The Turnbull touch
05 October, 2015
During September, Australia saw its fourth change of Prime Minister in just two years. The Liberal Party, fearing the consequences of former PM Tony Abbott's falling popularity in next year's general election, chose to replace him with the more popular Malcolm Turnbull. When grading his performance as a Rhodes Scholar at The University of Oxford, Turnbull's professors wrote of his confidence and ability to "enter life's rooms without knocking". With prices of its commodities falling and its growth rate slowing, Australia may well be ripe for bold reforming leadership.
Australians have fared relatively well since the GFC. They've seen their wealth grow on rising house prices and increasingly valuable share portfolios. Broadly, they have kept their jobs. The economy, despite challenges, has continued to grow. Yet consumers have been reluctant to spend and businesses reluctant to invest. This, in combination with a government intent on reining in spending, has seen weak demand growth generally. Weak demand growth has meant tougher conditions, which has only made consumers and business leaders more cautious. It would seem then that a change of mood could be the key to turning this vicious cycle into a virtuous one. Improving sentiment could trigger spending which would increase demand, which in turn could improve sentiment.
Politics, they say, is the art of the possible. If it is an art, then Turnbull's masterstroke could well be to paint a vision of the future in which Australians can believe. Early indications are positive with reported improvements in both business and consumer confidence in response to his assuming leadership. However Australians also have to accept the limits of what is possible, so Turnbull may also have to persuade voters to accept some of the country's tougher realities. We look forward to seeing his work...