something that’s purely come off the back of people working remotely and a reaction to lockdowns? Or is that potentially something we could see extended into the new year?

EO: I think the normalisation of remote work through COVID-19 is something that has probably helped regional markets more than it would otherwise, but at the moment it’s hard to put it down solely to the narrative of people fleeing cities and seeking a tree change or a sea change. The data in migration for example, partially supports that in Victoria. We saw a near record number of people leaving the Melbourne metropolitan for regional Victoria, but that same data pattern didn’t really stand up in the other states and territories. We have got this situation where, over the year the combined capital cities markets increased by 2 per cent.

Combined regional markets increased by 7 per cent, so essentially more than three times the annual growth rate there than the capital cities. I guess there are other factors such as affordability. Regional areas are coming off a relatively low base, so people who have seen maybe their income reduced or have sort a change in lifestyle through COVID-19, regional areas might be appealing for that relative affordability. Those broader factors such as low interest rates, supporting the markets as well. I think that, if anything, as the economy improves and fingers crossed as COVID remains well contained in Australia, we could actually see mobility pickup and in that case I would expect regional markets to continue to see that strong performance in 2021.

AG: Melbourne was the only capital city to report a loss last year, presumably due to the prolonged lockdowns that we had. Then, on the other hand, we had Darwin which reported the biggest gain, what do you put that down to?

EO: Yeah, that’s a really good observation. Melbourne is definitely a case where it’s the only capital city that’s seen a decline in values over the year, values down 1.3 per cent. I would put that down to the extended lockdown conditions that we saw which had impacted consumer sentiment, really limited real estate sales. Not to mention the fact that when restrictions did ease, we saw a significant surge in listings across Melbourne, whereas other parts of the country, listings volumes have remained quite tight. So you do have more stock coming onto the market as consumer sentiment in this state in particular remains pretty weak.

That’s, I think, the main factor contributing to the declines in values across Melbourne. When it comes to some of those smaller capital cities that are seeing strong increases such as Darwin which is up 9 per cent over the year. For me, Darwin and Perth, I think in those instances it’s just the fact that they’re coming off such a low base. Perth and Darwin are the most affordable capital cities and even though they’ve posted very strong annual growth results, Darwin is about 25 per cent below its peak value in 2014. What we’re observing in Darwin at the moment is just a rebound off the back of one of the longest and largest corrections that we’ve seen in an Australian property market and it’s just got a lot of room to grow.

To an extent, even though we’ve been through a pandemic, we are seeing that overall mining investment has increased over the year to June 2020 and that mining activity rebound will also support demand for property across Western Australia and the Northern Territory.

AG: Thanks for your time, Eliza.

EO: No worries, thanks for having me.

[Music]

[Parliament audio clip]

AG: Here’s Josh Butler, the Political Editor at The New Daily. Josh, there’s growing calls for the Federal Government to bring forward the vaccination process from March given that the actual vaccines will arrive at the end of this month. What’s your read on this? Do you think Scott Morrison will give in to the pressure?

JB: Yeah, the pressure is mounting and even just today there’s been some stories in the News Corp papers with the Government now committing to an earlier timetable than they previously said. Even on Monday, I think the Chief Medical Officer, Paul Kelly, said it would be more like a late March rollout. Greg Hunt today in the papers is saying more like early March. I wouldn’t be surprised if it does come a bit earlier than this. I’m not an epidemiologist, I’m not a health expert or anything like that. But essentially the Government’s argument which is I think a pretty fair one is them saying that Australia’s not in an emergency position, we don’t need to rush out approval of these vaccines immediately.

Other countries where we are seeing the vaccines being rolled out, like the USA, the UK, Israel, Canada, through Europe, they’ve given varying levels of some kind of emergency authorisation or like a special use authorisation which is a bit lower threshold, a bit lower standard to meet than the full approval process that you would go through in normal times – because those countries are so badly hit by the virus, thousands and thousands of cases a day, thousands and thousands of deaths a day we’re seeing in the US and hundreds in the UK – they’re having to rush this out because they’re in such a dire situation. The Federal Government is saying, we’re not in that situation, Australia has the virus, by world standards, pretty much under control.

We are seeing outbreaks and cases and that sort of thing are in Sydney and Melbourne, but you can’t compare it to what’s happening in the UK and the US and other parts of Europe. The Government’s saying, we don’t need to rush this out, we don’t need to make this happen immediately. But the other side of it is, some epidemiologists are saying, perhaps the waiting until March might be costly – even Raina MacIntyre, who’s one of Australia’s leading epidemiologists from UNSW and from the Kirby Institute, she released a video on Monday saying that it would be costly if we waited until March.

There are two sides to this coin. I wouldn’t be surprised if the Government does quite a popular political play saying February or January – “Okay, we’re going to start rolling this out in February.” I think it’s one of those things where they’ve probably factored in more time than they actually will need just to make sure that there are no mistakes to have the opportunity to say, “We’ve brought this forward a bit, we are doing it a bit faster than we said.” Now the timetable is early March, I wouldn’t be surprised if it does come even a little bit earlier than that.

