Poll date surprise
PM Julia Gillard has stunned politics watchers by throwing away any element of surprise in this year's election date. Will the move help her, or haunt her?PT4M6S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-2dlxg 620 349 January 31, 2013
If the economists' forecasts are right - a big if - the economy is likely to be in worse shape by the time of the election. It won't have collapsed in a heap, but it is expected to be noticeably slower, with unemployment creeping up steadily.
This says the election's timing has been picked in spite of the economy, not because of it. The days when the economy could be carefully groomed to be at its best for the election campaign are long gone.
In our ever-more globalised economy, far more developments affect the economy that are beyond a government's control. These days, even control over interest rates has passed to the econocrats at the Reserve Bank.
The economy will slow down because the surge of investment in new mines is reaching its peak, but other parts of the economy won't be growing fast enough to take up the slack. They are being held back by the continuing high dollar, the efforts of federal and state governments to get their budgets back into surplus, the more prudent approach of consumers and home-buyers and the disaffection of many business people.
Assuming the dollar stays high - which the government has been telling business is just what it should assume - we can expect a further stream of highly publicised factory lay-offs, which will worry many voters, even though few work in manufacturing.
If the dollar remains high and the economy continues slowing through the year, the Reserve Bank could well decide to cut interest rates a few more times in the lead-up to the election. But if all the rate cuts we saw last year are any guide, this wouldn't be likely to give the government a great political boost.
At least Julia Gillard is unlikely to be hit by rising interest rates during the campaign, as John Howard was in 2007 - unless, of course, the dollar were to fall sharply, which would reverse the Reserve's attitude to rate movements.
In days of yore governments lashed out with tax cuts and other vote-buying in pre-election budgets, but all fuss about the budget surplus rules that out this time. The May budget will confirm the Gillard government's commitment to increased spending on disability and school education, but spending cuts will be needed to cover this cost.
In Gillard's case for re-election, the state of the economy and its management won't be Exhibit A.