Viewed from afar, Australia is the envy of the world with its 26 years of unbroken growth and abundant resources. But scratch beneath the surface and it’s a different story. An era of stability and economic reform has been replaced by a revolving door of leadership and politics trumping policy. The nation is sliding in international rankings for innovation and education, leaving it struggling for economic momentum even as global growth picks up.
1. What’s gone wrong with Australian politics?
In short, a dearth of leadership. From 1983 to 2007, the nation had just three prime ministers and underwent a period of economic reform. Since then, no leader has served a full three-year term. The removal of a first-term prime minister in an internal coup, when Kevin Rudd was ousted by his own Labor lawmakers in 2010, marked a fundamental shift in the political landscape as a narrow focus on opinion polls, driven by a 24-hour news cycle, took hold. Voters have noticed. Since 2007, the major parties’ share of the vote has fallen from about 80 percent to 70 percent. Into the breach has stepped a hodgepodge of single-issue independents and small parties, mopping up disaffected voters from the left and right fringes.
2. So is anything getting done?
Not enough, particularly when it comes to the economy, which needs new drivers after decades of reliance on demand for Australia’s commodities. Current Prime Minister Malcolm Turnbull from the center-right Liberal Party was previously a banker and businessman with a reputation for driving deals. But like other recent leaders he’s struggled to handle a fractious upper house of parliament and manage his own lawmakers. Right now, academic Donald Horne’s 1964 book that concluded “Australia is a lucky country run mainly by second-rate people” has arguably never been truer. In the 1980s and 1990s, Labor leaders Bob Hawke and Paul Keating floated the local dollar, deregulated banks, cut manufacturing tariffs and modernized the tax system. Liberal leader John Howard, in power from 1996 to 2007, enacted a 10 percent tax on goods and services. But Australia hasn’t had a big reform since.
3. How hard is it to deal with parliament?
The rise of populism in Australia, as seen also in the U.S. and across Europe, has particularly been felt in the Senate. The upper house chamber has three times more independent or minor party lawmakers than it did a decade ago and they collectively hold the balance of power. That’s forcing the government to horse-trade as it seeks to push through a policy agenda. While Turnbull’s government has had legislative successes, dealing with the Senate has been difficult. In May, Treasurer Scott Morrison abandoned A$13 billion ($10.2 billion) of savings measures blocked by the upper house -- adding to a stubborn budget deficit that’s jeopardized the nation’s AAA credit rating.
4. Are there other problems for Turnbull?
It’s not just the Senate that Turnbull has to worry about. Rudd’s removal changed the political dynamic, and parties now feel free to ditch their leaders without waiting for the public to have a say in an election. Julia Gillard replaced Rudd and then suffered the same fate: Labor reinstalled Rudd just before the 2013 election, which he lost. The victor, arch-conservative Tony Abbott, fared little better despite the Liberals vowing not to repeat such chaos. He was removed after just two years by Turnbull. Abbott has not gone quietly into the night. Still a lawmaker, he’s one of Turnbull’s biggest public critics on policies from same-sex marriage to climate change.
5. So what next?
That’s what many Australians are asking. Infighting has weakened every government since 2007, breeding ferocious oppositions and creating an acrimonious atmosphere in a hyper-partisan parliament. As a result, substantive policy debate has evaporated -- leaving the nation struggling to tackle a housing affordability crisis, find new growth drivers or craft a climate policy. Unless the Turnbull government’s poll ratings improve, the revolving door of leadership may well spin again before the next election due in 2019, as Australia battles to rise above the “second-rate people” Horne warned about more than 50 years ago.
The Reference Shelf
- Bloomberg TV interviews Prime Minister Malcolm Turnbull.
- A QuickTake Q&A on the unusual law imperiling his government.
- Bloomberg Gadfly’s David Fickling tackles Australia’s constitutional crisis.
- A Q&A on Australia’s postal vote on gay marriage.