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Aussie Rules

Tuesday, October 16, 2007

John Howard’s economic management has been stellar. But after nearly 12 years, Australians seem poised to vote him out.

John Howard: Economy Up, Election OutShortly before the 2004 Australian election, Labor Party leader Mark Latham called for strict curbs on logging in the old-growth forests of Tasmania. Local timber workers went berserk, enabling Prime Minister John Howard to play the role of populist. Traveling to Launceston, Howard vowed that forest preservation “should not occur at the expense of jobs and not at the expense of individual regional communities.” The most vivid scene from the final days of the campaign was one of working-class loggers cheering their conservative prime minister. Howard’s center-right coalition government wound up gaining two lower-house seats in Tasmania, traditionally a Labor stronghold.

The timber spat provides a microcosm of how luck and skill have propelled Howard to four straight election wins (in 1996, 1998, 2001, and 2004). As Australian journalist Tony Jones said at the time, Tasmanian loggers belong to “the most left-wing union in the country.” They may worry about economic inequality. They may grumble about Howard’s tough stance on labor. They may reckon that Australia’s famous “fair go” ethos has suffered under his watch. But they rallied to Howard when he pledged to protect their economic livelihood.

Howard’s political longevity is inseparable from the robust Aussie economy. In a 2006 survey commissioned to mark his 10th anniversary as prime minister, 83 percent of Australians who ranked the economy as the most important issue approved of Howard’s economic management, including 92 percent of men and 61 percent of Labor supporters. “On many, perhaps most, issues canvassed in the poll he fared poorly,” The Sydney Morning Herald reported. But “his economic management was a fillip to voters’ overall assessments, overriding negatives on other issues.” Howard scored an overall approval rating of 60 percent: a remarkable figure after ten years in office.

Much like presidential contests in the United States, Australian elections typically turn on the economy and/or national security. However much Aussie voters have opposed Howard on industrial relations, education, healthcare, climate change, and Iraq, he has ably piloted a long economic boom and convinced the electorate that Labor would muck it up. Meanwhile, several incidents have focused attention on his muscular security posture.

For example, in August 2001, two months before an election, Howard stopped a Norwegian cargo ship carrying illegal immigrants from entering Australian waters. This concentrated the electorate on border controls. A month later came the 9/11 attacks. In October 2002, Islamic terrorists killed more than 200 people in Bali, Indonesia, including 88 Aussies. Then, in September 2004, one month before an election, terrorists detonated a car bomb outside the Australian embassy in Jakarta.

John Howard frames each election as a referendum on economic management or national security or both,” writes Peter Hartcher, political editor of The Sydney Morning Herald. “Howard only has a couple of cards to play, but they are the trump cards of Australian national politics.”

This past weekend, Howard announced the start of Australia’s 2007 election campaign, with the voting set for November 24th. He will once again be leading the center-right Liberal Party in tandem with its junior coalition partner, the rural-based National Party. His core message is as simple as it is predictable: Howard insists that steady, reliable economic stewardship is needed to maintain Australia’s prosperity.

Economic management and national security are 'trump cards of Australian national politics,' writes the political editor of The Sydney Morning Herald. Howard has successfully leveraged both in the past.

He deserves more credit on the economy than certain critics allow. It’s true that recent growth has been aided by high global commodity prices (Australia boasts abundant natural resources). It’s also true that the most painful economic reforms, which helped facilitate the current prosperity, came from a Labor government. Starting in 1983, Prime Ministers Bob Hawke and Paul Keating (who served as treasurer under Hawke) floated the Australian dollar, deregulated the financial markets, slashed tariffs, and overhauled the wage structure. The Australian economy began expanding in late 1991 and has never stopped.

But Howard did not simply piggyback on the Hawke-Keating years. He guaranteed official independence for the Australian Reserve Bank, revamped the tax system, boosted commercial links with China, reformed workplace law, erased $96 billion of debt (in Australian dollars, which at the time he took office in 1996 equaled about $74 billion in U.S. dollars), produced whopping budget surpluses, and brought domestic unemployment to its lowest level (about 4.2 percent) in more than three decades. The Australian stock market has soared and foreign trade has exploded.

In his new memoir, former Federal Reserve chairman Alan Greenspan praises Howard’s economic instincts. Just a few weeks ago, a report from the International Monetary Fund lauded the Australian government for its “exemplary macroeconomic management.” According to John Edwards, chief economist at HSBC Bank Australia and a former Keating adviser, “Between 1991 and 2005 real income per head increased 32 percent in Canada, 35 percent in the U.S., 36 percent in New Zealand, and 38 percent in the U.K., the four Anglo economies to which Australia is often compared. In Australia real income per head increased 43 percent over the period, level pegging Norway.”

“Not only have we never been wealthier,” writes Australian business journalist Steve Burrell, “but we have never been getting richer faster.” Indeed, Australians “are living through possibly the greatest accumulation of wealth, personal and corporate, that this country has ever seen, at least in the post-colonial era.”

The results of a nationwide poll conducted in late September were unsurprising. By a 15-point margin, 48 percent to 33 percent, Australians said Howard was “more capable of handling Australia’s economy” than Labor Party leader Kevin Rudd. By a 32-point margin, 53 percent to 21 percent, they said Howard’s treasurer, Peter Costello, was more capable of economic management than Labor’s shadow treasurer, Wayne Swan. And despite several interest-rate hikes since the 2004 election, a plurality of Aussies (36 percent to 31 percent) trusted Howard over Rudd to keep interest rates down.

So is Howard poised to romp his way to a fifth term? Quite the opposite. The polls are forecasting a landslide Labor victory. Rudd remains wildly popular overall, and Howard is even facing a tough challenge in his own Sydney-area parliamentary district. After nearly 12 years in office, the 68-year-old prime minister seems stale and tired when compared to the 50-year-old Labor boss, who speaks fluent Mandarin Chinese, has broken with party dogma on a number of issues, and identifies himself as both an “economic conservative” and a devout Christian.

Howard’s most famous supporters have been the so-called “Battlers”: Australia’s equivalent of lower- and middle-income Reagan Democrats. They were originally seen as traditional Labor voters who rebelled over the culture wars and the economy. After the 1996 election, the Liberal Party’s federal director and campaign manager, Andrew Robb, reckoned that “Labor’s vote among blue-collar workers fell from nearly 50 percent in 1993 to 39 percent in 1996.” But now the Battlers—many of whom live in the outer suburbs of Sydney and Melbourne, where federal elections are typically won and lost—seem to be trending back toward Labor.

Aussie commentators have spent the past several months examining why. Reasons abound, including a controversial new labor law known as “WorkChoices,” housing costs, interest rates, climate change, Howard’s support for the Iraq war, and, perhaps most important, the general notion that it’s time for new leadership. But the sheer duration of the post-1991 economic boom may also have bred complacency about job growth. As Dennis Shanahan, political editor of The Australian newspaper, observes, “There is a frustrating public assumption for Howard and Costello that it doesn’t matter who runs the economy because things are so good.”

Shortly before the 2004 election, Liberal Senator Brett Mason wryly told me, “It’s the economy, stupid.” In other words, Australia’s prosperity would once again catapult John Howard to victory. In 2007, that might not be enough.

Duncan Currie is managing editor of THE AMERICAN. His profile of John Howard appears in the September/October issue.

Image credit: Getty Images.

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