Abbott (L) and Turnbull (R) in 2009. Photo: Torsten Blackwood/AFP/Getty Images
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The febrile world of Australian politics: Turnbull vs Abbott

Following this month's failed backbench revolt against prime minister Tony Abbott, Malcolm Turnbull's position is stronger than ever.

In the mid-1970s the man who is likely to replace Tony Abbott as Australian prime minister some time this year – a prospect made even more likely by a failed backbench revolt by Liberal Party MPs early this month – made a speech from the floor of the Cambridge Union. On stage, impressed by the young Australian’s intervention, was the then editor of the Sunday Times, Harold Evans.

After he had spoken, the student, Malcolm Turnbull, received a note. “Good speech,” it said. “Come and see me in the Gray’s Inn Road tomorrow.” When Evans offer him a job, though, Turnbull said he was returning to Australia to finish his law degree. As Turnbull recalled 35 years later, Evans was taken aback. “Think of what awaits you,” he said. “Law will certainly make you more money than journalism – but where does it end? Chief Justice? Or much worse.” He shivered slightly. “You could end up a politician.”

Here in Melbourne, a city that has voted Labor at every federal election since 1990, this kind of urbane self-deprecation goes down particularly well. Turnbull did become a politician, of course, but along the way he made name for himself as a lawyer – most famously when he thwarted the Thatcher government in the 1986 Spycatcher trial. His high-profile career in the law, business and the media created a larger-than-life political persona and will help fuel his effort to reclaim the Liberal leadership, lost to Abbott in 2009. But his scarcely concealed (though often well-founded) view that he is the smartest person in the room has made relations with fellow Liberal MPs rocky.

The man Turnbull must unseat, still only 16 months into his ill-starred prime ministership, could not be more different. If you compare their positions on climate change (which Abbott described as “crap” while Turnbull was negotiating an emissions-trading scheme with Labor’s Kevin Rudd), on same-sex marriage (Abbott takes his cue from Sydney’s Catholic hierarchy; Turnbull is more in step with his inner-
urban constituents) or on an Australian republic (Abbott knighted Prince Philip last month; Turnbull spearheaded the late-1990s pro-republican campaign), it is hard to see how they co-exist in the same party.

Unfortunately for the quality and standing of the current government, the centre of gravity within the Liberal Party (and its Coalition partner, the rural-based Nationals) is closer to Abbott’s position than to Turnbull’s. Among the electorate, it’s the other way around.

This shouldn’t come as a surprise to the party. For years, polls have shown that the centre-right Liberals are out of step with majority opinion on vote-changing issues such as education and health. What has usually counterbalanced those factors is their reputation for superior economic management and stronger defence and security policies. Both those advantages eroded quickly after Abbott became prime minister in 2013. The economic growth rate stalled and then began to decline, unemployment rose, and Abbott’s attempts to turn every international event – from Flight MH370 to the rise of Islamic State – into a war-room situation began to wear thin.

Evidence that the coalition had sneaked into government largely as a result of Labor’s missteps under the feuding Kevin Rudd and Julia Gillard began to accumulate straight after the election. Government ministers were thinking out loud about dumping election commitments – most notoriously, a retreat from the promise to match Labor’s significant increase in funding to schools – and almost immediately their opponents took the lead in the polls. Aggregated, the polls show that the Liberal-led Coalition has been behind ever since.

A further hit in the polls has left the government languishing in landslide territory. Combine that with Abbott’s erratic style and high-handed decisionmaking and the conditions for a successful challenge are all in place. It’s just a matter of when Turnbull judges the right moment has arrived.

The budget’s dramatically skewed spending cuts are emblematic of a deeper problem facing the Liberal Party. A majority of Australians want governments to be active in health, education, industrial relations, broadcasting and the environment. The Liberal Party’s shrinking membership and a majority of the parliamentary party don’t; and this is why they’ve run dead on these issues during successive election campaigns.  

None of this quite explains the propensity of Australian political parties to dump their leaders so frequently. Part of the explanation is that national elections run to a constitutionally entrenched three-year cycle. Short parliamentary terms undoubtedly create a more febrile atmosphere, especially in a period of constant opinion polling. The small size of parliament may also play a role: 101 Liberal MPs voted on the motion to unseat Abbott; to win, its proponents needed to persuade just a dozen people to change their minds (Abbott prevailed by 61 votes to 39). Australia’s dispersed geography plays a part, too, with strong regional centres of power – Labor’s powerful New South Wales right-wing faction, for instance – vying for influence in their national parties.

Which brings us back to Melbourne, where the Liberal Party was created at the end of the Second World War. The new organisation was inspired partly by an earlier Liberal Party led by another Melburnian, Alfred Deakin, who between 1901 and 1914 wrote anonymous political despatches from Australia for the London Morning Post, right through his three prime ministerships. Abbott and Turnbull are both former journalists, but I suspect that only one of them could pull off Deakin’s trick of coolly criticising not only his own party, but also, when he deserved it, himself. 

 

This article first appeared in the 13 February 2015 issue of the New Statesman, Assad vs Isis

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.