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How to deliver economic growth but lose an election

By Gerald Giam

How is it possible to preside over a booming economy and yet still lose a national election?

Australia's outgoing Prime Minister John Howard may be puzzling over that question as he conceded defeat to the opposition Labor party in just-concluded federal elections.

"I have reformed the Australian economy and left it the envy of the world," said a subdued Mr Howard as he conceded defeat after 11-and-a-half years in power. He had previously won four general elections and has presided over Australia's booming economic growth since becoming prime minister in 1996.

Indeed, Mr Howard's Liberal-National Coalition's campaign theme was that the economy is safer in their hands than in the hands of an "inexperienced" Kevin Rudd, a former diplomat, the leader of the opposition and now prime minister-elect.

Booming economy but...

Most Australian voters obviously didn't buy that argument. The Australian Labor Party swept to victory with over 53 per cent of the votes. In the process, as many as six Cabinet ministers and parliamentary secretaries in the ruling Coalition may have lost their parliamentary seats. Even Mr Howard's own seat hangs in the balance, pending the final tally.

Despite the booming economy, many Australians may not have benefited from it. In a recent speech to the National Press Club, Mr Rudd (picture, left) charged that Mr Howard's government "has failed to ensure along the way that the boom delivers not just for the national economy as a whole, but for working families and the household economy as well…It is a government that has grown insensitive to the living pressures facing working families."

The staunchly pro-business orientation of the government may have turned many working Australians against them. One of the most contentious issues in this election was about WorkChoices, a sweeping set of industrial relations reforms pushed through by Mr Howard that was supported by business federations but which critics said hurt workers.

"Mr Howard treats working people as economic commodities," decried Mr Rudd.

Lessons for Singapore

The results of the Australian elections provide some valuable lessons for Singapore. Just like the outgoing Australian government, the Singapore government has always boasted about its stellar management of the economy and its ability to "deliver the goods" (i.e., economic growth) to the country. It has strongly argued that the only way forward for Singapore is to "enlarge the pie" by growing the economy (read: help big businesses become more profitable) as this will eventually prosper all Singaporeans, including those at the bottom of the pyramid.

This "trickle-down economics" theory in reality is often just that — a trickle. Voters in open democracies have been known to reject this political rhetoric. Back in 2004, India's ruling party, the BJP, also suffered a shock defeat at the polls despite its slogan of "India Shining" and the "feel good factor" from the economic growth fuelled by the strong IT services sector. Analysts saw the defeat as a result of a backlash from the impoverished masses of people who had not benefited from India's economic growth.

I was in Australia recently and almost all the opposition television commercials I watched focused on the rising cost of living, reduced workers' rights protections and higher interest rates. Sure, the war in Iraq and global warming played a part in swinging public opinion against the government, but they were probably minor factors.

The bottom line is that elections, even in advanced democracies and booming economies, are still always fought on bread-and-butter issues. Voters are not impressed by impressive macroeconomic growth figures. The government of the day may claim to have delivered the economic goods, but if those goods don't reach the doorstep of the average working family, they might be shown the exit door by the electorate, just like in Australia and India.

Read also:

"Australia's PM-elect Ruud vows better global ties" by Reuters

"Australia sweeps Ruud into power" by the BBC

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