The Australian political sphere has been anything but a picture of stability in recent years. The string of prime ministers has followed more of a Game of Thrones like attrition rate than would be expected from the economic leader of the South Pacific. In 2015, the BBC went as far as labeling the nation’s capital, Canberra, as the “coup capital of the democratic world”. But what impact, if any, has this had on the Australian economy?
Does a Stable Economy Require a Stable Government?
Australia has had five Prime Ministers in the top job since 2010, including current Prime Minister Malcolm Turnbull who has served in office since September 2015. However, the frequent changes in leadership have more to do with personality clashes and power struggles than economic policy differences, and key indicators suggest that Australia’s economy hasn’t been affected.
The country continues to be an attractive investment choice and its credit profile remains unchanged. Groups such as Moody’s Investors Service have said that it still has very high institutional strength. While it is clear that Australia’s economy is strong enough to withstand it’s ongoing governmental instability, one cannot help but wonder what if. Perhaps a glance to Australia’s closest neighbor can give us a clue about the benefits of quiet waters.
Australia VS New Zealand
It’s hard to ignore the relative stability of New Zealand’s political system and the economic gains they have made against Australia in this period. Prime Minister John Key has been in power since September 2008 and New Zealand has achieved a lot during this time. In the dawn of 2017, the NZD is now worth 0.97 AUD – almost at parity. The New Zealand government has delivered a huge surplus and unemployment levels have decreased.
There are other factors at play here, of course, such as the decline of Australia’s mining sector, but it’s difficult not to speculate on how much better off Australia could be if they had enjoyed greater stability at the top in recent years.