Grattan on Friday: how bold will Anthony Albanese be in his ‘offer’ for a potential second term?

Anthony Albanese recently told the Labor caucus his cabinet is preparing “an offer” to put to the Australian people at the election.

As it crafts its pitch, the biggest uncertainty looming over Labor is what sort of parliament a second term Albanese government would likely face.

The general expectation is for Labor to be returned. (Caveat: expectations can be wrong – who can forget 2019?) The question is: would it be a majority or minority government?

A May analysis of “The political landscape a year from the 2025 election”, prepared by the social and political research firms Accent Research and the RedBridge Group, concludes “a hung parliament or a Labor majority are almost equally likely outcomes” of the election.

“The likely range of seats won by Labor if an election were held during the fieldwork period [February to May] is estimated to have a low end of 71 and an upper range of 83,” the report says.

Ahead of a 2025 election, if Republican nominee Donald Trump wins in November’s US presidential election, that could affect the campaign climate. The world would change, with implications for Australia.

A federal election held in the shadow of the first days of a Trump presidency would elevate foreign policy issues. One obvious point of debate would be how either leader would potentially handle an unpredictable Trump.

A Trump presidency might favour Opposition Leader Peter Dutton’s national security focus. But an opposite view, held in Labor circles, is it could make people stick to the status quo. Trump’s triumph would also be fodder for the Greens in their attack on Labor’s closeness to the US. For its part, Labor would argue the Australia-US alliance is enduring regardless of individual US and Australian leaders and governments.

Because most observers discount the chance of a Dutton win, the thinness of Labor’s present majority (it has 78 seats in the 151 member House of Representatives) is often overlooked. It wouldn’t take much to slip into minority.

The polling suggests things haven’t moved significantly since the 2022 election, and history tells us governments can expect to go backwards at their first election. The 2025 election could be decided by a handful of seats – the days of huge swings and massive majorities seem behind us at least for now. We’re in an era of large crossbenches.

In its first term, this has been a “labour” government, but not a “radical” government. Some see its changes as incremental, but in economic terms, both unions and business see it as markedly re-tilting the playing field.

It has delivered heftily to the unions on industrial relations. It has committed to an interventionist industry policy. It has made modest improvements for those on social welfare. It has prosecuted the case for wage rises for the low paid, particularly women. These things have been combined with careful budget management that helped deliver two surpluses.

In what he puts to the people for another term, Albanese’s top priority will be trying to maximise his prospect of majority government. Policy adventurism in the election “offer” seems unlikely.

But that ties the government’s hands on what it can do in a second term – unless it is willing to trash promises post election. Yes, Albanese broke his word on the stage 3 tax cuts, without a backlash. But that doesn’t mean he’d want to make a habit of it – unless his hand was forced, for example, by the exigencies of minority government.

Albanese’s original strategy, it used to be said, was based on several terms, winning trust initially and moving to more robust initiatives later. Thus, many in the Labor base, and the wider left, would wish for a more radical second term program from the leader who made himself a small target in 2022.

For instance, Richard Denniss, head of The Australia Institute, a progressive think tank, says he would have on his wish list: attacking negative gearing and the capital gains tax discount; stopping the approval of new coal and gas mines; sweeping changes to environmental laws and introducing general public hearings at the National Anti-Corruption Commission.

But how brave/rash/out-of-character would such an “offer” be for Albanese as we observe him? He knows rocking the boat too hard would increase the chances of falling into the (minority government) drink.

Kos Samaras, a RedBridge director, former Labor official and political hardhead, says voters “just want to see a vision for the future, a plan for getting out of the mess – the mess on the housing issue, the stalemate on inflation. A vision that doesn’t scapegoat particular groups of Australians.”

Any “vision”, however, must have tangibles.

Rod Sims, former chief of the Australian Competition and Consumer Commission and now professor of public policy at the Australian National University’s Crawford School, homes in on a specific “vision” pitch.

The government should be expanding on the vision of Australia as an export-oriented green superpower. We can replace coal and gas exports with renewable energy-based exports. There’s an enormous vision there that needs to be further explained, and more policies need to be put around it.

This vision puts Australia at the heart of global emissions reduction, contributing up to a 10% reduction, and is “pro-productivity, pro-prosperity and pro-regions”, Sims says.

Within the ministry, differences bubble about what Labor should offer in the longer term. Industry Minister Ed Husic angered Treasurer Jim Chalmers when he recently suggested some future relief on company tax.

A senior Labor source points to child care and Medicare as likely policy priorities for the second term “offer”, as well as climate change, energy and the Future Made in Australia plan. Labor would describe this as a second term agenda to transform the economy through clean energy reforms and investment in manufacturing, skills and infrastructure, to create high skilled jobs in the regions and cities.

On climate change, the government’s ambition will be tested when it has to announce an emissions reduction target for 2035 in the next few months.

If it did go into minority government, the story of what Labor actually delivered in a second term might be complicated.

The Coalition likes to raise the spectre of the Greens tweaking a minority Labor government’s tail. But perhaps more likely, it might be the easier-to-deal-with teals.

And that would be interesting. The teals are often seen as breakaways from the Liberal part of the spectrum. But some of them are policy radicals. If they had power to extract concessions from a minority Labor government, they’d be demanding about “process”. They’d want a lot more consultation, changes to parliament’s operations, more transparency, and beefed-up integrity measures.

On climate, they’d exert pressure against the fossil fuel industry (possibly making common cause with the Greens), and press for faster environmental action.

Sophie Scamps, independent member for the Sydney seat of Mackellar, says:

I will want to see genuine action to address climate change and real steps to wean us off fossil fuels, as well as concrete policy action to ensure we meet our international commitments to protect the environment.

While the teals would have some common demands, they also have their individual causes.

Of course, the teals have their own battles to secure re-election. In the campaign, they will be under strong pressure to say how they would exercise a balance of power role. They might avoid the question of who they’d support, but it would be harder to dodge specifics about what policies they’d want.

How great the challenge a minority government would be for Labor would depend on how many numbers the government required to pass its legislation in the lower house. It would be helped by the size and diversity of the crossbench (including among the teals).

Even so, it would be operating from a weaker position than in the first term. That would make it all the more important for it to have a clear second-term agenda for which it could then argue it had a mandate.