By MILLIE MUROI, Economics Writer
Elections are one of the biggest – and real-life – displays of strategic thinking. There are winners and losers, set choices and strategies galore.
They’re a dynamic affair with a million moving parts, but Labor’s thumping victory in the latest federal election can be explained by a relatively new branch in economics called “game theory”, which focuses on the strategic actions of two or more players in a given situation.
More importantly for the Liberals, game theory is the key to winning back votes in three years’ time (and one shadow treasurer Angus Taylor is very familiar with).
Game theory is often applied to business, but ANU lecturer in politics, philosophy and economics Dr William Bosworth says it works remarkably well when thinking about the Australian political landscape.
In your day-to-day life, you may have noticed close competitors such as Coles and Woolworths tending to set up shop right next to each other, and McDonald’s and Hungry Jack’s cosying up to each other on the same street.
It’s because these businesses know the best place to capture the largest number of customers is as close to the centre of all their potential burger-loving, or grocery-buying, customers as possible.
In game theory, this is known as the “Nash Equilibrium”, where neither company can improve its customer reach by changing location – especially given where their competitor is. The further away one moves from the centre, the more customers they give up to their competitor.
It’s also why the two biggest players in Australian politics – Labor and Liberal – sit relatively close to the centre of the political spectrum and to each other: it’s where they’re able to appeal to the largest number of voters. Labor is generally seen as a centre-left party economically and socially, while the Liberals are seen as centre-right.
That’s not to say they mimic each other entirely. Just as Hungry Jack’s promises their burgers are better, political parties must also ensure they highlight their perceived strengths. That’s why we saw Anthony Albanese whip out his Medicare card and Peter Dutton pump fuel so many times throughout the election: they both had different packaging for their agendas.
But University of NSW professor of politics and economics Dr Gabriele Gratton pointed out ahead of the election that Labor and the Coalition shared some fairly similar policies.
Both, for example, promised to take the heat out of cost of living, one by slashing the government’s tax on petrol (called the fuel excise), the other by promising to (once again) pay a slice of our electricity bills. They also both wanted to cap international student numbers to dampen immigration, and matched each other on various spending promises, including investment into Medicare and major road upgrades across the country.
Why is this? It’s because, like the supermarkets and burger chains maximising their customer reach, both Albanese and Dutton wanted broad appeal to voters. The closer they were to the centre, the more voters they could pull from their opponent while still being closer to those on the left (for Albanese) and those on the right (for Dutton).
So, why did Albanese come out so clearly on top?
A large part of the reason is that the game has changed. More specifically, the “customers” they were trying to attract (voters) have skewed more progressive – especially as younger people: Gen Z and Millennials – together became the biggest group of voters for the first time.
That meant the “middle” or “average” voter was probably more left-leaning than at previous elections, prioritising issues such as climate action and gender equity.
“You can quite confidently say that the median voter has shifted a generation [younger],” Bosworth says.
Neither party was especially ambitious, but it was clear the Coalition’s focus was misplaced.
Not only did the Liberals fail to read the room on issues such as working from home (which the majority of the population clearly supported), but they also went hard on conservative policies such as their anti-woke agenda.
While some people claim the Liberal Party needs to firm up support among its traditional voters by moving further to the right, the outcome of the election shows that’s the wrong direction.
Parties further right of the Liberals, such as One Nation, won just 8 per cent of the national vote, while the Greens (despite losing seats) claimed a record 11 per cent – and Labor secured an overwhelming majority.
Trump’s victory in the US might seem like evidence that right-wing policies appeal to voters, but compulsory voting in Australia means there’s little to be gained by appeasing the extreme ends of the political spectrum in a bid to get the most passionate supporters out to vote.
Since everyone votes here, the key – or the optimal strategy in game-theory lingo – is to appeal to the average voter. If the Liberals want to win more than half the national vote, staying put (or moving further right) is a dead-end move.
“It’s clear that if the Coalition wants to win the next election, they have to move closer to the centre,” Bosworth said. In doing so, the Liberals have a better chance of taking back some of the voters they lost to Labor this election.
One big problem for the party is that they’ve lost many of their moderate Liberals over the past few years, instead ending up with a party leaning further to the right. They have also failed to fix their well-aired “women problem”, still noticeably represented mostly by men.
The two front-runners for the party’s leadership after Dutton’s defeat are Angus Taylor (who is in the party’s “right” faction and, coincidentally, wrote a thesis applying game theory to analyse English pubs) and the slightly more moderate Sussan Ley.
While neither Taylor nor Ley are particularly inspiring, there is an argument that a party led by the slightly more moderate Ley could be better placed as the Liberals try to return with a more centrist focus (while also at least signalling that the party is ready to embrace female leadership). The party must also be prepared to preselect more moderate candidates to rebuild its pool of talent without collapsing further right.
Of course, the Liberals’ resounding defeat this election wasn’t just about their suboptimal positioning. It was also about execution of a campaign during which they backflipped on policies such as ending working from home for public servants, all but abandoned their nuclear policy, and sent mixed messages through conflicting spokespeople.
It’s easier said than done, but they must stem the splintering within their party and deliver a more coherent and cohesive message.
A swing back towards more conservative views among Australian voters is not out of the question. But the long-term trend seems to be younger generations being broadly more progressive than their predecessors.
Without acknowledging this and moving their business closer to the centre, no amount of soul-searching will help the Liberals win the political game.
