Australia's Elections Should Matter to Obama

Daniel Munoz / Reuters-Landov

Australia has long been a leading indicator for what is to come in U.S. politics. Its former prime minister John Howard, a staunch conservative who would later enthusiastically back the Iraq War, was elected five years before George W. Bush entered the White House. Then their electorates soured on them and veered left. In 2007 Australia's Labor Party swept to power when its leader, Kevin Rudd, mobilized a young, idealistic, multiethnic coalition just as Barack Obama did a year later.

But if the pattern holds, Obama and the Democrats may now have reason to worry. Last month, with just weeks until the Aug. 21 general election, Rudd was ousted by his deputy Julia Gillard (the equivalent, in shock value, of Obama falling to an 11th-hour Hillary Clinton primary victory). Whole books could be written as to why. But one cause—and a chilling portent for Obama and congressional Democrats—was that a flat-footed Labor mismanaged the perils of deficit politics and feared a stunning election defeat. In particular, Labor was spooked by the sudden rise of Tony Abbott, the leader of the conservative opposition, who had whipped up a ferocious campaign—egged on by radio shock jocks—that involved carpet-bombing all proposed legislation and accusing the government of amassing deficits and debt.

Labor's temporary stimulus, it is true, has lurched Australia from a small Howard-era budget surplus to a US$35.5 billion deficit in 2010. Gillard promises the surplus will return by 2013. But this is awfully tame in the American context, with two wars, an unending deficit measured in the trillions, and a looming crisis over how to fund Medicare and Social Security. While countries such as Britain and Germany introduce tough austerity measures, Australia's public-debt-to-GDP ratio of about 6 percent is the lowest in the industrialized world. What's more, Australia's unemployment rate is 5.1 percent—a figure the Obama administration would kill for.

Yet Abbott is feasting on paranoia that all debt is, by definition, bad. In this view, government borrowing, even by a relatively minor international capital seeker such as Australia, is responsible for rising mortgage interest rates, thus running a budget surplus is the only responsible economic strategy. Opposition members have even bellowed that Australia represents a sovereign risk to overseas creditors. And as with Obama, Gillard—and, before her, Rudd—have largely allowed such a damaging narrative to go unanswered.

Abbott, for his part, is digging in. So far, he has diverted attention from the headline success of the stimulus by clutching at botched individual elements. He has attacked the government's US$2.2 billion home-insulation scheme in which shoddy installations have been linked with 189 house fires and four deaths. Another US$14 billion in school-building programs was vital in keeping Australia's construction industry afloat—yet the opposition has been able to sensationalize the relatively few projects with cost blowouts.

The swashbuckling Abbott, with his mantra of "End the waste and stop the debt," echoes deficit hawks in the United States. But even more so, he replicates with relish the demogoguery of Tea Party candidates who have fused traditional conservative beliefs about social issues and government spending to cast grave doubts on the Obama administration. Polls show the Tea Party alienates voters when it tips too far into the language of cultural grievance. So too, in Australia, even as Abbott's cheap economic critique gains traction, his combative style and clumsily delivered messages on social issues have caused his own polling negatives to spike. A former Catholic seminarian, the 52-year-old is a hard-core anti-abortionist who publicly advises his teenage daughters that virginity is the "greatest gift" they can give. He admits feeling "a bit threatened" by homosexuality. He once described climate change as "absolute crap." Earlier this year, when Abbott proposed forcing the unemployed to relocate to remote mining regions in the Western Australian desert, opponents ridiculed him for having a "Sarah Palin moment."

So, watch for Australia's election results in a few weeks. The early polls suggest Gillard and Labor will hold on. But if the Abbott-led conservatives can engineer a turnaround by beating the drum on deficits and debt, then alarm bells should ring louder for Democrats. The Obama administration has yet to convince voters it can pull back from the fiscal cliff. If conservatives can mask their ideological baggage and win on a Tea Party–type economic platform in Australia—even where there is little basis for it—then just imagine the coming whirlwind in America.

Mascarenhas has written for numerous publications and was a reporter at The Sydney Morning Herald.