- Former Goldman banker becomes sixth leader in eight years
- New PM must revitalize economy battered by slowdown in China
Malcolm Turnbull was sworn in as Australia’s sixth prime minister in eight years Tuesday after ousting Tony Abbott, pledging to revitalize an economy battered by the slowdown in China.
The 60-year-old former investment banker takes charge of a post-mining boom economy suffering its weakest run of growth since the 1991 recession. He beat Abbott, 57, in a late-night ballot of ruling Liberal Party lawmakers, concerned the government was heading for defeat in elections next year after trailing in opinion polls for more than 12 months.
While Turnbull, a former Goldman Sachs Group Inc. executive, enjoys strong public support, he may struggle to reunite his party after the leadership ballot in which nearly half the lawmakers picked Abbott to stay, and with some senior ministers expected to step aside.
“It’s going to be hard,” political analyst Stephen Stockwell of Brisbane’s Griffith University said by phone. Still, Turnbull will have “a strong mandate to modernize the Australian economy.”
The S&P/ASX 200 Index declined 1.4 percent as of 1:28 p.m. local time, extending losses after Chinese equities opened lower, while yields on benchmark 10-year Australian government bonds fell 1 basis point to 2.68 percent. The Australian dollar fell to 71.32 U.S. cents after the Reserve Bank said China’s slowdown and market volatility increased risks to global
growth, snuffing out a rally that came after Turnbull’s selection.
Abbott told reporters Tuesday he would make the change of leadership as easy as he could for the government. “There will be no wrecking, no undermining, and no sniping,” he said. “This is a tough day, but when you join the game, you accept the rules.”
He didn’t say whether he plans to retire from politics.
Abbott’s ouster extends a period of revolving-door leadership in Australia that saw the now-opposition Labor dump two of his predecessors -- Kevin Rudd and Julia Gillard-- and embark on infighting that helped contribute to its election loss in 2013.
The new leader is expected to escape the barrage of public criticism that followed the removal of Rudd in 2010, the first such ousting of a first-term sitting prime minister. “The key difference is that Australian voters have seen this coming, whereas they did not see the removal of Kevin Rudd,” said Haydon Manning, a politics professor at Flinders University in Adelaide.
Rather, Turnbull’s own ranks could be his biggest enemy, given some Liberal lawmakers regard him with suspicion for his left-leaning views on issues such as climate change.
Turnbull, who won the ballot 54 votes to 44, said he’d be a consultative leader who would explain his economic vision to voters. The make-up of his ministry will be announced after this week. He said it was his assumption that the current parliament would serve its full term.
“We need to have in this country, and we will have now, the economic vision, a leadership that explains the great challenges and opportunities that we face,” Turnbull told reporters after the ballot. “The Australia of the future has to be a nation that is agile, that is innovative, that is creative. We cannot be defensive, we cannot future-proof ourselves.”
Foreign Minister Julie Bishop was voted back in as deputy leader of the Liberals, a role she has served under three previous leaders, including Abbott. Speculation is mounting that Turnbull will ax Joe Hockey as treasurer after the world’s 12th-largest economy lost traction under his watch, with Social Services Minister Scott Morrison tipped as his replacement.
Business leaders have been critical of the government’s lack of resolve to overhaul an outdated tax system and labor market -- reforms seen as essential to boosting growth.
Australia is the world’s most China-dependent developed nation and slumping commodity prices caused by slower growth in demand for its resource exports have hurt the economy. It expanded just 0.2 percent in the second quarter from the first three months, and was saved from a contraction by an uptick in defense spending.
A lack of investment and confidence has flowed through to slower employment growth, nudging up the country’s jobless rate and pushing down wages growth to recessionary levels.
The ballot ended Abbott’s leadership after just two years in power. He angered the public with unflagged spending cuts in his first budget in May 2014, while his decision to bestow a knighthood on Queen Elizabeth’s husband Prince Philip in January was ridiculed and exacerbated a perception he was out of touch with public opinion.
Having narrowly seen off a leadership challenge in February, Abbott failed to lift the ruling coalition’s popularity. A Newspoll publishedin The Australian newspaper this month put support for the government at 46 percent against the opposition’s 54 percent. The survey showed 41 percent of voters preferred Labor leader Bill Shorten as prime minister, against Abbott on 37 percent. Turnbull’s popularity in polls has been about three times that of Abbott.
“Abbott’s leadership has been a problem,” said Zareh Ghazarian, a Melbourne-based politics professor at Monash University. “There have been a series of leadership gaffes that he has made. These things have to an extent alienated a chunk of his own party.”
Turnbull, a self-made millionaire, has an impressive resume: before winning a Sydney-based parliamentary seat in 2004 he was a Rhodes Scholar, political journalist, successful lawyer and Goldman Sachs executive. He led an unsuccessful push for the nation to become a republic in 1999 -- a cause he still supports and one that Abbott had rejected as party policy.
He was Liberal leader for 15 months while the party was in opposition before being ousted by Abbott by one vote in December 2009. His social agenda is seen as more centrist than that of Abbott, a former trainee Jesuit priest who opposes same-sex marriage and scrapped the previous Labor government’s carbon-price mechanism.
“Turnbull should get a honeymoon period and give the government a quick bounce in the polls,” said Paul Williams, a political analyst at Griffith University. “He’s a good communicator and is more popular with voters than Abbott.”
Even so, “Turnbull still faces a huge challenge to heal what’s obviously a split party and gain enough momentum to win the next election.”