Turnbull on the Ropes as Australia Rival Readies New Challenge

(Bloomberg) -- Australia’s Prime Minister Malcolm Turnbull was battling for his job on Wednesday after narrowly surviving a leadership vote, as his chief rival Peter Dutton prepared to mount another challenge.

Lawmakers from Turnbull’s ruling Liberal Party were circulating a petition to force a party-room meeting as early as Wednesday night, the Australian reported, without citing where it got the information.

While Turnbull, 63, called for unity after defeating Dutton in a party ballot on Tuesday, more fractures emerged within the government. A raft of ministers who voted to oust the prime minister offered to resign, while Dutton, 47, took to the airwaves, saying he was the best hope for reversing the government’s slumping poll ratings and winning elections due by May.

The potential for another change of leadership adds more uncertainty for businesses in a nation that has endured repeated policy missteps and flip-flops over the past decade. Since 2007, Australia has switched prime ministers five times, and none has lasted a full term. Turnbull, who himself came to power in 2015 in a party coup before winning the 2016 election with a razor-thin majority, has struggled for both policy traction and political authority.

Dutton, a former policeman who has become a lightning rod for disaffection with Turnbull’s policy direction, mounted a media blitz Wednesday styling himself as a future leader, promoting populist policies including cutting taxes on power bills and reducing immigration. After losing to Turnbull by 48 votes to 35 on Tuesday, he resigned from Cabinet -- and is clearly seeking to build support for another challenge that may come before parliament goes on a two-week break on Thursday.

Read more: How politics is poisoning the ‘Lucky Country’

Asked in a radio interview on Wednesday if he was “working the phones” to win more support from Liberal colleagues, Dutton said: “Of course I am. I’m speaking to colleagues. I’m not going to beat about the bush.”

Turnbull, flanked by key backers Treasurer Scott Morrison and Finance Minister Mathias Cormann, told reporters later on Wednesday that he was seeking to ensure the stability of the government and he remained leader by “the iron laws of arithmetic.”

Dutton’s backers are a handful of votes away from securing the majority of Liberal lawmakers needed to bring on another challenge, The Daily Telegraph reported.

Even if Turnbull makes it through the week, the turmoil and dissent within government means he’s unlikely to pass substantive policies before the next election. That’s good news for Bill Shorten, 51, whose Labor party led the ruling Liberal-National coalition by 10 percentage points in a poll released on Monday.

“The ability of this government to produce meaningful policy positions has been greatly compromised because the authority of the prime minister has been severely weakened,” said Martin Drum, a senior political lecturer at Notre Dame University in Perth. “Shorten is a winner from this.”

Ministers Resign

A raft of senior Liberal lawmakers, including Trade Minister Steven Ciobo and Health Minister Greg Hunt, offered their resignations on Tuesday evening after backing Dutton in the ballot. International Development Minister Concetta Fierravanti-Wells quit, saying the traditionally center-right government has drifted too far to the left under Turnbull.

“My conservative base has been very concerned about the direction of the government,” she told reporters on Wednesday. “I think it’s very important for any government, particularly a coalition government, to have the appropriate balance of moderates and conservatives.”

Turnbull’s supporters insisted that switching leaders would be electoral suicide. Foreign Minister Julie Bishop, who is deputy Liberal leader, said on Wednesday the prime minister maintained majority support in the party. Nevertheless, speculation was rife on Wednesday that other ministers may throw their hats into the ring, with the Australian newspaper reporting Morrison was gauging support for his own potential challenge.

Dutton 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. He criticized Alan Joyce for using his position as chief executive officer of Qantas Airways Ltd. to advocate for legalizing same-sex marriage.

Dutton has used a raft of television and radio interviews since his narrow loss to outline his populist policy manifesto, including removing a tax on electricity bills for families and pensioners, a wide-ranging investigation into energy companies, and cuts to immigration to ease city congestion.

His economic credentials were called into question on Wednesday when he announced a plan to scrap goods and sales levies from energy bills -- that was quickly criticized by a peak business lobby for risking distortion in the tax system. He’s also facing media speculation he may have breached constitutional law by being a beneficiary of a trust which owns a childcare company and receives government subsidies.

Turnbull’s authority over the party, which is divided between moderates and conservatives, has always been in doubt. The self-made millionaire and former Rhodes scholar, who led an unsuccessful push for Australia to become a republic in 1999, is regarded as too liberal by the party’s right-wing rump.

Since seizing the leadership from Tony Abbott in a party ballot in 2015, he’s retreated from some of his most strongly held convictions, including tough action against climate change, in a bid to appease conservative forces in the party.

With only a one-seat majority after the 2016 election, he’s struggled to gain momentum. While he oversaw legislation allowing same-sex couples to marry, shrunk the budget deficit and enacted tax cuts for small businesses, other policies have been stymied in parliament or his party room. Proposed tax cuts for bigger businesses were blocked in the upper house Senate on Wednesday and Turnbull told reporters he would not take the policy to the next election, citing a lack of political consensus on the issue.

A planned A$49 billion ($36 billion) broadband network, designed to thrust Australia into the forefront of the digital revolution, was plagued by cost overruns and construction delays. Sniping between state and federal governments has stalled crucial infrastructure to ease crippling traffic congestion.

Read more: How politics is wrecking Australia’s energy policy

Earlier this week, Turnbull de-fanged his signature energy policy, which was drafted to give voters cleaner, cheaper power -- a move that came after Dutton and others demanded the government provide more support for the coal industry and abandon its Paris Agreement emissions target.

All of the chaos is helping the Labor party, which is pledging to ramp up spending on education and hospitals if it wins the next election. It also wants to reduce tax breaks for property investors to address generational disparity.

“Australia has a prime minister in name only -- without power, without policies,” Shorten said on Tuesday. “If nearly half of his own government do not want him to be the prime minister, why should the rest of Australia have to put up with him?”

To contact the reporter on this story: Jason Scott in Canberra at jscott14@bloomberg.net

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Edward Johnson, Peter Vercoe

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