Fires, scandal and economic slowdown pose triple threat to Australian PM

Prime Minister Scott Morrison's government is walking back promises on a budget surplus as the fires and coronavirus threaten economic growth. PHOTO: EPA-EFE

CANBERRA (BLOOMBERG) - When Australia's Parliament wrapped up for the summer break in early December, Prime Minister Scott Morrison was brimming with optimism.

He was still riding high from a dramatic come-from-behind victory in the May election that saw him hailed as a conservative hero. He was also trumpeting a plan to return the budget to surplus.

"Whatever challenges are in front of us, the one thing we can always say with a full heart is: It's great to be an Australian," Mr Morrison declared.

Two months later, as lawmakers gather in the national capital Canberra for the first parliamentary sitting of 2020, it's all going wrong.

An unprecedented wildfire season that has burnt out an area of land almost the size of England and shrouded major cities such as Sydney and Melbourne in toxic smoke has increased pressure on Mr Morrison to abandon his pro-coal agenda.

His government is walking back promises on a budget surplus as the fires and coronavirus threaten economic growth. A member of his Cabinet has just resigned over a breach of ministerial standards, and there is disunity within his junior coalition partner.

Voters are taking notice. The Liberal-National coalition government's four percentage point opinion poll lead over the main opposition Labor party two months ago has been reversed, while Mr Morrison's personal approval rating has plunged eight points to 37 per cent.

"Morrison has suffered one of the steepest declines in political fortunes in recent Australian history and his government colleagues will be worried that his reputation is already damaged beyond repair," said Mr Paul Williams, a political analyst at Griffith University in Brisbane.

"He's no longer seen as an average Aussie bloke but as a media manipulator more concerned with his image than with the community's welfare."

Still, while the backlash against his climate policies and slowing growth pose threats to Mr Morrison's government, he can take some solace from the fact that elections don't have to be held until September 2022.

He is also unlikely to face an internal challenge from his own lawmakers, due to rule changes that make it harder for a party to topple its leader - and because he still remains popular among his colleagues for delivering the election victory. That means he still has time to rebuild his damaged reputation.

"Morrison does have time, but at the moment he doesn't seem to have many ideas about what his government is aiming to achieve," Mr Williams said. "His policy agenda looks thin, so 2020 will likely see a lot of added pressure on Morrison."

As Parliament resumes on Tuesday (Feb 4), former Nationals leader Barnaby Joyce will vie to take the leadership of the party from Mr Michael McCormack.

Mr Joyce was forced from the role, which sees the incumbent also become deputy prime minister, two years ago after he admitted having an affair with a member of his staff. Depending on the result of Tuesday's vote, Mr Morrison may have to revamp his Cabinet.

The Prime Minister's summer from hell began soon after Parliament went on hiatus. By that time, the nation's wildfire season was already looking unusual. It had began unseasonably early and out-of-control fires were being reported across the country.

His suburban dad image suffered a huge knock in December when it emerged he had taken an unannounced family vacation to Hawaii just days after calling the blazes a "national disaster". On his return, he was heckled while touring a bush fire-affected community, and footage of him awkwardly trying to force people to shake his hand went viral on social media.

Doubling Down

The severity of the fires, which have left more than 30 people dead, have increased criticism of the government's climate and energy policies. At the forefront of voters' concerns is that Australia lacks a mechanism to punish greenhouse-gas polluters.

Although he's signalled greater financial support for renewables such as wind or solar, Mr Morrison's government remains committed to the fossil-fuel industry and backs opening up new coal mines.

Despite the opinion poll slide, street protests and criticism at home and abroad, Mr Morrison appears to be sticking to his guns and resisting calls to cut carbon emissions deeper than already pledged under the Paris Agreement.

Instead of putting a price on carbon, Australians need to prepare for climate change by "building dams, developing new crop varieties, improving planning for natural disasters", he said in a major speech last week that focused on the need for mitigation and resilience.

The reputation of the Liberal-National coalition government has been further damaged by a scandal over the handling of a A$100 million (S$92 million) sport-grants programme, which on Sunday resulted in Ms Bridget McKenzie quitting the Cabinet. The then sports minister was found to have breached ministerial standards by failing to declare she was a member of a shooting club for which she approved a A$36,000 grant.

And in a potential hit to its reputation for strong fiscal management, the government has walked back its promise to deliver the first budget surplus in more than a decade as the wildfires and coronavirus outbreak take their toll on the world's most China-dependent developed economy.

Even before the wildfires intensified, slowing growth was eroding the projected surplus, with the government in December cutting its forecast for the 12 months through June 30 to A$5 billion from April's budget estimate of A$7.1 billion.

The coronavirus is adding to nerves about the economy. According to Westpac Banking Corp, a complete shutdown of Chinese tourism and student travel for a year would cut Australian gross domestic product by almost one percentage point, "with significant additional multiplier effect".

"These events, outside our control, are going to have an impact on the economy," Treasurer Josh Frydenberg said in a television interview on Sunday. "As for delivering the surplus, our focus is on delivering support to the people who need it the most."

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