When visiting my native Australia in late-July this year, I was invited to attend a book-launch at the New South Wales state parliament in Sydney. The main speaker was the now ex-Australian Prime Minister, Tony Abbott.
It breaks no confidence to say that most people at the small gathering represented a Who’s Who of the Australian right. As is Abbott’s wont, he appeared very self-confident, and entertained the mixed crowd of politicians, journalists, academics, social conservatives, committed free-marketers, and largely Catholic clergy with his usual combination of political-historical observations and self-deprecatory humor. At one point, Abbott even remarked that he might well find himself back working as a journalist sometime in the future.
In retrospect, that particular comment was revealing inasmuch as it seemed to indicate Abbott’s awareness that his political fortunes could be about to change very quickly. Indeed, even among this group of friends and fellow travelers, there was considerable uncertainty as to whether Abbott would be leading the government into the next election, due by January 2017.
So why is it that the Liberal Party of Australia, which combines a majority conservative wing with a minority centrist wing, has just removed from office the man who ended what even Labor politicians have described as six years of a disastrous Labor government by winning a sizable majority in the House of Representatives? And why has it replaced Abbott with Malcolm Turnbull: someone who comes from the party’s minority wing, who few would describe as especially animated by conservative convictions, and who Abbott himself deposed as Liberal Party leader back in 2009?
Some of the reasons have to do with Abbott and the government itself. Certainly Abbott racked up some important successes. As Turnbull himself stated in a press conference, these include no less than three Asian free trade agreements negotiated by the very talented trade minister, Andrew Robb, and, perhaps above all, a decisive resolution of the refugee crisis that developed under the previous Labor government. Such was the success of Abbott’s refugee policy that the Labor party has adopted the government’s position on the issue, and it is being examined by European governments struggling to stop the flow of leaky boats across the Mediterranean.
Generally speaking, however, Abbott had enormous difficulty getting legislation—especially spending cuts and economic reforms—through the Australian Senate. Thanks partly to the Australian electoral system’s peculiarities, the balance of power in the federal parliament’s upper house is held by a rump of Trump-like economic populists and fringe groups with curious names like the “Motoring Enthusiast Party.”
Few governments in Australian history, however, have controlled the Senate for long periods. Yet most of them managed to pass controversial legislation. Other problems included the attention directed to Abbott’s private office (with complaints about the allegedly excessive influence of Abbott’s chief of staff) as well as endless leaks from cabinet. The latter is always indicative of an absence of discipline on a government’s part.
From a broader perspective, however, Abbott’s removal underscores some serious problems in the Australian body politic. These go far beyond the specifics of Abbott himself, his government, and the Australian right more generally. After all, the previous Labor government itself witnessed the ousting of not one but two prime ministers—Kevin Rudd and Julia Gillard—who managed to overthrow and replace each other in the space of just four years.
This trend goes against what’s been an enviable record of political stability in Australian governments since World War II. It was partly that background which enabled Labor and conservative governments from 1983 until about 2000 to implement a widespread program of economic reform. This included a successful shift towards free trade, widespread domestic economic liberalization (especially the financial sector), major tax changes, significant and lasting reductions in subsidies, and gradual labor market deregulation.
This program set Australia up very well for meeting the demand for natural resources from China and Southeast Asia that began in the early 1990s. The reform process, however, ground to a halt in the later years of John Howard’s government. Then, two years ago, Australia’s resources boom began winding down as demand from China started drying up. As a result, many are wondering whether the Australian economy, after 24 years of no recessions, is on the brink of substantial economic regression. What’s especially worrying is the across-the-board decline in Australia’s economic productivity: something long masked by the resources boom but now more visible than ever.
The basic problem, however, that lies at the root of what the best commentator on Australian politics, Paul Kelly, describes as “the Australian crisis” is “the intersection of a corrosive political culture and the need for hard and unpopular economic repair.”
As a small country in the South Pacific on the edge of Southeast Asia, Australia has no choice but to be a free and open economy. Economic nationalism is thus even less of an option for Australia than it is for the rest of the world. And in a competitive global economy, that means the process of economic reform must be ongoing.
The nature of Australian politics, however, is now such that it militates against governments proposing and implementing change. As mentioned, with economic nationalists controlling the balance of power in the Senate, it has become harder to pass reformist programs.
The impediments to change are compounded by the short-termism that now dominates Australia’s political culture. This is partly driven by three-year parliamentary terms. It’s exacerbated, however, by the now endless opinion-polling to which Australia’s overwhelmingly professionalized political class is, as Kelly notes, addicted. That makes it very difficult for any government to think about the long-term national interest.
Another part of the puzzle concerns the gap between (1) public expectations concerning economic prosperity and (2) the policy-requirements for maintaining economic prosperity. The resources boom and the successful reforms of the ’80s and ’90s have accustomed Australians to very high-living standards. Kelly underscores, however, that many Australians today either don’t understand or like the fact that ongoing change is needed to sustain such prosperity. Moreover, if just one sufficiently powerful Australian interest group sees change as threating its power, or if one of the main political parties sees votes in opposing necessary-albeit-unpopular reforms, then they don’t hesitate to capitalize on the expectations-reality gap.
This was one reason why one of Australia’s most successful conservative prime ministers, John Howard, lost office (and his own parliamentary seat) in 2007. Having decided late in the day to resuscitate the economic liberalization agenda by embarking upon another round of labor market reform, Howard aroused the fury of Australia’s once-powerful unions. Despite their record-low membership numbers as a proportion of the workforce, unions successfully mobilized public opinion against what were, in hindsight, not especially radical changes.
But perhaps the wider import of the Australian crisis is that it reflects problems that characterize Western democracies as a whole. Does anyone doubt, for example, that many of the trends noted above are just as apparent in much of North America and Western Europe?
This is one of the main reasons why conservatives and free marketers around the world should be paying close attention to the Australian situation. The Australian story of successful economic liberalization (pioneered by center-left governments in the ’80s and ’90s and which attracted widespread support across the left-right divide, including from unions) has long been highlighted as (1) an example of how Western democracies can implement hard but needed economic changes without (2) reformist governments being immediately thrown out of office by angry electorates.
The longer-term significance of Tony Abbott’s political execution may well be its confirmation that this story’s saliency is now very much in question.
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