Columnist Sean Kelly has warned that the Reserve Bank's latest inflation forecast puts the likely May 2028 election into a danger zone for Labor, citing a study showing governments facing elections within two years of an inflation peak double their chances of defeat. Previously, headline inflation was expected to peak in June this year, which would have put the election right on the two-year mark; the RBA now says the peak will arrive in December, placing the poll well within that period.
Kelly said the economic conditions were now expected to be fundamentally different from what was forecast, though he noted the new forecasts could also be wrong.
Kelly argued that the dominance of inflation as a political issue cuts both ways for Labor. While opponents see it as a problem for the government, Labor can tell itself that when inflation fades, it will spring back, as it did in its first term. However, Kelly pointed to several reasons Labor strategists should not assume history will repeat.
One risk, he wrote, is that inflation may confirm concerns voters already hold about the government's character. He noted that this is the second bout of inflation on Labor's watch, drawing a parallel with Scott Morrison's experience: after winning an election, his polling rose, then plummeted after the bushfires, rose again during COVID-19, then never recovered after the vaccines' debacle.
A further complication, Kelly said, is the possibility that Andrew Hastie could become Liberal leader by the next election. Hastie, who described the Iran war as a “huge miscalculation”, appeared to suggest in an interview that he might back Labor's changes to housing taxes, though he has been more critical since. If Hastie is leader, Kelly wrote, the things Labor has done so far this term may not be as large a potential advantage as they now appear.
Analysis
Why This Matters
- The RBA's revised inflation forecast directly affects the electoral outlook for the Albanese government, potentially shortening the window for voters' memory of economic pain to fade before the 2028 election
- The analysis suggests that even if inflation eases, broader concerns about the government's character could persist, echoing patterns seen in previous governments both in Australia and the US
- The possibility of Andrew Hastie becoming Liberal leader introduces a new variable, as his early criticism of the Iran war and openness to housing tax reforms could reshape the political landscape
Background
Columnist Sean Kelly, a former adviser to prime ministers Julia Gillard and Kevin Rudd, drew on a study showing that governments facing elections within two years of an inflation peak double their chances of defeat. He applied this and other political dynamics to the likely May 2028 federal election, writing in the context of the US midterm elections where he said inflation was the dominant factor in the Republican losses.
Key Perspectives
Andrew Hastie (Liberal MP): Expressed concerns about the Iran war from the start, describing it as a "huge miscalculation" and saying he was "very suspicious about regime change by force", and appeared to suggest he might back Labor's changes to housing taxes.
Labor strategists (as framed by Kelly): May hope that inflation is all that is hurting them in the polls and that they will bounce back when it fades, as happened in their first term.
Sean Kelly (columnist): Argues Labor cannot assume history will repeat, because inflation may confirm deeper voter concerns, the RBA forecast now puts the election in the danger zone, and the political landscape by 2028, including who leads the Coalition, is unknown.
What to Watch
- The Reserve Bank's inflation forecasts over the coming months, and whether the December 2026 peak remains the official projection
- Andrew Hastie's public positioning on housing tax reform and whether he emerges as a leadership contender for the Liberal Party
- Labor's polling trajectory as inflation eases, to see if the government recovers or if deeper voter concerns persist
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedThe RBA’s latest inflation forecast puts the likely next Australian election in Labor’s “danger zone.”WA Today - Latest News: “As of last week, the RBA is saying the peak will arrive in December. That puts the election well within the danger zone”
- SupportedThe election is likely to be in May 2028, within two years of the forecast inflation peak.WA Today - Latest News: “Previously, headline inflation was expected to peak in June this year, meaning the likely May 2028 election would be right on the two-year mark. As of last week, the RBA is saying the peak will arrive in December.”
- SupportedA study says governments facing elections within two years of an inflation peak double their chances of defeat.WA Today - Latest News: “I’ve written before about the study showing governments facing elections within two years of an inflation peak double their chances of defeat.”
- SupportedPreviously, headline inflation was expected to peak in June, putting the likely May 2028 election right on the two-year mark.WA Today - Latest News: “Previously, headline inflation was expected to peak in June this year, meaning the likely May 2028 election would be right on the two-year mark.”
- SupportedThe RBA now says the inflation peak will arrive in December, putting the election well within the danger zone.WA Today - Latest News: “As of last week, the RBA is saying the peak will arrive in December. That puts the election well within the danger zone”
- SupportedKelly says economic conditions are now expected to be fundamentally different from what was forecast, but the new forecasts may also be wrong.WA Today - Latest News: “That is not an academic point; the economic conditions are now expected to be fundamentally different from what was forecast. (Of course, these new forecasts may be wrong as well.)”
- SupportedKelly says inflation’s dominance cuts both ways for Labor, which can expect to spring back when inflation fades, as it did in its first term.WA Today - Latest News: “As we seek to apply American lessons to the next Australian election, then, the dominance of inflation cuts both ways. Labor, meanwhile, can tell itself: inflation is what’s hurting us in the polls – when it fades, we will spring back. That’s because that’s what happened in its first term.”
- SupportedKelly says this is the second bout of inflation on Labor’s watch.WA Today - Latest News: “Remember, too, that this is the second bout of inflation on Labor’s watch.”
- SupportedAfter winning an election, Scott Morrison’s polling rose, fell after the bushfires, rose again during COVID-19, then did not recover after the vaccines debacle.WA Today - Latest News: “He won an election, the polls went up. After the bushfires, his polling plummeted as voters developed their suspicions. Then COVID-19 arrived and he was up again. Then the vaccines’ debacle confirmed all those earlier suspicions and he never recovered.”
- SupportedHastie described the Iran war as a “huge miscalculation.”WA Today - Latest News: “Four weeks later, he was describing the war as a “huge miscalculation””
- SupportedIn an interview, Hastie seemed to suggest he might back Labor’s housing-tax changes, though he has been more critical since.WA Today - Latest News: “Hastie, in the same interview where he described the Iran war as a “huge miscalculation”, seemed to suggest he might back Labor’s changes to housing taxes (though he has been more critical since).”
- SupportedKelly says that if Hastie is Liberal leader, Labor’s actions this term may not seem as large a potential advantage as they do now.WA Today - Latest News: “If Hastie is leader, the things Labor has done so far this term may not seem as large a potential advantage as they do now.”