Maybe Barrie Cassidy knows something:
That is why an election in the first half of next year – by mid-May – is now a serious option.
If the polls tighten – and the prospect of a surplus diminishes – then the Government would not need a lot of encouragement to go early. Just a whiff that the mood is improving in NSW would do it.
I have canvassed the prospect of an early election before.
The right to call an election can be thought of as an ‘American’ option* – the prime minister can call an election at any time up to a specified date. That option is valuable to the party in office. The opposition can under some very specific circumstances force an election – specifically the Parliament can force an election. But those situations are rare.
Factors that make options valuable include the time to expiry and volatility. Right now the time to expiry is over two years – the last election was less than a year ago. Nonetheless it looks like the government would be wiped out at any election held any time soon. That is because there is no volatility in public opinion – support for the government is a one-way bet, down. But the government is intending to shock the system – the introduction of the carbon tax might introduce volatility into the mix and then the option to call an election at will becomes very valuable. That combined with the time-value of options suggests that an election (barring unexpected by-elections) will be as late as possible.
Cassidy obviously has better contacts than I have, but I’m not convinced it pays the government to go early. I suspect they will be able to brazen out the lack of a budget surplus (the Pre-election Economic and Fiscal Outlook should tell us the state of the budget even if they did go early). Anger over electricity prices rises may have subsided for the while but a few election ads will take care of that.
The other consideration is that the government has to win seats to retain office. Normally a government would either have to simply hold seats or lose fewer than its majority to retain office. If and when Rob Oakeshott or Tony Windsor lose their seats government will change hands assuming the Coalition recovers Slipper’s seat and Wilkie retains his seat. That isn’t hard to imagine. So a classic sand bag strategy doesn’t do the trick. That is before we start thinking about Dobell or northern Tasmania where the forestry industry has collapsed.
* The term ‘American’ here relates to the option type, not the political system. The alternative to an American option is a European option that can only be exercised on the maturity date.