With a razor-thin majority in parliament, new Australian Prime Minister Scott Morrison will struggle to build a consensus among members of his Liberal-National coalition and prevent the Labor Party from winning elections next year.
Until Australia solves the problem of parliamentary fragmentation, it will encounter difficulty in balancing economic ties with China and political ties with the United States.
Due to Canberra's mixed signals on its ties with Beijing, China may choose to put engagement on hold until Australia's elections next year.
For the past decade, Australia has been politically adrift. Like some counterparts in the Western world, it has been experiencing a cycle of deep fragmentation, polarization and swings in the political balance that have put its governments off kilter. Prime Minister Malcolm Turnbull's downfall in late August ushered in the country's sixth prime minister in less than a decade — with that period nearly evenly split between the country's two political pillars: the Australian Labor Party and the Liberal-National coalition.
The Big Picture
Australia is the most China-dependent economy outside the developing world and must balance these deep ties with its long-standing strategic relationship with the West. This delicate balance, however, will be harder to strike in the coming months as the country's long period of political fragility continues.
Turnbull's removal comes as Australia is facing numerous foreign policy challenges. The country is attempting to balance both its deep strategic ties with the United States and its deep economic ties to China. The United States' protectionist push further complicated Australia's predicament, because its geographical isolation means it must depend on the free flow of goods and investment across the region. But with political fragility likely to worsen, it will be difficult for it to forge a coherent foreign policy, particularly in balancing the rewards and risks of its relationship with China.
Down and Out, Down Under
Australia's political disarray has deep roots, but it has worsened in the past several years. In federal elections in 2016, the ruling Liberal-National coalition hemorrhaged 14 seats, allowing the opposition to whittle down the government's numerical supremacy to a bare majority. Instability in the coalition (and parliament as a whole) has been especially pronounced over the past year, as sharp disagreement over the dual citizenship of parliamentarians that began in July 2017 resulted in 15 lawmakers from numerous parties resigning their posts. Although this didn't change the balance of power, the spate of resignations, replacements and by-elections cost the Liberal-Nationals their comfortable advantage in parliament. In February, a crisis in the ruling coalition nearly shook the foundations of their 95-year-old Liberal Party and National Party alliance when National Party head Barnaby Joyce refused to step down amid a scandal. Joyce ultimately acceded to the demands and resigned from the party, as well as the deputy prime minister's post, although he remained a member of parliament. Then, just last month, lawmaker Peter Dutton initiated a sudden bid to unseat Turnbull and install himself as the new prime minister. Dutton failed in his quest but did open the way for a compromise candidate, Scott Morrison, to become Australia's latest leader.
Turnbull has now resigned from parliament entirely, meaning the ruling coalition will face a by-election for his seat in October — a poll it must win to retain its slim majority in the House of Representatives. (In the Senate, the Liberal-National coalition holds the largest share of seats at 40.7 percent, although it is outnumbered by Labor at 34 percent and a motley array of third parties at 25 percent.) With its grip on the majority more brittle than ever, the government is heading toward a late May 2019 deadline for federal elections, suggesting the next nine months will offer little in the way of political coherence. And even the post-election landscape might be similarly divided, giving an even greater role for third parties.
Because Morrison was a compromise candidate, questions will linger about his coalition's long-term grip on power. For now, Morrison's task is to focus on building consensus and boosting low approval ratings, especially as polls conducted immediately after he assumed the hot seat showed that 56 percent of Australians — up from 51 percent — supported Labor and backed its leader, Bill Shorten, for prime minister.
The Consequences for Canberra
Political fragmentation and fragile coalitions could make it difficult for the ruling coalition to pass legislation, particularly through the sharply divided Senate. As it is, the government has only now — five months on — succeeded in pushing through the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) after Labor dropped its objections on Sept. 11, finally ending the coalition's fears that the main opposition might join smaller parties to waylay the deal and force changes. However, other challenges for the government lie ahead in the realm of foreign policy.
Australian foreign policy necessitates a careful balancing act to benefit from China's rise while remaining in line with Washington's efforts to limit Beijing's strategic expansion. On the economic side, China is Australia's largest trading partner, accounting for nearly 30 percent of its exports, while Chinese business leaders pumped $94.75 billion in foreign direct investment into the Australian economy from 2006 to 2016. On the political side, the United States has approached Australia in the hopes of enlisting it in its efforts to counterbalance China. In November 2017, Australia participated in the launch of the Quadrilateral Security Dialogue, a group consisting of Australia, Japan, India and the United States that seeks to address China's rise. Canberra subsequently released its first foreign policy white paper since 2003, expressing strong concerns about China's growing power.
The past year of Australian political turmoil has resulted in increasingly frosty relations between Canberra and Beijing as some lawmakers have begun pushing for a harder line against China amid the dearth of leadership at the top.
The past year of Australian political turmoil, however, has resulted in increasingly frosty relations between Canberra and Beijing as some lawmakers have begun pushing for a harder line against China amid the dearth of leadership at the top. Australia has increased its scrutiny of foreign investment, espionage and foreign influence peddling — primarily with China in mind. In February, Morrison (then the federal treasurer) announced measures to impose enhanced scrutiny on foreign investment into Australia's farming and electricity sector due to a public outcry about a spike in agricultural land acquisitions by Chinese-affiliated holdings. In July, parliament also passed the Foreign Influence Transparency Scheme Bill to curb the flow of foreign funds to Australian lawmakers and civil society groups in response to a political furor over alleged Chinese political influence, which even forced a Labor member of parliament to resign. The new law will also force foreign agents to register with national authorities, while a separate bill passed that month also tightened protections against espionage. Then, just last month, Australia moved to bar Chinese electronics giant Huaweifrom providing equipment for its 5G networks.
A Chance for Rapprochement?
The year of heated activity and rhetoric targeting Beijing has even created what some have dubbed a "diplomatic deep freeze" between Australia and China, resulting in the cancellation of planned trips by Turnbull and then-Foreign Minister Julie Bishop in March, as well as shifts in Chinese officials' trips to Australia, education exchanges and other working-level visits. And even if the two countries did hold some meetings in recent months, few could deny that their relations were in a rut. Fast-forward to last month, when Turnbull appeared set to correct course and attempt to repair the relationship. Barely over a week before losing his post, Turnbull called for a "reset" in relations with China as part of an apparent bid to defuse some of the past year's heated rhetoric. Bishop, who had leveled harsh words against China and had not traveled there in over two years, also appeared to reach out.
Turnbull and Bishop, however, are now out of the picture, raising questions about the fate of Australia's possible rapprochement with China. Canberra has certainly not alienated Beijing. Indeed, the actions against Chinese investment in agriculture and electricity highlight Australian hopes to counterbalance Beijing's influence in the country rather than root it out, because those sectors attract relatively little Chinese direct investment compared with metals and energy. Australia's political back and forth, however, has severely complicated its ability to forge a clear balance in relations with the most critical country in its region. And given the turmoil in the Australian capital, China might just decide to sit on the sidelines for another nine months until it has a more solid counterpart to deal with — even if there are few guarantees that the next Australian government will be any more stable than its predecessor.
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