Scott Morrison, Australia’s prime minister-designate and leader of the Liberal Party, center, and Josh Frydenberg, Australia’s energy minister and deputy leader of the Liberal Party, right, leave following a closed-door meeting of lawmakers in Canberra, Australia. (Photographer: Mark Graham/Bloomberg)

Here Are Four Key Challenges Facing Australia’s New Prime Minister

(Bloomberg) -- Nine months. That’s all the time new Australian leader Scott Morrison has to convince voters he can unite his wounded government and produce winning policy positions before the next election.

Morrison, 50, emerged as prime minister after last week’s infighting within his Liberal party saw Malcolm Turnbull brought down by its disaffected right wing. Polls now show the ruling Liberal-National coalition trailing the main opposition Labor party by double digits.

Here Are Four Key Challenges Facing Australia’s New Prime Minister

Morrison has one ace up his sleeve. Despite voter concern about entrenched stagnant wage growth, the economy is performing well and new Treasurer Josh Frydenberg is seen as a sensible choice by the business community to steer the nation into its 28th year of consecutive growth.

But other areas of policy remain in flux and must quickly be addressed, including foreign affairs, energy, trade and immigration. These crucial portfolios have new ministers, adding to the sense that Australia is heading into unknown territory at a time it’s craving for stability.

Here’s some of the key challenges.

Foreign Affairs

Former foreign Affairs Minister Julie Bishop hand-picked her successor, Marise Payne.

Bishop was seen as a very capable minister, at ease on the world stage and navigating Australia’s balancing act of maintaining its alliance with the U.S. as well as cordial relations with China, the nation’s largest trading partner. Still, that tightrope walk became more precarious in December, when Turnbull angered China by saying its meddling in national affairs was a catalyst for his anti-foreign interference laws, passed in June.

Payne, 54, offers the chance of a reset. While unknown to most voters due to her low-profile approach in her previous portfolio of defense, the onus will be on her to increase her visibility domestically and abroad as Australia’s top diplomat.

There are few indications that Payne will be radically different to Bishop. She has indicated a willingness to step up Australia’s aid program in the Pacific, an increasing focus for Beijing, and defended the government’s decision last week to bar China’s Huawei Technologies Ltd. from Australia’s 5G market. She told Sky News that it would help protect Australia’s national interests and security.

“The path that Australia has been following is to try to manage a number of forces in a pragmatic way," said Melissa Conley Tyler, the head of the Australian Institute of International Affairs. "What our foreign policy needs more than anything else is nuance.”

Energy

Australia is blessed with an abundance of natural resources including coal, which for decades provided a relatively cheap source of energy.

Yet that blessing became Turnbull’s curse. As renewables such as solar and wind became cheaper and voters concerned about climate change encouraged their state governments to look beyond coal, the Liberals’ right wing put up an ideological fight to keep the fossil fuel as the nation’s primary energy source.

That battle culminated this month when Turnbull was forced to de-fang his National Energy Guarantee policy, which intended to provide cheaper, cleaner, more reliable power. He was removed even after he abandoned his plan to legislate Australia’s Paris Agreement commitment to cut emissions by at least 26 percent below 2005 levels by 2030 at the behest of coal-industry supporters within his government.

Eyebrows were raised when Morrison -- who in February 2017 brandished a lump of coal into the parliament in support of the fossil fuel -- named Angus Taylor as the new energy minister. While Taylor, 51, is seen as a rising star within the party, he’s protested against wind farms.

Taylor’s immediate task will be trying convince voters he has a plan to reduce surging electricity prices, which go to the heart of voters’ concerns over rising living costs. Lawmakers within the coalition will be pushing him to announce the government will bankroll new coal-fired plants.

“Taylor is likely to tread very carefully when dealing with the issues of energy policy,” said Kobad Bhavnagri, the Australian head of Bloomberg New Energy Finance. “He’s likely to talk loudly about pressuring providers to reduce prices. But there is no long-term fix for prices without credible guidelines for investment, which depend on a robust framework for dealing with emissions. So that probably rules out any substantive policy being formed before the next election.”

Here Are Four Key Challenges Facing Australia’s New Prime Minister

Trade

Australia has long been an advocate of globalization, and since 2013 the Liberal-National government has secured free-trade deals with major partners including China, Japan and South Korea. It also played a role in reviving the Trans Pacific Partnership after the U.S. withdrew.

That stance has become more difficult to maintain in the era of President Donald Trump, and the targets to secure new bilateral free-trade agreements are proving tougher to hit. Former education minister Simon Birmingham, who took on the trade portfolio, is tasked with helping to secure deals with Indonesia, India and the European Union.

“Increasingly in an open economy, trade is all about education, skills and human capital,” said Tim Harcourt, a lecturer at the University of New South Wales Business School. The government needs to resist using “trade policy for domestic, political purposes.”

Immigration

Only a half-century after the White Australia policy effectively ended, the nation is now truly multicultural: Almost half of the country’s 25 million people were either born overseas or have a parent who was.

Still, that hasn’t stopped voter concern that too many new arrivals are coming. The population swelled 28 percent between 2000 and 2017, by far the biggest increase among Group of 12 nations, placing strain on transport infrastructure and housing affordability.

Morrison attempted to seize control of the debate within his party by cutting immigration from leadership challenger Peter Dutton’s sweeping home affairs portfolio and giving it to new minister David Coleman.

Still, Morrison -- himself a former hard-line immigration minister -- may feel compelled to take a stance to announce a cut in numbers even though the migrant influx has helped drive economic growth.

Here Are Four Key Challenges Facing Australia’s New Prime Minister

“It’s important to have a clear position on immigration,” said David Burchell, a senior lecturer at Western Sydney University. “It’s important to reassure people that there are limits applied and what the logic of it is.”

©2018 Bloomberg L.P.