Malcolm and the Fairies

Stanley Baldwin and Neville Chamberlain were two of the leading lights of the British Conservative party in the 1930s. They had their differences, but had one shared determination: exclude Winston Churchill from their governments.

Baldwin confided the reasons for this pact to a Tory colleague, Dr. Tom Jones, in May 1936:

“One of these days I’ll make a few casual remarks about Winston. Not a speech –no oratory – just as few words in passing. I’ve got itall ready. I am going to say that when Winston was born lots of fairies swooped down on his cradle [with] gifts – imagination, eloquence, industry, ability, and then came a fairy who said ‘No one person has the right to so many gifts’, picked him up and gave him such a shake and twist that with all these gifts he was denied judgment and wisdom.”

When I encountered this anecdote in Roy Jenkins’ magisterial biography of Churchill it immediately conjured up a Turnbullian image.

This may well have been generated by the fact that I had exchanged some views with Turnbull regarding Churchill’s wartime leadership on an earlier occasion.

Let’s say Turnbull lived up to Chamberlain’s description that such encounters with Churchill were akin to “arguing with a brass band”.

That’s the way he was 15 years or so ago. Prime Minister Malcolm Turnbull is certainly entitled to demonstrate whether he has, with the passage of time, managed to retrieve those valuable fairy gifts.

He is going to need them.

Political timing

Throughout his various careers Malcolm Turnbull has been fortunate, or skilled enough, to getthe timing right.

That does not appear to be the case this time. Turnbull comes to the Prime Ministership when the odds against emerging as a successful, talented and popular economic manager, the benchmark of Australian political leadership, have become dauntingly short.

In a parliamentary party that has become increasingly centre-right in its dominant ideology Turnbull has succeeded as a pragmatist of the centre–left. He is clever without being glib.

Turnbull has become Prime Minister of an Australia that has been refashioned by the latest and largest of the mining booms that have rolled through our history since the gold rushes of the mid-nineteenth century.

This time the boom has been underwritten on the supply side by vast deposits of iron ore and coal. On the demand side, China has been determined to restore its economy to superpower status.

By virtue of its expanded wealth, geography and success Australia moved up the global power rankings and remained there as the boom wound down.

Booms carry with them the seeds of their own destruction. While hardly a disinterested bystander at the demise of the boom, Australia was fortunate that China’s crash through economic management style embraced Keynesian demand stimulation with an open cheque book.

China is now paying the price for its extravagance; handicapped by excess capacity across its manufacturing and transportation sectors. In addition, it embarked on a program of residential development the likes of which the world had never seen.

Australia was, in effect, given a free ride through the boom and its aftermath. Turnbull prospered while maintaining a low public profile. His wife, Lucy, served as Lord Mayor of
Sydney.

When Turnbull decided to run for a parliamentary seat he did so in a typical unorthodox and provocative fashion challenging a sitting member with long and close ties to the Liberal Party.

He also spent up big. His gift of timing resulted in his election as leader of the Liberal Party after the defeat of the John Howard government in 2007.

However, when he sought support from his party colleagues for an environment and climatefriendly platform Turnbull was unexpectedly defeated.

He was dissuaded from resigning from parliament and was ultimately rewarded by his colleagues who re-elected him leader of the party.

This time he won because he was widely seen by the parliamentary party as the only candidate who could win government for the Liberals.

Just what sort of Prime Minister he will make remains to be seen. While much more popular with his Liberal colleagues than he was six years ago, his elevation has been the result of ability not popularity.

Of more importance is what sort of Prime Minister will he be?

Once again this could prove one of those unusual mistimings.

The challenges ahead

This is not the best time to find yourself leader of the national government.

One strong plus is that your opponent, trade union executive, Bill Shorten has failed to make any impression on the parliament. Shorten is basically a king-maker, not a king.

Nor is the policy arena particularly attractive to either candidate for the Prime Ministership.

The winding up of the mining boom will see a sharp, reduction in the workforce currently remaining in that sector. Should that winding–down soften into a recession then it’s anybody’s guess.

Labor won the 2010 election by running a union-funded campaign against changes to industrial laws, which Labor argued would cost jobs.

Then there is the winding down of the motor vehicle industry which will see between 20,000 and 40,000 jobs lost.

Then there is the expected arrival of the El Niño weather system which can usually be translated into extensive droughts.

A serious El Niño could cut GDP by a full per cent. In a country where GDP is expected to grow by less than 3 per cent, an El Niño fall-out could be the political decider.

Then there is the real worry for the Australian government – a hard landing in China. Such an outcome would almost certainly be accompanied by recessions across the universe of emerging markets. That’s a club where commodity exporter, Australia, is an honorary
member.

Australia has not experienced a recession in over 20 years. In the past, a recession could cut the value of stock exchange investments by 45 per cent. Unemployment, currently at 5.6 per cent, could double.

Rock-bottom interest rates have underwritten million dollar mortgages across Australia. Recessions are usually sparked by central bank imposed rate increases.

Such a scenario would be toxic for an incumbent government.

At the moment Malcolm Turnbull is riding a wave of popularity, especially Liberal faithful.

Turnbull is going to need all the help he can get to ensure re-election … even fairies.

 

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Max Walsh

Contributor

Max Walsh was for many years one of Australia’s top economic and political commentators, highly regarded as a journalist, author and broadcaster. Throughout his career, Max was involved in all dimensions of the media industry, which has encompassed positions with two of Australia’s largest publishing companies and television networks.

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