Wounded Turnbull Survives Australia Leadership Ballot

(Bloomberg) -- Australia’s Prime Minister Malcolm Turnbull survived a leadership vote on Tuesday but may be challenged again within days amid growing unease among party colleagues about the government’s slumping poll ratings.

Turnbull defeated Home Affairs Minister Peter Dutton by 48 votes to 35 in a ballot of Liberal Party lawmakers in Canberra. While the win hands Turnbull a reprieve, the size of the vote against him shows just how wide the rifts within government are.

Dutton, a former policeman who’s become a lightning rod for government lawmakers dismayed by Turnbull’s policy direction, resigned from the Cabinet following the vote. He remains on the backbench, where he’s free to lobby for the extra votes he’d need to take the leadership. Turnbull may decide to seize the initiative and call a snap election, Sky News reported.

“The dead-man walking scenario looks writ large over Turnbull,” said Haydon Manning, an associate professor of politics and public policy at Flinders University. “This has the classic look of a two-stage act -- the first challenge narrowly fails but sets the scene for a successful second one.”

Turnbull, 63, has struggled for policy traction and political authority since his Liberal-National coalition retained office in 2016 by a razor-thin margin. The government has trailed the main opposition Labor party in opinion polls ever since, and with elections due by May, disquiet over Turnbull’s leadership has been growing.

Wounded Authority

His authority was wounded in the past week as several backbench lawmakers threatened to vote against a key energy policy, demanding the government provide more support for the coal industry and abandon its Paris Agreement emissions target.

“For business, what we need is clarity,” Elizabeth Gaines, chief executive officer of Fortescue Metals Group Ltd. told Bloomberg Television in an interview Tuesday. Perth-based Fortescue, the world’s No. 4 iron ore exporter, is investing about $1.3 billion in a new mine and rail project in Western Australia. “We need to have some clarity in terms of policy, it’s really important for those long-term investment decisions,” Gaines said.

Turnbull has been dogged by misfortune and missteps since the 2016 election. While he shepherded through legislation allowing same-sex couples to marry, has shrunk the budget deficit and enacted tax cuts for small businesses, other policies have been stymied in parliament.

The country has had 27 years without recession, yet the government has failed to reap a political dividend due to stagnant wages, spiraling power bills, high levels of household debt and property prices that are beyond the reach of many Australians.

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Political Dysfunction

The leadership turmoil is nothing new. Turnbull himself seized power by defeating Tony Abbott in a ballot of Liberal lawmakers in 2015. The previous Labor government was equally chaotic -- with first term Prime Minister Kevin Rudd ousted by his deputy Julia Gillard, only to claw his way back to the top job weeks before losing the 2013 election.

Such political dysfunction has damaged the nation’s prospects, with successive governments failing to enact reform across key areas such as energy, housing policies and taxation.

“We are rightly a laughing stock -- it’s hard for watchers around the world to understand Australian politics,” said Jill Sheppard, a political analyst at the Australian National University. “What we’ve seen is a huge turnover in prime ministers now. Some of the people we’re electing just aren’t very good, they’re not very responsible and they’re not very charismatic.”

Dutton, 47, is seen as a leader of the party’s right wing, and has risen to prominence as a staunch supporter of the government’s hard-line policy of detaining asylum seekers in offshore camps. He’s been accused by human rights advocates of creating racial division by urging a crackdown on “African gang violence” in Victoria state, and if voted in as leader could announce cuts to immigration.

Unless Turnbull can swiftly heal rifts within the government and close Labor’s lead in opinion polls, he may face a further challenge -- potentially as soon as this week or in the next parliamentary sitting in September. The opposition party leads the government 55 percent to 45 percent, according to a Fairfax-Ipsos poll published Monday -- a wide enough margin to win the next election by a landslide.

“He needs to pull a policy rabbit out of the hat that somehow shows strength of leadership and unify the government,” said Manning. “The fact the vote is so close means Turnbull would have to have a faultless run to lead the government to victory at the next election, and the chances of that look increasingly remote.”

(Updates with Fortescue CEO comment.)