17 September 2015

Why the free market right abandoned Tony Abbott


Australian politics is a blood sport. That’s the clear takeaway from Monday’s leadership coup, which saw first term Prime Minister Tony Abbott replaced by his own party. His replacement, Malcolm Turnbull, was the Communications minister, and a former opposition leader whom Abbott replaced in 2009.

At first glance this appears to be another instance of the intra-party warfare that plagued the Australian Labor Party from 2010 to 2013. With five prime ministers in the last five years, it is undeniable that Australia is becoming, as Nick Bryant of the BBC put it, the “coup capital of the democratic world.”

But it would be wrong to conflate Abbott’s removal with the sudden assassination of Kevin Rudd, and the long battle that followed it.

Kevin Rudd was an immensely popular leader. He defeated the 11 year old Howard government in a thoroughly presidential-style campaign, and under his leadership the Labor party was ahead of the Liberal-National opposition in all but a single Newspoll (published fortnightly by The Australian newspaper) from their election in 2007 to Rudd’s removal in mid-2010. Rudd’s party colleagues may have hated him, but to the public his removal was both unexpected and unjustified.

The same cannot be said of Tony Abbott, who has never been popular with the public. As Turnbull noted on the day of his challenge, the Abbott government has been trailing Labor in every respectable opinion poll for the past 18 months. Whilst the timing of the challenge may have been a surprise, it was not entirely unexpected.

What was, perhaps, more surprising was the lack of support for Abbott amongst some of his key former supporters. This reversal was most significant amongst influential section of the free market right.

Abbott is no natural free marketeer. His first political mentor was the traditionalist catholic political activist B.A Santamaria—a strident anti-communist who in 1955 inspired a Labor Party split, which helped keep the newly formed Liberal party in government for almost 20 years. Santamaria opposed the free market economic reforms that became bipartisan consensus in the 1980s and 1990s.

This background helps explain why, when former Howard government Treasurer Peter Costello was asked whether he endorsed Abbott’s as a potential leader in 2009, his response was “not on economic matters.”

Despite this, Abbott’s rise to party leader was strongly backed by the most ardently pro free market sections of Liberal party.

Opposition to Turnbull’s clamor for an emissions trading scheme—a “great big new tax,” as Abbott called it—was the genesis of this support. But Abbott was also applauded for his pledge to repeal section 18C of the Racial Discrimination Act—an overly broad hate speech law, the usage of which led to the censorship of popular conservative columnist, Andrew Bolt.

The most strident opponents of this anti-free speech law was, and still is, the Institute of Public Affairs (my former employer).

At the IPA’s 70th anniversary dinner in 2013, Tony Abbott not only reaffirmed his pledge to repeal section 18C. He pledged to repeal the carbon and mining taxes, abolish the department of climate change and the clean energy finance corporation, trim the public service, cease funding the expensive renationalization of Australia’s internet infrastructure, and make $1 billion in red tape savings every year.

This was all music to the ears of free market right. But his inability to enact his economic agenda, get the debt and deficit under control, and in particular his abandonment of 18C reform, lead to a rapid loss of faith amongst key supporters.

The importance of returning to surplus and reigning in debt may seem strange to European and American readers, whose governments have for years run large deficits and have mountains of debt.

At roughly 15 per cent of GDP, Australia’s level of net debt is low by international standards. But for a nation that had zero net debt in 2007, the current trajectory is worrying.

According to the government’s Mid-Year Economic and Fiscal Outlook (MYEFO) of 2014-15, Australia now $244 billion in net debt, which is projected to increase to $315 billion (17 per cent of GDP) by 2017-18.

This increase is the result of an explosion in government spending, predominantly enacted during the former Rudd/Gillard/Rudd government. According to a 2014 report from the IMF this has lead to Australia having the fastest change in real expenditure of the 17 developed countries they measured.

Despite this economic outlook, Abbott was incapable of selling the case for economic reform. Treasurer Joe Hockey, who retained Abbott’s steadfast support despite his lackluster performance, reportedly remarked that Australia may “never get back to surplus.”

This is unacceptable for many in Australian politics. As IPA Senior Fellow Chris Berg pointed out in a timely column following Monday’s challenge, “without a credible economic story, without a credible treasurer, and without stable support from the right, Abbott was going to go. Whether this week or next month or next year.”

All of this explains why some of the Liberal party’s most ardent free marketeers, such as Senators Mitch Fifield and Scott Ryan—who helped bring Abbott to power in 2009—not only switched their support from Abbott to Turnbull, but were reportedly key figures responsible for marshalling the votes for Turnbull during the challenge.

In his first public address as Prime Minister of Australia, Malcolm Turnbull stated that he would lead “a thoroughly Liberal government, committed to freedom, the individual, and the market.” This message will be welcomed by many on the free market right. Time will tell whether he can live up to the promise.

Patrick Hannaford is the Editor of Young Voices. He was previously a Research Fellow at Australian free market think tank, the Institute of Public Affairs, and worked in the office of an Australian Senator.