- Former Goldman executive Turnbull ousted Abbott in Australia
- Banker trio oversees $1.3 trillion of regional economic output
The surest path to political power, at least in Australia and New Zealand, may be to spend most of your working life avoiding it. Preferably at an investment bank.
In Australia, Malcolm Turnbull this week toppled Tony Abbott in a Liberal Party ballot to become prime minister. That means former executives from Goldman Sachs Group Inc., Merrill Lynch & Co. and Deutsche Bank AG hold the top three political leadership posts in Australia and New Zealand.
Turnbull, New Zealand Prime Minister John Key and Mike Baird, premier of Australia’s largest state, New South Wales, together oversee $1.3 trillion of output-- with the latter two demonstrating a knack of persuading the public to accept their economic programs. It’s the sort of day-to-day sales pitch any Wall Street dealmaker or investment banker around the world needs to master to get anywhere.
“In banking, you’re saying to clients: here’s this transformative transaction and here’s what it can do for you,” said Alastair Walton, who ran Goldman Sach’s investment banking business in Australia after Turnbull left the firm in 2001. Bankers know “how to sell change.”
The Liberals turned to Turnbull, 60, after opinion polls repeatedly showed Abbott was failing to convince voters he could manage Australia’s economic slowdown. The new leader helmed a boutique investment bank, Turnbull & Partners Ltd., for a decade before joining Goldman Sachs in 1997, where he worked for four years. The New York-based firm has a long history of filling government ranks.
Robert Rubin was a Goldman Sachs co-chairman before he was President Bill Clinton’s Treasury secretary. Hank Paulson, a former Goldman chief executive officer, was Treasury secretary for George W. Bush.
Turnbull, who also worked as a political journalist and lawyer before entering parliament in 2004, challenged Abbott on Monday saying he’d failed to show economic leadership. The government has trailed the main opposition Labor party in opinion polls for more than 12 months, with voters turned off by unflagged cuts in last year’s budget and business critical of its lack of resolve to push through economic reform.
“The feeling was that Malcolm has that ability to talk to mums and dads about the economy and explain why certain actions have to be taken,” said Grahame Morris, a former chief of staff to ex-Liberal Prime Minister John Howard who’s now a political lobbyist.
Moments after beating Abbott, Turnbull said he wanted to emulate New Zealand’s Key, saying the former head of currency trading at Merrill Lynch had managed to bring the public with him by “respecting their intelligence.”
Key, 54, had “been able to achieve very significant economic reforms in New Zealand by doing just that, by explaining complex issues and then making the case for them,” Turnbull said.
Key won a third term as prime minister in September last year after delivering the fastest economic growth in 10 years and has raised billions of dollars selling off state assets.
In New South Wales, ex-Deutsche Bank executive Baird, 47, became premier last year and oversees an economy more than twice the size of New Zealand’s. He successfully argued the merits of a planned A$20 billion ($14 billion) selloff of the state’s electricity network in the face of labor union opposition and won re-election earlier this year.
“Obviously a financial background helps, but you need more than a financial background to be successful in politics,” said John Hewson, who led the Liberal Party from 1990 to 1994 when it was in opposition.
They also need to be armed with enough charisma to carry a crowd, according to Walton. “There are some really boring bankers around,” he said.
Many may also be turned off by the less glamorous aspects of politics.
“It’s the branch meetings, being nice to everybody, working out who’s in the factions,” said Walton. “Bankers aren’t trained to do that. Most would be utter failures.”