11/05/2026
One Nation’s stunning victory in the Farrer byelection has sent shockwaves through federal politics just days before the Albanese government delivers its federal budget.
The result has intensified pressure on Opposition Leader Angus Taylor and exposed a deepening crisis within the Coalition, with the Liberal Party now trapped between the growing popularity of One Nation in regional and outer suburban Australia and the continued dominance of teal independents in wealthier city seats.
Prime Minister Anthony Albanese wasted no time targeting the Coalition’s preference arrangements with One Nation, arguing the Liberals had effectively legitimised Pauline Hanson’s party. Labor believes the result highlights the political risks facing the Coalition as more frustrated voters abandon the major parties.
For the Liberals and Nationals, the situation is becoming increasingly dangerous. While preference deals with One Nation may help in some Labor-held seats, there are fears the strategy could further cannibalise the Coalition’s own support base. The dilemma is already resonating beyond NSW, particularly in Victoria, where the state Liberals are struggling to rebuild ahead of the November election.
The political fallout comes as Australians grapple with rising inflation, higher taxes, soaring interest rates and worsening housing affordability. Treasurer Jim Chalmers is expected to use Tuesday’s budget to frame Labor as focused on “intergenerational equity”, including proposed changes to capital gains tax and negative gearing aimed at easing housing pressures.
The Coalition is preparing to attack the budget hard, arguing Labor’s policies will drive up costs even further. Angus Taylor is expected to focus heavily on immigration in his budget reply speech, linking record migration levels to housing shortages and broader concerns about protecting “the Australian way of life”.
Meanwhile, One Nation’s momentum continues to grow nationally, fuelled by voter frustration over cost-of-living pressures, immigration and dissatisfaction with the political establishment. The party’s surge is now being compared to a localised version of the “Make Australia Great Again” movement seen overseas.
Despite Labor’s confidence, analysts warn the economic outlook remains fragile, with fears of recession, continued price rises and mounting pressure on households likely to dominate the political debate in the months ahead.