Australia conservatives ride economy to shock election victory

Morrison’s victory is the biggest come-from-behind win in Australian politics since Labour’s Paul Keating pulled off the ‘unwinnable’ 1993 election. (Bloomberg pic)

CANBERRA: Australia’s centre-right government clung to power in a surprise victory, with voters backing its stewardship of a slowing economy for another three years and rejecting the opposition’s progressive agenda.

Despite trailing in most opinion polls for years, Scott Morrison’s Liberal-National coalition closed down the gap with a relentless attack on Labour’s pledge to take tougher action on climate change and strip tax perks from wealthy Australians. For Labour leader Bill Shorten, the loss is akin to Hillary Clinton’s 2016 failure to win the US presidency.

“I have always believed in miracles,” Morrison, 51, told cheering supporters in Sydney, flanked by his wife and two daughters. “Tonight we’ve been delivered another one.”

President Donald Trump cheered the victory by a fellow conservative, tweeting “Congratulations to Scott on a GREAT WIN!”

Shorten, 52, ran on Australia’s most progressive agenda in decades, including tax cuts for low income workers, increases to the minimum wage, sweeping emissions curbs and scaling back concessions for property and stock market investors. That presented a big target for Morrison, with blanket TV ads warning Shorten was “the Bill Australia can’t afford.”

The government also ran on its record of economic management, across-the-board tax cuts and a return to a budget surplus. In the final week, it announced support for first-home buyers, mixing that carrot with the stick of warnings that Labour’s proposal to curtail tax breaks for property investment would send prices tumbling.

With 75% of votes counted, the coalition was on track to win at least 74 seats in the 151-seat lower house, eking out a victory via gains in the mostly rural states of Tasmania and Queensland, according to Australian Broadcasting Corp projections. Labour was on 66 and minor parties on 6, with 5 seats in doubt. While it remained unclear whether the coalition would gain the 76 needed for an outright majority, Shorten conceded defeat.

Morrison’s victory is the biggest come-from-behind win in Australian politics since Labour’s Paul Keating pulled off the “unwinnable” 1993 election. Like that poll, it was consistent warnings against the opposition’s expansive program that underpinned Morrison’s win.

Treasurer Josh Frydenberg paid tribute to Morrison for leading a tireless campaign.

“He was assured, he was confident, he was across the detail,” Frydenberg said Sunday. “And he sold our economic plan to the Australian people.”

Australia’s near 28 years of uninterrupted economic growth is a developed-world record. But the harshest housing downturn in a generation and a deepening trade war between the nation’s biggest trading partner China and its most important ally America now threatens that streak, leaving voters receptive to Morrison’s call for continuity.

It’s a remarkable win for the conservative government, which has been plagued by factional infighting that hobbled its ability to craft policy. Morrison took the helm in August, becoming the Liberals’ third leader in four years. His predecessor Malcolm Turnbull quit politics last year. Tony Abbott, who preceded Turnbull, lost his seat on Saturday.

Turnbull was ousted as leader after losing his battle to strong-arm the party into taking stronger action to reduce greenhouse-gas emissions. In contrast, Morrison centred his energy policy around reducing voters’ energy bills while backing new coal mines and is actively considering using tax-payer money to build a new coal-fired plant.

That argument appears to have resonated in Queensland, where Adani Power Ltd wants to build a controversial mine that could lead to a doubling of Australia’s coal exports. Despite heated opposition from environmentalists, the coalition was set to pick up two seats in the state. Primary vote support there for Labour, which equivocated on its support for the mine, sank to 27%.

‘Narrow path’

The coalition was also set to gain two seats in the southern island of Tasmania, which is gaining economic traction under a Liberal state government after decades of stagnation.

Liberal lawmaker Arthur Sinodinos, a former adviser to prime minister John Howard, on Saturday night lauded Morrison’s tactical prowess in mapping out the regions the coalition needed to concentrate on to boost its chances of re-election.

In February, Morrison “took me around the seats around the country and talked about where he thought the opportunities were,” a focus that included Queensland, Sinodinos said. “He thought there was a narrow path to victory and I think he’s operated on that basis ever since.”

Morrison, a lawmaker since 2007, will enter the Liberal Party pantheon after the surprise victory, Abbott said Saturday. The win may unify the government behind his center-right standard – a contrast to the past six years in which it has struggled to reconcile the left and right factions.

Still, Morrison faces a drawn-out battle to legislate planned income tax cuts that could provide much-needed fiscal stimulus. His ability to do so will hinge on the makeup of the Senate, where populists and independents could hold the balance of power. Vote counting for the upper house will likely continue for days.

Such stimulus would likely be welcomed by the central bank, which many economists expect will cut interest rates as soon as next month to shore up hiring and revive wages and inflation.

The prime minister will also need to repair Australia’s ties with China. The relationship was damaged under Turnbull’s watch when he introduced laws designed to negate Beijing meddling in national affairs, and by the government’s decision to ban Huawei Technologies Co from bidding for 5G contracts.

Labour will enter a period of introspection after the loss. Shorten, who took over a badly divided party six years ago, consistently trailed Morrison in personal popularity and announced on Saturday he will step down as opposition leader.

Morrison could be the country’s first prime minister to serve a full term in more than a decade, after both main parties introduced rules that make it harder to oust their leader.