One Nation is capitalising on Australians' economic pessimism like never before, with polling numbers at unprecedented highs and leader Pauline Hanson achieving higher net approval ratings than the prime minister and opposition leader. This surge, driven by a 'stagflation impulse' reminiscent of the 1970s, combines elevated inflation, stagnant economic growth, and deep consumer pessimism, as measured by the Westpac-Melbourne Institute.
Cost-of-Living Squeeze Fuels Support
Households are experiencing a cost-of-living squeeze accompanied by fear for their financial future, including job insecurity. Australia's notoriously high housing costs and the frustration of younger generations being priced out of home ownership have intensified this discontent. According to the Westpac-Melbourne Institute, consumer sentiment surveys show Australians are now experiencing 'deep pessimism,' with interest rate hikes weighing on prospective buyers and mortgage holders.
Jordan McSwiney, a research fellow at the University of Canberra's centre for deliberative democracy, notes that One Nation has tied housing affordability concerns to immigration. 'Economic policy and housing are not really territories that One Nation is usually comfortable on,' McSwiney says. 'This kind of link between immigration and housing allows them to address issues that are very front of mind to people, like the economy, but address it from their preferred terrain.'
Bait-and-Switch on Immigration
McSwiney describes One Nation's approach as a 'bait and switch,' using housing and the economy to discuss immigration, their core focus. The party also links cost-of-living pressures to its campaign against net zero emissions and renewables, providing another established talking point for Hanson. In her National Press Club address last month, Hanson argued that 'immigration policy has our country in the state of crisis.'
The Coalition has already explicitly linked migration rates to housing supply, giving One Nation's policy mainstream legitimacy. Hanson's party, however, is better at prosecuting its case, especially through 'engagement farm' operations that flood social media with simple solutions to housing affordability at no cost to voters.
Sequence of Economic Shocks
The causes of Australia's housing problem are multilayered, with decades of chronic undersupply and investor-centric tax settings helping supercharge prices. Government data shows 25 years of price growth that has far outpaced wages. While periods of high migration can place immediate pressure on rents and housing supply, they also provide workers needed to build homes and address skill shortages.
AMP's chief economist, Shane Oliver, says policymakers need to balance immigration to avoid drastic cuts that result in labour shortages and economic strain from an ageing population. The initial wave of inflation starting in late 2021 did not spark One Nation's current support; it surged only during the latest rise in living costs from late last year, worsened by the Iran war. Households have stocked up on cheap canned goods and reduced spending on takeaways and restaurants.
A new OECD report found that 'real hourly wages in Australia' are falling, meaning living costs rise faster than paychecks. 'This sustained erosion of purchasing power points to persistent pressures on household incomes, even as the labour market has remained broadly solid,' the report says.
Growing Scrutiny Ahead of Election
One Nation's surge will be tested at the next federal election, to be held by 2028, with economic conditions playing a major role. The global economic situation is uneasy due to the Iran war's fallout and potential oil supply disruptions on inflation. Hanson must navigate growing scrutiny as a central political player, with her talk of a 'monoculture' potentially putting off voters.
Gabriele Gratton, a professor at UNSW Business School, says voters react to a 'sequence of economic shocks' when shifting political positions. 'The result is that voters lose trust in [political and bureaucratic elites] and seek alternatives to the liberal democracy we have built,' Gratton says. 'The lesson from the US and Europe is not that a single economic shock moves voters towards the right or the left.'
McSwiney says Labor faces the 'long, slow process of announcing policies that are going to improve people's everyday lives, and then delivering on those.' He adds, 'That is what might take the wind out of One Nation's sails, but that's a long game. I'm sure the Labor party is very thankful that this spike in One Nation's polling has happened at this point in the electoral cycle, and not six months out from an election. For the Coalition, they need to get their act together, and present a serious opposition.'