AG: You wrote an interesting piece the other day on the big Australian political fights to look forward to this year, with one of them being that vaccine rollout which we just discussed. One of the others is the whispers around how long Anthony Albanese will actually last, so how are you seeing that play out?

JB: This is a really interesting one. I mean, obviously there’s been a lot of whispers and talk about Anthony Albanese and his leadership for quite a while now. I honestly don’t think there’s a whole lot in it. Obviously, people like Joel Fitzgibbon have made a bit of a fuss about Albo’s leadership and all that sort of thing – and people cite his poll numbers, he’s consistently lagged Scott Morrison by a fair bit on the preferred PM stakes. I think the last news poll had Morrison at about 60 and Albanese at about 28 on the preferred PM stake. But the other side of it is too that Labor has trailed on the news poll essentially since the start of the pandemic, I think since March. But at the same time, it’s been only by a couple of points, they’ve been within striking distance and Labor’s consistently said, “Look, we’re going to be constructive for this period, we’re going to get behind the Government on a lot of things.” They haven’t been the traditional opposition that you normally would see. They haven’t really been going after the Government and Morrison and the Coalition 110 per cent like you might have seen with a Tony Abbott or that sort of thing. They’re in a different position. That, I think, is probably part of it. They haven’t really had the opportunity that a normal opposition would have to really find the distinction with the Government to really set themselves apart and create a contrast. Whereas, this year I was talking to some Labor MPs at the start of the week and one of them even said to me, and I’m quoting here, “2021 will be a licence for more combat for Labor.”

I think that you will see a different sort of side of Anthony Albanese and Labor this year and I think it will be a bit more full on – he’s already signalled he will be taking on Scott Morrison more directly and calling him out a bit more and taking on the Government more directly. That all, I think, feeds into this idea of leadership speculation. I mean, if you’re going better in the polls, there’s less talk about your leadership and less talk for your opposition and enemies to kind of getting under your skin. But there’s been talk for a while about the likes of Jim Chalmers or Chris Bowen or Richard Marles potentially stepping in if Labor’s vote doesn’t increase or if there’s talk about Albanese a bit more.

There’s been talk about Tanya Plibersek perhaps or Tony Burke, but none of these people have raised their hand. They’ve all said they’re behind Albanese, they’ve all said that he’s doing a good job and they want to be ministers in an Albanese Government is I think something that Richard Marles said a while ago. I think it’s too early at this stage, I think last year has been such a difficult year for everyone, but it’s sort of been a strange time for politicians too to have to get out of that normal style of campaigning, of fighting, of arguing, of politicking and that sort of thing. I wouldn’t be surprised if the poll numbers do change this year.

There probably will be more talk about Albanese leadership and that sort of thing, but I don’t think there’s a lot to it. None of the Labor MPs I’ve spoken to are all that fussed, they say that there’s a lot of smoke and mirrors and that sort of thing. There’s not a lot really there behind these rumours.

AG: It begs the question from Scott Morrison’s perspective whether he calls the election this year or he waits until 2022, so what are your thoughts on that?

JB: Yeah, look, I’ve thought kind of all the way through that he wouldn’t wait until 2022. There was a really interesting piece by Dennis Shanahan in The Australian the other day and he sort of forensically went through all the possible dates there could be an election. To boil it down, there’s a tricky set of laws around the timing of elections, it has to be a certain time after the last one and a certain time before, a certain date in the future and x, y, z. Essentially, the election has to be called between August this year, so August 2021 and I think May 2022. It has to be on a Saturday.

They’re not going to call probably in the middle of school holidays, they’re not going to call it over the Christmas break, they’re not going to call it when it’s public holidays and all the rest. When you take all those things out, there’s only a small number of dates it could be and there’s only a really small number that there could be in 2022. On a purely scheduling logistcal basis, there’s more dates in 2021 that there could be. But, number two, I think on a more political level the longer Morrison waits to call an election, I think the longer chance there is for a scandal to erupt in the Government that could take some paint off them, that might hurt their chances.

But I think the earlier he goes as well, I think the more likely it is that people will remember relatively on world standards, how good a job they’ve done in managing the pandemic, how they’ve managed to keep unemployment lower than it was predicted to go to and how they’ve managed to keep more people in jobs than was predicted, how they managed to keep the virus under control in a way that no one predicted. I think the longer you wait, the more chance there is for people to forget it. You come back to Labor and Albanese, then there’s more chance for them to rev up their engines and kind of really get back in the swing of things and get back into normal politicking. I think on a number of levels, there’s probably more encouragement I think to run a poll probably late this year. Again, some Labor types that I’ll be speaking to, some Greens types are thinking that they’re going to get their campaigns up and running so they’ll be at full speed by September if they need to.

I think September might be a bit early, I think maybe more October could be more what we’re looking for. But I would be surprised if it’s not this year, but I wouldn’t be shocked, if that makes sense. If I had a tip, I’d say September/October.

AG: Thanks for your time, Josh.

JB: No problems, thanks.

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AG: This week we remember David Bowie, who was born on the 8^th of January back in 1947 and died aged 69 in 2016. Here’s a little of Space Oddity to remember him by.

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AG: That’s all from me, have a great week.

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