Australia Dodges Populist Lurch as Brexit, Trump Hit Markets

  • Australia has avoided upheaval that’s plagued U.S. and Europe
  • Prime Minister Turnbull on target to win July 2 election

Former fish and chip shop owner Pauline Hanson was elected to Australia’s parliament in 1996 amid a populist, anti-immigration mood, famously warning the nation risked being “swamped by Asians.”

While Hanson was voted out again a few years later, she’s now seeking a return to politics -- and has a fresh target.

Pauline Hanson. Photographer: Saeed Khan/AFP via Getty Images

Pauline Hanson.

Photographer: Saeed Khan/AFP via Getty Images

“We have to take a strong stance against Muslims, a strong stance against Islam and its teachings and its beliefs,” Hanson, 62, said in the aftermath of the Orlando massacre, as she campaigns for a Senate seat she is favored to win on July 2. Prime Minister Malcolm Turnbull’s government needs to be told “no more Muslims in Australia,” she said.

Australia’s election is being held against the backdrop of turmoil across some of the world’s biggest democracies, as established parties find themselves on the back foot over issues like immigration and income inequality. In Europe, right-wing parties are on the rise, while the U.K. votes this week on whether to split from the European Union. In the U.S., Donald Trump has snatched the Republican presidential nomination with anti-Islamic tirades and calls for immigration curbs.

Those factors are also at play in Australia, where income inequality is above the OECD average and widening. Yet despite public concern about refugee and migrant levels, and general frustration with mainstream parties, as shown by six years of revolving-door leadership, Hanson will probably remain a political outlier.

“Anti-establishment politicians like Hanson do rise from time to time but they find it’s hard to change the system from outside the major parties,” said Zareh Ghazarian, an author and lecturer at Monash University’s School of Social Sciences. “A lot of policies seem set in stone for Australians so that makes the chances of a revolutionary political force gaining real power seem unlikely.”

That’s for a number of reasons: Voting is compulsory in Australia, so it’s not just the angry or enthusiastic who show up on the day. Australia doesn’t have a large refugee crisis on its doorstep, and doesn’t share a land border with anyone. And despite a growing gap between rich and poor, the economy has expanded for 25 years and there’s access to free or subsidized schooling and health care.

For an explainer on the demographic issues at stake in Australia, click here.

Turnbull’s center-right Liberal-National coalition is expected to retain power over the Labor opposition, though polls point to a tight race and his lower house majority could be whittled down.

Voters may seek a semblance of stability after the country churned through six prime ministers in eight years, including three ousted by internal party maneuvers rather than an election. After Turnbull removed Tony Abbott in a ballot of Liberal lawmakers in September, the U.K.’s Observer labeled Australia “the Italy of the southern hemisphere.”

The need for continuity is a major theme of Turnbull’s campaign. An electoral system that favors established parties under a complex process of preferential voting -- where they can win support even if they aren’t the first choice -- also makes it harder for small parties or independents.

That doesn’t mean Australian politicians shy away from populist rhetoric. And while a quarter of a century of unimpeded growth has reduced the appeal of economic radicalism, many Australians don’t feel richer. Wage growth is slowing to the point where real disposable income per person fell 2.4 percent in the past 12 months.

That’s sparked greater income inequality: A report in 2015 found the average wealth of a person in the top 20 percent of earners surged 28 percent over eight years, outpacing a 3 percent gain for the bottom 20 percent. A decade-long property boom has seen home prices in Sydney soar 70 percent.

Opposition leader Bill Shorten is campaigning on a pledge to build a “fairer” nation. The former union leader wants to strip landlords of tax subsidies to make housing more affordable, while his bid to set up an independent commission on the banking industry led Turnbull to accuse him of attempting to create “some kind of class war.”

“Shorten has flirted with leftist populism but he realizes he can’t go too far because the average voter still values economic pragmatism,” said David Burchell, a political analyst at the University of Western Sydney. “He’s appealing to people that are doing it tough but in reality the potency of that message is limited because Australia just hasn’t had the type of economic and social upheaval that’s riven the U.S. and Europe in the past decade.”

Australia’s refugee intake is falling

Turnbull, a former banker who wants to cut taxes for small businesses, has sought to use the Brexit-related uncertainty to push his case for continuity in Australia.

Britain’s pending vote shows the need for “a stable government with a clear national economic plan because there are many things that occur in the global economy over which we have no control,” he said this month.

As governments and investors around the world warn Britain leaving the EU could trigger turmoil across global markets, opinion polls show the outcome is too close to predict. In the U.S., Trump’s quest for the White House hit turbulence after criticism to his response to the Orlando shooting, while longtime loyalist Corey Lewandowski has been removed as campaign manager.

Trump’s rise to become the Republican nominee is causing some nervousness Down Under: a poll released by the Lowy Institute for International Policy on Tuesday found 45 percent of Australians think the nation should distance itself from its major ally should he become president.

Should Turnbull win his election in Australia, he is likely to face further headaches in the Senate from micro parties and independents that have already blocked A$13 billion ($9.6 billion) in budget savings. 

Former broadcaster Derryn Hinch, who has been jailed for contempt of court, is seeking a Senate seat. And Senator Nick Xenophon’s party, which supports higher tariffs and greater curbs on selling agricultural land to overseas interests, is forecast to win at least three spots.

“It’s likely that the upper house will still be at the mercy of the cross-benchers,” said Ghazarian. “That means Australia’s government will remain colorful, if not always chaotic.”

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