Politicians are the biggest threat to our economy: The Economist

Australia’s enviable economy, natural wonders and strong relationship with China make it a “wonder down under”, but our politicians’ love affair with leadership spills could spell an end to all of that.

Since 2006, Australia has had six different Prime Ministers thanks to party infighting and politically lethal climate change policies. A leadership coup may be good for politicians’ ambition, but it’s bad for the economy, the environment and democracy, a major new report from The Economist argues.

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“It is easy to imagine a cycle in which the constant changes of leadership make policymaking even less consistent, further sapping faith in government and making politicians even more timid,” Asia editor and report author, Edward McBride said.

Attempts to deliver climate change policies have felled several leaders, but the environmental problem isn’t going away, he warned.

Neither is tepid wage growth. While Australia’s wage growth used to outpace other developed nations, that’s also coming to an end. Policies underpinning this growth, like immigration, are also becoming more politically fraught.

“If politicians do not sort themselves out, Australia risks becoming as troubled as everywhere else.”

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Speaking to Yahoo Finance, McBride said he worries the constant leadership churn is also disenchanting voters.

“Many Australians complained to me that fewer and fewer MPs had had other careers before getting into politics, although I’ve never seen any hard data on it. I think there’s something to that concern,” he said.

“But I think career politicians especially ought to be able to see that their current antics are putting voters off, which can’t be good for their job security.”

Big questions need answering

Some big questions need to be addressed.

How cozy can Australia be with China and the US at the same time? How will Australia secure a sustainable energy future? How will we pay pensions to a growing number of retirees?

They’re big questions with massive economic, social and environmental ramifications, but difficult to answer while pandering to factions within parties, McBride said.

“The infighting, in other words, is clearly impeding the business of government,” McBride wrote.

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“Even if Scott Morrison wanted to pursue bold reforms, he does not have time before the next election, which is due by May.

“Figuring out where Australia should get its energy from or how warmly to embrace China will have to wait yet another six months, at least.”

Look to the past for political bravery

No other wealthy country has experienced a period of economic growth as long as Australia’s current stretch, and our relatively open approach to immigration is also a major asset.

Australia takes in as many as 190,000 immigrants a year who work, pay taxes and have children – all useful to address an ageing population. Then there’s Australia’s world-class health-care and superannuation systems.

“I’m surprised by how few Australians seem to realise how much their country stands out,” McBride told Yahoo Finance.

“Not just in terms of how long it has gone without a recession, but also in terms of income growth, immigration and economic reform. It’s an amazing record, and one that it’s really important not to jeopardise.”

The good news is Australia only needs to look to the past for leadership inspiration.

Responding to questioning on which countries Australia should attempt to emulate when it comes to addressing political infighting and climate change, McBride said we don’t need to look outside our own country.

“[Australia] has managed to make important, ambitious reforms stick in other areas. Think of super, or gun control, or immigration.

“The key is to get both Labor and the coalition on board. The problem at the moment is that one wing of the Liberal party undermines all attempts to stake out a centrist position on climate,” he continued.

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Quoting University of Sydney emeritus professor in government, Rod Tiffen, McBride said leadership spills will continue until parties are penalised come election time.

However, if the Wentworth by-election is anything to go by, the Liberal party will soon feel the full anti-spill backlash.

“I think Australian voters are sensible and the electoral system is intelligent, so there is a good chance that politics will correct itself,” McBride said.

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