Malcolm Turnbull’s New Job

By+Kerry+Brown

The successful coup managed by Malcolm Turnbull， former Australian communications minister， against Tony Abbott， who had served as prime minister since 2013， means Australia has had four prime ministers in as many years， an astonishing feat. Abbotts term proved to be the shortest of the countrys 28 prime ministers， despite leading his Liberal Party to one of their greatest victories in recent years in the 2013 national elections.

Problems during the Abbott era

Abbott was regarded as an excellent opposition leader. And his first few months in power into 2014 were on the whole well received. After the highly fractious Rudd-Gillard years that saw a war between factions in the ruling Labor Party and constant disunity and tension， Abbott was seen as someone who could instill discipline into his party and make government， in his own words， quieter and more about results than producing nice-sounding promises that subsequently let people down.

The 2014 budget， however， will likely be seen as the moment when his authority started to wane. For a country that has enjoyed strong economic growth over almost a quarter of a century—with its last recession occurring in the early 1990s—the message of austerity and belt tightening that Abbotts first budget revealed came as a major shock. The public was unprepared. Policies like charging high fees for what is， at the moment， a mostly free education system up to tertiary level for students and asking for a small payment to see a doctor angered and irritated the public.

This accompanied another shift during Abbotts tenure and something Turnbull will now have to turn all his attention to： declining economic growth that is partly linked to China. As Chinese demand for iron ore， in particular， has slowed since 2012， so too have the significant economies of Western Australia and other parts of the country with mining assets. This has had repercussions on other parts of the economy with the loss of quality jobs and a decline in government tax revenue that once came from mining. As some commentators have pointed out， Australia has not， like Norway and other resource-rich countries， placed some of its earnings from exports into vehicles like a sovereign wealth fund. On the whole， the money from the boom years has already been spent on one of the worlds best but most expensive， welfare and health systems.

Can Australia maintain such excellent public services now that its economy is creeping down and the level of growth is flattening out？ This is the key question Turnbull will have to answer in the next few months before he takes his party to the electorate again for a fresh mandate that will probably take place sometime in 2016， this time under his leadership. （Turnbull has already said he will let this government run its full term， despite the change in leadership， which would take it to the latter part of next year）.

Turnbull was leader of the Liberal Party until 2009 when he was ousted， ironically， by Tony Abbott. His weakness was that his position on policy issues， ranging from climate change to same-sex marriage， were viewed as more liberal than the rest of his party. Despite this， he is still largely respected and liked by the public. A former lawyer and investment banker， he has a formidable pedigree. His core complaint against Abbott， and the basis on which he launched his leadership bid， was his predecessors lack of economic credentials and success. To ensure he doesnt fall into the same trap， Turnbull will have to come up with a coherent narrative over the next year on how to improve Australias economy. This will fundamentally involve spelling out its relationship with China.

The China factor

Under Abbott， policy toward China was largely opportunistic. Australian media reported at the G20 summit last year that Abbott told German Chancellor Angela Merkel the relationship between Australia and China is guided by “fear and greed.” Abbott did little to guide public opinion on what sort of role the country wants to have with China in the coming years. While he irritated Beijing in early 2014 by insinuating that Australias relationship with Japan is more important， Abbot did allow officials to finalize the Free Trade Agreement （FTA） between China and Australia that had been under discussion for almost a decade. In that sense， he has left Turnbull a useful enough legacy. While the political relationship between Australia and its largest trading partner is now amicable enough， the economic situation could be better. In order for this to happen， the China-Australia relationship needs to move away from a commodity export model designed largely around narrow interpretations of Australias self-interest and more toward what could be a much richer， more sustainable and complex—but perhaps riskier—relationship.

The FTA still needs to be ratified by Australias parliament， and despite the decadelong discussion about its contents and the rationale behind it， pockets of the Australian public are highly antagonistic toward its implan-tation. In the final weeks of the Abbott era， the opposition mounted a campaign to demand changes in its content largely on the basis that they felt it would allow Chinese companies to import labor into the country， which would threaten local jobs. At a time when unemployment is creeping up and many are worried about their job security， this is a toxic claim and one that has received support from some work unions and other pressure groups. The opposition has launched this campaign despite the fact that it was fully involved in and previously supported the agreement. Further negotiations would mean expending more time on the deal and could jeopardize the whole agreement.

It is true that the FTA has provisions for Chinese investors to commit more than AUS$150 million （$107 million） to apply to bring workers in if they cannot find them locally. But as those involved in the negotiations for the agreement have made clear， this does not change current immigration legislation， and in any case only addresses a problem that was identified during the mining boom a few years earlier when Chinese companies could not recruit locals who had the right skills. The argument is that if there were a future boom like this， at least the process， in principle， would be there for Chinese companies to apply to. In all such cases， the final decision on granting working visas would lie with the government— exactly the same position as today.

Critics of the FTA have focused on this issue and played on public ambiguity about the rising role of China in Australias economy. As someone who has frequently visited China and has strong knowledge of its global and regional role， Turnbull understands the real value of the agreement lies in its ability to reframe and reposition the economic relationship between the two countries. Eighty percent of Australias economy is service-sector orientated. Yet despite big increases in recent years， Australias service exports to China remain low. Sydney and Melbourne are not seen as major service sectors where Chinese companies can come and do business. A surprisingly small number of Australian companies in the service sector have looked at working in China. The FTA is one way to promote this path， and to diversify the economic relationship beyond its current and worryingly narrow base.

Australia in essence has an excellent story it can tell about its relations with China. It has a more straightforward political relationship than the United States or the European Union， despite being much smaller. It has an increasing population of ethnic Chinese who can work as an important cultural and intellectual bridge between the two countries. It has played host to tens of thousands of Chinese students in the last decade or so， many of whom have since re- turned to China to take up influential business and government positions. So Turnbulls main task here is to pull this Australia story about China much more tightly together， and to more powerfully assert the crucial current need to diversify the relationship to make it more forwardlooking and expansive.

It is likely that Australias new prime minister may well use a visit to China in the coming months to burnish his credentials and set a new tone in the relationship. Turnbulls success is important for China. It would be another step toward delivering what Chinese President Xi Jinping during a November 2014 visit to Canberra called a more “visionary and imaginative” bilateral relationship. Abbott was not a visionary and imaginative man. Turnbull is. And Turnbull， with at most a year to go to receive support from the Australian public for reelection will not want to go down in history as Australias shortest serving prime minister. Australia under Turnbull can speak much more about its ambitions with China， and with more relevance about Chinas ambitions for itself. This is a good thing for both countries. The Turnbull prime ministership is a positive thing and something that should be welcomed.