A by-election in Australian politics has recently delivered a result that has surprised many observers. On 9 May, the electorate of Farrer in southern New South Wales went to the polls, where One Nation candidate David Farley secured victory with 57.4% of the two-candidate-preferred vote, or 14,643 votes, ahead of independent candidate Michelle Milthorpe. This result made him the first non–Coalition-affiliated member ever elected in the seat since its creation in 1949, and also marked One Nation’s first-ever seat in the House of Representatives.

Farrer has long been regarded as a safe Liberal stronghold. For the past 25 years, the seat was held by former Liberal leader Sussan Ley. Yet in this by-election, the Liberal Party not only lost the seat, but also fell to third place in first-preference votes and was excluded from the final count altogether. This is more than an isolated electoral defeat. It signals a warning: the long-standing political order built around Australia’s two major parties is beginning to fracture, while One Nation is shifting from a fringe protest movement into a political force capable of challenging established conservative power. This development may reshape Australia’s political landscape in the years ahead.

One Nation: No Longer Just a “Rural Party”?

The result in Farrer is broadly consistent with One Nation’s traditional base. The electorate is a rural seat, shaped by agriculture and mining, where issues such as agricultural development, water allocation, and regional economic survival have long been central concerns. One Nation’s core support has historically come from similar rural communities.

In many of these areas, social networks tend to be relatively homogenous, with limited direct engagement with migrant or multicultural communities. As a result, some voters may be more receptive to simplified and forceful political messaging around anti-immigration sentiment, opposition to globalisation, protection of local industries, and resistance to “big government”.

However, recent by-elections suggest that One Nation’s support base may no longer be confined to rural Australia. It is increasingly extending into outer suburban areas. The Nepean by-election on 2 May offers a clear example. Although Nepean is not a rural seat, it is also not inner-city, but rather an outer metropolitan community. In that contest, while Liberal candidate Anthony Marsh managed to retain the seat, the party’s primary vote fell by nearly 10%, and One Nation secured close to 25% of the vote.

This suggests that One Nation’s appeal is expanding beyond its traditional rural strongholds into outer suburban electorates. From this perspective, Farrer may not be an isolated case, but part of a broader pattern that could emerge in similar outer metropolitan seats.

Erosion of the Two-Party Base

Recent by-elections and polling trends indicate that Australia’s two major parties are experiencing a gradual but significant decline in political dominance.

The Liberal Party lost a long-held seat in Farrer and also faced a clear drop in primary vote support in Nepean. In the 2024 Werribee by-election, Labor narrowly held the seat with less than a 1% margin in the two-party-preferred vote, while its primary vote dropped by around 17%. Meanwhile, the February 2026 Newspoll showed One Nation’s national support at approximately 27%, compared with Labor at 33%, and well ahead of the Liberal–National Coalition at around 18%.

These figures reflect a broader pattern of voter fragmentation and declining loyalty to the traditional two-party system. Importantly, a vote for One Nation does not necessarily indicate full agreement with its more extreme positions. In many cases, it reflects dissatisfaction with the political establishment and a lack of trust in mainstream political narratives.

At the same time, Australia’s trust in government remains at historically low levels. Rising living costs, increasing rental pressure, and limited policy responses have contributed to growing frustration among voters. In this environment, major parties often avoid contentious issues due to electoral risk. This cautiousness can leave voters feeling that political language is overly vague or disconnected from lived reality.

As a result, when politicians—such as those from One Nation—speak in more direct and forceful terms, even when controversial, they can still attract support from segments of the electorate seeking clearer and more decisive positions.

Major Parties’ Irresponsibility

Beyond electoral outcomes, a more fundamental question concerns the strategic choices of the major parties.

In both the Farrer and Nepean by-elections, Labor chose not to field candidates. While this may reflect a calculation that victory was unlikely, it raises a broader issue: democratic participation is not solely about winning. Elections are also opportunities for engagement, representation, and maintaining long-term trust with communities.

