Australia’s Prime Minister Anthony Albanese was on track to lead his party to its biggest election victory since World War II, giving him a strong mandate to tackle much-needed economic reform and bargain with the Trump administration on tariffs.

Albanese will enter his second term as a Labor hero after back-to-back wins in Saturday’s election, the first prime minister to do so since 2004, while in a shock outcome opposition leader Peter Dutton lost his seat. With 60% of votes counted, Labor led by 55.9% to the opposition’s 44.1%, the Australian Electoral Commission said. That was a much stronger result than polls predicted, with Labor now projected to win at least 86 of the parliament’s 150 seats with 14 still undecided.

U.S. President Donald Trump had loomed over the campaign with his global tariff program that sparked turmoil in markets. Dutton, who had praised the American leader shortly after his return to the White House, was forced to back away from that position as polls showed Trump was deeply unpopular with Australians.

“Today, the Australian people have voted for Australian values,” the prime minister said after claiming victory in Sydney. “For fairness, aspiration and opportunity for all.”

Albanese ran an almost faultless campaign, turning around polls at the start of the year that had suggested he was headed for serious trouble. In contrast, Dutton struggled, frequently contradicting himself, backflipping on policies and even being forced into an apology for misquoting the Indonesian president.

“We did not do well enough during this campaign, that much is obvious tonight and I accept full responsibility for that,” Dutton said.

Albanese’s center-left government had struggled during its first term with headwinds such as sticky inflation, high interest rates and a housing crunch that risked a voter backlash. The government sought to soothe those concerns with additional tax cuts and rebates in a pre-election budget.

Labor’s recovery was aided by global volatility sparked by Trump’s tariff program, which he unveiled during the first week of the campaign. In Australia, offshore uncertainty tends to draw voters back toward the incumbent and this dovetailed with a more focused performance on the hustings from Albanese.

The prime minister campaigned on a platform of stability, while drawing comparisons between Dutton, a former Queensland policeman, and Trump.

“In this time of global uncertainty, Australians have chosen optimism and determination,” Albanese said in his victory speech. “Australians have chosen to face global challenges the Australian way, looking after each other while building for the future.”

Labor’s win came days after Canada’s center-left government secured a fourth term, a result heavily influenced by expectations that new leader and ex-central banker Mark Carney would be able to manage the U.S. leader.

Albanese will have to grapple with an economy at a crossroads as its key growth drivers — China, immigration and the housing sector — are all under pressure. The obvious response, economists say, is a major reform program to revive economic dynamism and raise living standards, a task successive prime ministers have shied away from because of the political risks involved.

Both sides sought to convey that they had a solution to Australia’s housing crunch. Albanese promised to pour billions of dollars into properties for first-time buyers, while also allowing them to purchase homes with deposits as low as 5%.

At the same time, Labor has an opportunity to cement its clean-energy policies and offer greater certainty to investors.

The center-left government introduced a raft of decarbonization and renewable energy targets during its first term and committed to spending significantly on clean energy and manufacturing. On the campaign trail, it announced a new Cheaper Home Batteries Program to subsidize behind-the-meter storage to ease cost of living pressures.

Both Labor and the Coalition pledged increased spending during the campaign at a time when the nation’s budget is already deep in deficit and not expected to return to surplus for years.

That prompted S&P Global Ratings to warn its AAA rating for Australia may be at risk if campaign pledges result in larger structural deficits, debt and interest costs. Australia is among a handful of nations to have a AAA rating from all three agencies, and losing one of them would politically damage the party that oversaw it.

In a rarity for Australia, the 2025 election campaign was impacted by offshore events.

On April 2, five days after Albanese called the vote, Trump announced his plans for “reciprocal” tariffs including a 10% charge on Australian exports, sparking voter concern as markets worldwide plunged.

Then in the fourth week, as Australians began early voting, Pope Francis passed away, leading both parties to briefly pause their campaigns.

———

(With assistance from Swati Pandey.)

©2025 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.