Magazine of Socialist Action in Australia

2019: Turmoil guaranteed as Labor gov and recession loom

Reading Time: 6 minutes

2019 is set to be a year of political turmoil. Internationally, it started with a US government shutdown and the British Tories tearing themselves apart over their Brexit strategy. The yellow vest movement in France refused to die down after more than two months of intense protests.

While there have been attempts to dampen the US-China trade war, no resolutions are in sight and it could reignite at any time. It has the potential to throw the entire world economy into a spin, with big ramifications for Australia.

There is hardly a government in the world that you could describe as stable. This is despite the fact that capitalism has experienced modest economic growth in recent years. The problem is that the growth has been extremely lopsided. While the rich have gotten much richer, the rest of us have suffered from low pay, casualisation and increasing levels of debt.

We were told that the world economy had recovered after the global financial crisis a decade ago, but instead we are now looking down the barrel of a new downturn. People across the world are beginning to reach the end of their tether.

These trends also exist in Australia. Wage growth is flat and millions are suffering from housing stress. This is despite the fact that Australia has not had a technical recession for 27 years. The figures however mask the real struggle that people face trying to make ends meet.

Weak Coalition

The federal government hangs by a thread, barely surviving without a majority in parliament. The Coalition parties are consumed with infighting and it seems they can barely go a few weeks without some new scandal erupting. The Greens are also divided, as are many of the new right wing populist parties that have entered the scene in recent years.

The reason is that all parties that support capitalism are forced to accept its logic – that is, the prioritisation of the profits of a minority at the expense of the needs’ of the majority. This is what lies at the heart of people’s dissatisfaction with what they see as ‘politics’ and the crisis all capitalist parties face.

Most pundits expect a federal election to be called in May, but there is a real question about whether the Morrison government can even survive that long. Regardless, almost no one really expects that a new government will result in anything fundamentally changing.

The government plan to release an early budget with the announcement of a return to surplus. This may not happen, but their hope is that it would boost their economic credentials and their electoral fortunes. Most likely it will be too little too late. People don’t care much about the state of the government’s books when their working hours are being cut and their wages aren’t enough to pay the bills.

People want to punish the government for the situation they have created and this is reflected in the polls. Labor are well ahead of the Coalition despite the fact that Scott Morrison is personally more popular than Bill Shorten. It seems it will take something extraordinary for the government to turn things around from here.

Election campaign underway

In reality, the federal election campaign is already underway. But the next months will be a bumpy ride for the Coalition. There is a huge worry that they will lose power at the New South Wales state election in March. This would come just months after the Coalition were trounced at the Victorian state election.

Making matters worse the banking royal commission is set to release its findings before May. This will only further irritate people and remind voters that the government tried to shield the corrupt big bankers from scrutiny. The government is rightly seen as out of touch with the issues that ordinary people face. The problem is, despite their sometimes-populist language, Labor are no better.

While we could not rule out the possibility of Labor snatching defeat from the jaws of victory, it is becoming harder and harder to see how the Coalition could win the next election. The most likely perspective is that Labor will win enough seats to form government, but with a minority in the Senate.

An increasing number of voters are dissatisfied with both of the major parties. Many plan to vote for minor parties, as a way of registering their dissatisfaction with the state of affairs. Unfortunately, it has been right wing populist parties that have taken advantage of this anti-major party mood so far.

The process of creating a new left party has been hindered by the trade union officials who continue to cling to Labor despite their clear orientation to big business. A stint in power will no doubt rub the shine off Labor and force many to look again at the best way of providing political representation to working class people. Socialists will continue to call for the unions and community groups to come together to build a new working class party.

Labor began to set out their election policies at their recent national conference. They claim that they want a ‘fair go for Australia’ but nothing announced will do anything much to ease cost of living pressures or increase wages for working people. Behind the scenes they are desperately reassuring big business that they will be a safe pair of hands in power.

Unions could have impact

The trade unions have the potential to force big concessions from Labor, but their ‘Change the Rules’ campaign – while having huge potential – is little more than a pro-Labor election campaign at this stage. This is a major mistake considering what is likely to develop over the course of 2019.

Australia’s economy is weakening, with house prices already beginning to drop. After the mining boom, the property sector was key to keeping the economy afloat, but now that bubble is also beginning to deflate. The difference this time is that a housing crash has the potential to impact on millions more working class people.

A housing crash could be the trigger for an economy-wide recession, and with record levels of household debt, interest rates already low and at best a tiny budget surplus, any new Labor government will have very little room to manoeuvre.

A new economic downturn won’t be like 2008. This time around Australia won’t be shielded, and if the trade war between the US and China happened to intensify at the same time, things in the so-called ‘lucky country’ could turn around very quickly.

Even a mild recession would see the bulk of Labor’s election promises put on ice. They would come under pressure from their big business backers to protect their profits and their system. Just like we’ve seen elsewhere in the world, working people will be asked to pay for a crisis. Struggle between the classes would be back on the agenda and Labor would quickly find itself on the wrong side of the fence.

Prepare for recession now

The trade union leaders should be preparing for these developments, but instead they have handed Shorten a free pass. If they fail to put their stamp on the situation, it will only open up more space for right wing populists to falsely pose as champions of working people. In reality, these right wing charlatans only seek to divide workers for their own gains. We need to oppose their racism and bigotry and build a political alternative to all pro-capitalist forces.

For years in Australia, so-called ‘professionals’ have dominated politics. Ordinary people have not entered the scene in the same way as we have seen overseas. But 2019 could mark the beginning of a change.

As movements like the yellow vests in France show, people will only put up with the pressures for so long. If Labor are thrown into power, people will not just accept more of the same. They will expect some relief. France shows that people will turn against even relatively popular leaders. Unlike Macron, Shorten is unpopular even before coming to power!

Workers will also want their unions to push ahead to ‘change the rules’. If the union leaders decide to go soft on their Labor mates, and are reluctant to struggle, people will find other ways to express themselves, just as the yellow vests have done.

In the coming years all of the major forces in society will be put to the test. The profit-driven capitalist system will be put under pressure and will be further exposed as a system that does not work for the majority. More and more people will realise that while you can try to ignore politics, politics does not ignore you!

The turmoil on the horizon will pose the need for an alternative to this exploitative and oppressive system. It will also pose the need for ways and means to achieve the social change we need. In this context, the ideas of democratic socialism can get a new lease of life.

Let’s work to make 2019 the beginning of a new period where working people refuse to let big business and the so-called professionals dominate politics any longer, a period where we put class struggle, solidarity and socialism back on the agenda.

Editorial comment from the January-February 2019 issue of The Socialist


The COVID-19 pandemic has laid bare many of the problems with capitalism. The Socialist strives to explain the systemic causes of this crisis, and reports about the issues that are important to working people. We also help to organise struggles against the powers that be.

We don’t receive a cent from big business or governments. Our work is fully funded by our supporters. Even if half the people who read our website every month donated a few dollars each we would raise thousands to help our work!

We need organisations of struggle now more than ever, so if you support what we do please consider making a donation.

One-off or regular donations can be made securely HERE.