When parties consistently withdraw from contesting certain seats, they risk weakening their connection with voters who may already feel disengaged. Over time, this absence can contribute to further political alienation and indirectly strengthen alternative parties.

On the other hand, the Liberal Party’s approach to One Nation also reflects strategic uncertainty. As both occupy the right of the political spectrum, the Liberals have often avoided directly confronting One Nation, fearing it could further alienate conservative voters. However, this hesitation has left the party struggling to clearly define its own position, while failing to prevent voter drift toward One Nation.

For many conservative voters, the Liberal Party increasingly appears politically unclear. When a party appears unwilling to firmly defend or articulate its own ideological position, voter trust naturally erodes.

Meanwhile, Labor, despite its public commitment to multiculturalism, has at times adopted cautious positions on immigration-related issues in order to avoid losing support in marginal seats. This balancing act can also contribute to perceptions of inconsistency or lack of clarity.

Even with One Nation’s rise, a significant portion of Australian voters remain opposed to its more extreme positions. The key question, therefore, is whether the major parties still have the capacity—and willingness—to reconnect with disillusioned voters and offer a credible political alternative. If they continue relying on outdated political messaging while avoiding difficult debates, they may face increasing electoral consequences, particularly in upcoming state elections in November.

A Changing Political Landscape

As public trust in the major parties continues to decline, voters are increasingly open to alternative political voices. One Nation’s rise may be only the beginning of this broader shift.

The Farrer result is also notable for another reason: the Liberal Party did not make it to the final count, which instead came down to One Nation and an independent candidate. This indicates that independents are also gaining traction and may play a more significant role in future elections.

Australia’s two-party system is therefore facing structural pressure. The issue is not only that the major parties are underperforming, but also that they appear to lack fresh political imagination. Faced with housing pressures, cost-of-living challenges, migration debates, infrastructure strain, and generational uncertainty, both parties often rely on familiar language and established frameworks without offering a compelling new direction.

As a result, voters are no longer confined to choosing between Labor and the Liberals. Increasingly, attention is shifting toward new faces and alternative voices.

Some voters turn to One Nation because it directly expresses their dissatisfaction with the status quo. Others do so not out of full ideological agreement, but out of frustration with mainstream politics. The key question moving forward is not whether Australia will swing sharply to the right, but whether a new political force can emerge that bridges the gap between distrust of the major parties and rejection of political extremism.

Such a force may not come from traditional party structures. Instead, it may require leaders capable of articulating a new narrative for Australia—one that addresses economic pressure and social change, without resorting to the exclusion of migrant communities or minority groups.

The Next Phase of Australia’s Political Language

Migration has long been a politically charged issue in Australia. As parties continue to highlight the economic and social pressures associated with immigration—particularly through the framing advanced by One Nation—the concept of “multiculturalism” has, for some voters, lost part of its persuasive power.

While this does not reflect a broader rejection of immigration within Australian society, it does suggest that prolonged reliance on established political language may reduce public engagement and interest in these debates.

The next stage of Australia’s political language may therefore not lie in repeating existing value statements, but in constructing a more responsive public narrative. Rather than focusing solely on “multiculturalism” as a slogan, there may be a need for a framework that emphasises mutual understanding, real-world interaction, and shared participation. Rebuilding trust between communities and institutions will likely matter more than reinforcing ideological divides.

From this perspective, current political turbulence may not be entirely negative. It may instead represent a turning point. Australia’s political future may already be entering a new phase. For voters, the key challenge is not blind loyalty to any one party, but a renewed commitment to critical thinking, scrutiny, and participation. As citizens move beyond passive acceptance of established political structures and begin actively seeking alternatives, Australian politics may be entering a new era.

