Australia's Bizarre Politics...And Its New Prime Minister

With five leaders in just five years, something appears rotten about the state of affairs in Australia. Can the new PM turn things around?

The ghostly appearance of a former king inspired the famous line from Shakespeare’s Hamlet, “There is something rotten in the state of Denmark.” With five leaders in just five years, something appears decidedly rotten about the state of affairs in Australia, after the reappearance of former Liberal leader Malcolm Turnbull as the nation’s new prime minister.

Yet with opinion polls published after the bloodless coup quickly turning in the ruling party’s favor, Turnbull’s elevation has sparked optimism of a change in direction for the world’s twelfth-largest economy, which has struggled to adjust to the end of a China-driven mining boom.

On the evening of September 14, sixty-year-old Turnbull overthrew his younger rival, fifty-seven-year-old Tony Abbott, securing the leadership by 54 to 44 votes in a meeting of Liberal Party lawmakers. Under Australia’s Westminster system, the leader of the ruling party can become prime minister even without a national election, a fact noted by Abbott when he said before the vote that the leadership should be “earned by a vote of the Australian people.”

Ironically, Abbott had challenged and beaten Turnbull by a single vote in a party room poll for leadership of the center-right party in 2009, with Abbott narrowly failing in 2010 but later delivering his party a landslide election victory in 2013.

But with the Australian economy slowing, the jobless rate rising and business confidence sinking, Turnbull convinced his colleagues of looming defeat in next year’s scheduled poll, should they stick with the unpopular Abbott.

“If we continue with Mr Abbott as prime minister, it is clear enough what will happen. He will cease to be prime minister and he’ll be succeeded by [Labor Party leader Bill] Shorten,” he said. Turnbull pointed to Abbott’s inability to provide economic leadership, his controversial “captain’s picks” such as awarding a knighthood to Britain’s Prince Philip, and the Coalition Liberal-National party government’s track record of losing “30 Newspolls in a row” to the center-left Labor.

Despite Turnbull’s liberal leanings, including his previous support for an Australian republic, gay marriage and an emissions trading scheme, the new leader has pledged to build consensus for reform while steering the conservative party in a more centrist direction.

“This will be a thoroughly Liberal government committed to freedom, the individual and the market. It will be focused on ensuring that in the years ahead, as the world becomes more and more competitive and greater opportunities arise, we are able to take advantage of that,” he said in his postelection victory speech.

"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. We have to recognize that the disruption that we see driven by the technology, the volatility and change, is our friend if we are agile and smart enough to take advantage of it. There has never been a more exciting time to be alive than today, and there has never been a more exciting time to be an Australian."

Without outlining specific policy changes, Turnbull pointed to his trans-Tasman counterpart, New Zealand Prime Minister John Key, as a model reformer. He said,

"My firm belief is that to be a successful leader in 2015, perhaps at any time, you have to be able to bring people with you by respecting their intelligence in the manner you explain things….[New Zealand Prime Minister] John Key for example, has been able to achieve very significant economic reforms in New Zealand by doing just that."

It’s the Economy, Stupid

Economists said the new leader would revive consumer and business confidence, even though reforms could take longer to materialize.

“Turnbull’s past statements and his more liberal approach suggest he will have some policy differences to Abbott, although we do not expect a significant shift of policy in the short term,” ANZ Research said. The Australian bank said policy papers currently being drafted on taxation and federal-state relations could form the basis of Turnbull’s reform efforts, giving the potential for a boost to productivity growth.