Australians Go To The Polls

The Albanese Labor Government in Australia has been returned with a historic win in the May 3, 2025, general election. The result represents the largest two-party preferred swing to a first-term government in the House of Representatives in Australia’s political history.

Labor is likely to secure at least 85 seats in the 150 seat House of Representatives, surpassing the 76 needed for a majority and up from the 77 Labor won at the previous election. The Coalition is likely to drop to 39 seats, down from the 58 secured at the previous election. Interestingly, the Greens will likely now be unrepresented in the lower house, losing all four previously held seats, including by their leader, Adam Bandt. Labor’s two-party preferred vote was 55%, reflecting a 2.8% swing in its favour. This increased majority delivers the Labor Party greater legislative control in the lower house, where government is formed and legislation is primarily initiated, especially for fiscal bills. In the Senate, Labor will increase its presence to at least 27 of the 76 seats in that chamber, meaning they will require 12additional votes to pass their legislation. This can be drawn from the Coalition (26) or a combination of Greens (11), other minor parties or independents. This outcome reflects broad continuity in the upper house’s composition.

The clear and decisive result enhances political certainty at a time when many Western democracies face growing polarization, gridlock, and volatility.

Implications for Australian Politics

The outcome of a strong majority result for Labor surprised pre-election consensus forecasts, which anticipated a minority Labor government. The scale of the majority was unthinkable just months ago. There is a political maxim in Australia that Oppositions don’t win elections, rather Governments lose them. This election has clearly been the exception to this rule, and may have even changed it.

The Opposition lost this election. According to Newspoll, in February 2025 only 34% of voters believed the Government deserved to bere-elected and 53% believed it was time for another party to govern. Furthermore, Labor achieved their historic result with the third lowest primary vote in Labor’s history. Labor’s primary vote at this election is still lower than that recorded by the Coalition Government at the last election, when they were defeated.

The Opposition clearly believed they could win by allowing the Government to lose without providing a sufficiently compelling and simple positive case for voters to convert their clear, genuine and expressed frustrations with the Government into a vote for the Opposition. Voters were open to the change argument, but the Opposition failed to make it. In Newspoll in late April, despite only 39% of voters believing the Government deserved re-election, more than 60% expressed doubt the Coalition was ready to govern. In the absence of even an excuse to change, voters defaulted to the Government.

While the popularity of the Coalition’s Leader, Peter Dutton, played a clear role; deeper strategic and organisational issues were also evident. Labor’s long-running, effective personal targeting of Coalition leaders once again went unchallenged by a cohesive counter-narrative from the Coalition. While leaders must accept their share of responsibility for their unpopularity, it is increasingly important in a more presidential election environment in Australia, that the Coalition develop a strategy and set of tactics to counter these assaults on their Leader, as it has such a large impact on the ultimate vote. The problems for the Coalition Opposition are also far deeper than political mechanics, tactics and strategy. The country has changed post COVID. There is now a strong appetite, post crisis, for Government and Government policy to act as an ‘insurer of last resort’ on the business cycle and other economic shocks.

Voters are in a more defensive and  protectionist mode. This is understandable given what they have had to endure in recent years, from the global pandemic to more recent global uncertainty.  Economic security is now more about policies that support compensation than aspiration.  This means social security and direct economic supports to address the consequence of ‘cost of living’ pressures rather than their causes – namely increases in structural government spending, policy driven premiums on energy costs and increased Government regulation on everything from permitting and approvals process delays to small business over regulation and inflexible labour laws. This places the traditional centre right policy offering at a distinct electoral disadvantage, post COVID, at least for now. This is particularly the case for women and voters under 55.

In other western jurisdictions like the US, ideology, culture wars and political tribalism has boosted centre right support, as was witnessed in the recent US election. In Australia’s compulsory preferential voting system, it is far less politically salient to Australia’s more centrist voting base. While DEI and other such issues may annoy many, it largely doesn’t change their actual lives. Centrist Australian voters can also be put off by over reaction to such issues, and just switch off. This is a point that is fundamentally not understood by many on the non-Labor side of politics in Australia, including conservative commentators in the media. This makes it extremely difficult for Coalition leaders to hold their politically engaged base, while appealing to the centre ground, where elections are won and lost.

A further factor is the fracturing of the political landscape in Australia. The traditional major parties accounted for just 67% of the primary vote at the 2025 election, similar to the 68% at the 2022 election. This has fallen from the Pre-COVID norm of around 80% since the 1990s, and over90% prior to that time. This means both sides of politics in Australia are dealing with increased fragmentation at their edges, with the rise of numerous minor party and independent offerings. Social and digital media have enabled and accelerated much of this proliferation. This makes it difficult to compare between previous eras and today’s modern political environment. For example, while the previous Coalition Government had it’s lowest primary vote in decades at the 2022 election, it’s 2PP vote (47.9%) was actually higher than past Coalition Governments at the time of their electoral defeats in 2007 (Howard47.3%) and 1983 (Fraser 46.8%).

