The federal election in Australia scheduled for May 21 remains in the balance. Whichever party wins the election, the Australian Labor Party or the ruling Liberal National Party coalition, will have China-Australia relations at the center of its economic and security policies.

While national security has been the centerpiece of the LNP election campaign, the Labor Party has focused on declining living standards, rising inflation, stagnant wages and under-funded eldercare. Voters increasingly hold Australian Prime Minister Scott Morrison responsible for a less than stellar response to the COVID-19 pandemic and natural disasters, and a decade of neo-liberal restructuring that has seen reductions in education and health budgets, and a transition to an asset economy.

US policies cause of Australia's woes

Moreover, the fallout from the LNP's blind adherence to both the Donald Trump and Joe Biden administrations' China policies is being increasingly seen as a major cause for Australia's economic woes.

A key finding of recent voter research has been the disparity between the LNP's posturing on national security and the sentiments of the electorate. While security concerns have been exacerbated by the ongoing Russia-Ukraine conflict, opposition leader Anthony Albanese has countered the LNP focus on national security by mirroring the government's defence policy but avoided linking it to a potential conflict over Taiwan or the LNP hysteria, largely driven by Defence Minister Peter Dutton, over the so-called "China threat" theory.

Albanese and his deputy, Penny Wong, have indicated they would deal with Beijing "in a mature way" by focusing on the Labor Party's foreign policy principles－regional engagement, support for multilateral forums and the alliance with the United States.

While a win is unlikely to prompt the Labor Party to fundamentally change the LNP's security policies vis-à-vis the Ukraine crisis, Taiwan, the South China Sea issue, or the Quadrilateral dialogue (among the US, India, Japan and Australia) and AUKUS(a security pact among Australia, the United Kingdom and the US), it may adopt a more deterrence-based approach through non-military measures: intelligence, cyber, financial and logistical.

Australia's key reason to change policy

Albanese has highlighted China's "forward-leaning" attitude as the key reason for changing Australia's foreign policy and spoken of increasing defense spending to more than 2 percent of GDP should regional geopolitical tensions rise. Also, Morrison's failed "backyard" approach to the Pacific islands, which ignored climate change and economic development, is likely to undergo major review.

Further, the LNP's massive increase in Australia's military spending, including AU$10 billion ($6.93 billion) for the AUKUS nuclear submarine base scheduled for completion by 2023, and Australia's support for the Quad's attempts to disrupt implementation of the South China Sea Code of Conduct, by targeting the Philippines, Indonesia and Vietnam will almost certainly be reviewed in light of the Labor Party's policy on trade with the member states of the Association of Southeast Asian Nations and the Regional Comprehensive Economic Partnership, and China.

Albanese has referenced China's changed posture toward Australian imports as a key concern for Australian businesses, and knows very well that Australia faces a looming economic dilemma, aggravated by slowing growth with almost all of the country's trading partners, including China.

Rising inflation and commodity prices pose both supply- and demand-side problems for the Australian economy. Although the agricultural and mining sectors receive windfall profits in the wake of the Ukraine crisis, the cost of living, including services, house prices, rents and energy costs, continue to rapidly rise in the country.