On May 5, the Victorian Labor government announced in its 2026/27 budget that it had achieved its first fiscal surplus in seven years, describing it as the result of “disciplined financial management.” Official figures indicate that the state expects a surplus of approximately AUD 1.048 billion, while emphasising that no new taxes have been introduced this year in an effort to ease cost-of-living pressures.

From a political messaging perspective, this narrative is clearly appealing: a post-pandemic fiscal recovery, maintained public services, and no additional tax burden. For voters, this combination is naturally attractive. However, when this “surplus” is examined within the broader fiscal structure, it reveals a far more complex reality—one shaped by underlying debt pressures and long-term fiscal risks.

Where does the surplus come from?

From a structural fiscal perspective, the so-called “surplus” is not the result of a sustained improvement in the government’s financial position. Instead, it relies largely on two types of one-off or non-recurring revenue.

The first is additional funding from the federal government. Budget figures show that Victoria received around AUD 4 billion more in federal transfers than originally expected this financial year. Under Australia’s federal system, state governments are already highly dependent on such transfers, particularly in areas like healthcare, education and infrastructure. While legitimate, this funding essentially represents external support rather than a reflection of Victoria’s own economic strength.

The second source is one-off revenue from assets and licensing arrangements, particularly in the gambling sector. For example, the operator of Keno and The Lott paid approximately AUD 1.15 billion to the state government in exchange for extending its licence for another 40 years. In simple terms, this approach brings forward revenue that would otherwise have been collected gradually over decades.

From a fiscal standpoint, such income does not improve the government’s long-term financial capacity. It merely shifts future revenue into the present, making the current balance sheet appear stronger than it actually is.

As such, this “surplus” is less a sign of improved fiscal health than a timing adjustment—an accounting outcome created by bringing future income forward.

The real issue: debt and future fiscal pressure

The budget does not fully reflect Victoria’s overall fiscal position. Major infrastructure spending is not directly accounted for in the operating balance, as it is largely funded through borrowing. This allows headline figures to appear relatively stable, even as total debt continues to grow.

According to budget projections, the government expects to borrow an additional AUD 40 billion over the next four years, indicating that debt has not yet peaked and will continue to expand. By 2029–30, net debt is projected to reach approximately AUD 199.3 billion, with annual interest payments rising to around AUD 11.8 billion—equivalent to roughly AUD 32 million per day. In other words, even without any new spending, the government will still face a substantial daily cost simply to service past borrowing.

Historical comparisons make the trend even clearer. In 2014, Victoria’s net debt stood at around AUD 21.8 billion. By 2029–30, it is expected to approach AUD 200 billion—an almost tenfold increase. Over the same period, annual interest payments are projected to rise from approximately AUD 2.1 billion to AUD 11.8 billion, more than five times higher.

To manage these pressures, the government is relying heavily on continued growth in future tax revenue. Payroll tax—currently the largest revenue source—is projected to increase by around 15% by 2029–30, while land tax revenues are also expected to rise.

However, this reveals a deeper structural issue. Much of the economic activity driving higher tax revenues is itself supported by debt-funded infrastructure spending. In other words, employment growth and revenue increases are, to a significant extent, built on borrowing rather than purely organic economic expansion. As a result, even rising revenues struggle to keep pace with the compounding growth of debt and interest obligations.

In effect, fiscal pressure has not disappeared—it has simply been deferred into the future. As for how this debt will ultimately be repaid, the government has yet to provide a clear plan. Treasurer Jaclyn Symes has not outlined any concrete timeline for repaying principal, instead stating that the current priority is to “stabilise” debt rather than reduce it.

How did Victoria reach such high debt levels?

To understand Victoria’s current debt position, it is necessary to look back to the period under former Premier Daniel Andrews. At the time, interest rates were historically low, making borrowing relatively inexpensive. The government adopted an approach that treated debt as an “investment tool”: as long as borrowed funds were directed toward infrastructure capable of generating long-term economic returns, short-term borrowing was seen as justified.