The results of the last two elections indicate that Labor has adapted more successfully to this more politically proliferated environment, proving more able to consolidate the centre left vote at elections, with disciplined preference flows and alliances. The Coalition must work on consolidating the centre right vote in a similar manner, across a broad spectrum, if they hope to form Government again.  The political out-take of the result is that the Government achieved a truly extraordinary victory, and represents a major political achievement for Prime Minister Albanese(credit to my former opponent where it is due). However, it is also important to note that the Labor Government’s vote came more from resignation than jubilation, due to the win being a function primarily of the Opposition’s manifest political failure.  The smart operators in the Labor Government will know that the significant gains they achieved at this election was more wide than deep and they will need to significantly lift their performance in their second term, to consolidate these gains.

By contrast, the Opposition must quickly learn the lessons of this defeat and the broader changes taking place in the electorate. They should also be encouraged to make haste as extraordinary outcomes in elections are becoming increasingly more ordinary as political cycles become shorter. This means the political tide can turn more quickly than most think. John Howards famous victory from Opposition in 1996 (53.6% 2PP) came after their greatest defeat under John Hewson (1993, 47%) in a decade. What this means for Corporates and investors is that they must be conscientious to remain politically and strategically engaged across the political spectrum. This is especially true given the composition of the Senate. Today’s opposition is tomorrow’s government—and institutional memory is long.

This broader shift in political culture will have policy implications. There is growing pressure on governments to spend more, both on social security and broader economic supports. Tax reform will become more difficult, and public debt pressures may intensify. Nevertheless, the Labor Government’s strong mandate enhances its ability to resist populist demands and pursue consolidation and incremental policy changes aimed at stability and certainty.

Impact on Economic and Security Policy Outlook

While the election focused heavily on economic discontent—cost of living, housing affordability, and energy prices, Australia’s fundamentals remain robust.  Elections often amplify rather than clarify real policy debates. They can be caricatures. The adage that things are never as good or as bad as they seem holds especially true during election campaigns. This is as valid in Australia today as it is in any western democracy. The following indicators, the product of the achievements of successive Governments in Australia over decades,  indicate how Australia is better placed to deal the economic challenges common to most western developed economies:

• Fiscal Position: Australia maintains one of the lowest government debt-to-GDP ratios among OECD economies, currently at 35.4%, compared to over 120% in the U.S. and around 90% in the UK and France. The federal budget deficit is modest, between 1% and 1.5% of GDP.
• Credit Ratings: Australia is one of only nine countries globally with a AAA credit rating from all three major agencies.
• Trade and Investment: Australia’s economy will be minimally affected by recent U.S. tariff changes, thanks to open trade policies and diversified export markets. Over 75% of Australia’s trade is covered by formal trade agreements assisting Australia to diversify where needed. U.S. goods trade represents just 5.7% of Australia’s exports—less than 1% of GDP—compared to 2-4% exposure among G7 economies (excluding Canada) and the EU.
• Financial Stability: Australia boasts one of the most resilient and well-regulated financial systems. APRA stress tests and NPL ratios remain well within safe thresholds, supporting ongoing confidence.
• Strategic Resources Base: Despite softening terms of trade, high global demand for iron ore, LNG, and coal underpins export income and trade resilience. These resources account for over 60% of export value.
• Currency and Superannuation: The Australian dollar remains stable and competitive in trade-weighted terms. Australia also has one of the largest pension and sovereign wealth fund sectors globally, supporting capital formation and financial resilience.
• Post-COVID Recovery: Services exports, including tourism, fully recovered by 2023/24 and are now in positive territory. Disposable income per capita has returned to growth, and the RBA is expected to begin rate cuts in mid-2025 as inflation returns to the 2-3% target band. The current cash rate stands at 3.85%.

The re-election of the Albanese Government is also likely to ensure continuity in Australia’s strong commitment to AUKUS, the Quad, and broader Indo-Pacific security frameworks, put in place by the previous Coalition Government. This provides reassurance to allies, especially the United States, of sustained alignment in the face of intensifying geopolitical competition in the region.

The challenge will be to ensure that Australia keeps pace with the increasing expectations of our allies and partners. This includes the need to increase investment in Australia’s national defence to 3% of GDP, inline with commitments increasingly being made and demanded by Australia’s allies, especially the United States. This will place additional pressure on the federal Budget at a time when the Albanese Government has made significant commitments to further increasing structural spending on healthcare, welfare and other social programmes. At some point, these objectives will collide with economic and security spending priorities.

Conclusion

Australia’s 2025 election result affirms its role as one of the most stable and reliable democracies in the world. For international investors and strategic partners, it provides a platform of continuity, economic resilience, and geopolitical alignment in an increasingly fragmented global environment.

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