Under this logic, the government accelerated a range of major infrastructure projects, including the Metro Tunnel, the Level Crossing Removal Project, the North East Link, and later the Suburban Rail Loop. These projects aimed to address long-standing infrastructure gaps, improve transport efficiency, and stimulate employment and economic activity in the short term.

However, most of these investments were not funded through current revenue, but through long-term borrowing—effectively shifting the cost burden into the future.

The problem is that economic conditions do not remain static. As interest rates rise, previously manageable borrowing costs can escalate quickly. This model came under further strain during the COVID-19 pandemic. Faced with prolonged lockdowns and economic disruption, the government significantly increased spending to support businesses and employment, relying heavily on debt as a short-term stabilisation tool. While this helped cushion the immediate impact, it also accelerated the growth of public debt to one of the highest levels in the country.

Victoria’s fiscal structure further compounds the issue. Unlike resource-rich states such as Western Australia, which benefit from substantial mining royalties, Victoria relies heavily on property-related taxes and payroll tax. This makes government revenue more sensitive to fluctuations in the housing market and economic growth, weakening its capacity to manage high debt levels during downturns.

In modern public finance, high debt is not inherently problematic. What matters is whether borrowed funds generate sustainable long-term returns and whether there is a credible plan for repayment. The issue is not simply how much is owed, but why the debt was incurred and how it will be repaid. On this front, Victoria has yet to provide a clear and convincing answer.

Relief measures: shifting the focus

Rather than directly addressing structural fiscal challenges, the government has shifted its policy focus toward cost-of-living measures aimed at improving public perception. These include free or discounted public transport, vehicle registration rebates, and the continuation of vision care services for school students. These policies are highly visible and easily felt by the public, offering immediate relief in daily life.

At the same time, the budget sets aside approximately AUD 5 billion in reserves, part of which is expected to be used to reach wage agreements with teachers—likely to minimise the risk of industrial action ahead of the November state election.

These measures can be seen not only as social support, but also as a strategic allocation of resources—prioritising short-term, tangible benefits to maintain public support in the lead-up to an election, even as longer-term fiscal pressures remain unresolved.

The government has also emphasised that “no new taxes” have been introduced this year. While this is politically appealing, the broader context tells a more complex story. Since Labor came to power in 2014, Victoria’s overall tax burden has risen significantly. Data shows that combined state and local government tax revenue per capita increased from around AUD 4,066 to approximately AUD 6,605—an increase of more than 60%, making Victoria one of the highest-taxed jurisdictions in Australia.

In recent years, the government has expanded its tax base through various measures, including higher payroll taxes for large businesses to fund mental health services, the introduction of a windfall gains tax, additional levies on businesses to repay COVID-19 debt, as well as increases in land tax and the expansion of emergency services levies.

Against this backdrop, the claim of “no new taxes” is less a sign of tax relief than an indication that the government may have reached the limits of its capacity to impose further tax increases.

What should a responsible government do?

As Opposition Leader Jess Wilson has argued, the budget reveals a cash deficit of approximately AUD 7.7 billion, alongside rising debt, increasing tax burdens and growing interest repayments. This stands in clear contrast to the government’s emphasis on a “surplus,” and highlights the absence of a coherent plan to address underlying fiscal challenges.

In the face of expanding debt, a responsible government should not focus on presenting favourable headline figures or shifting attention elsewhere. Instead, it should openly acknowledge the scale of the problem and clearly communicate the associated risks and trade-offs to the public. Without transparency about where debt comes from, how it is being used, and how it will be repaid, the issue becomes not just economic, but one of public trust and governance.

A credible fiscal strategy should include clear timelines and pathways—outlining how debt growth will be managed, when and how principal repayments will begin, and how the revenue base can be strengthened without placing excessive burden on taxpayers. At the same time, greater transparency is needed in explaining the relationship between borrowing and spending, so the public can distinguish between long-term investments and short-term fiscal support.