Consider sanctions as an example. US Authority here depends upon its central position in global payments, a position that allows it to punish non-compliance. This position remains powerful as evidenced by the problems created for the EU which does not agree with the US position on Iran. However, US policy has created powerful incentives to develop new structures and processes that by-pass the US dominated payments system.
This type of process takes time. Looking back over some of my writing, I have sometimes over-estimated the pace of change, underestimated the stickiness in existing systems, underestimated the way extend to which other shocks can affect the change process. I had not expected, for example, that China would adopt such an aggressive foreign policy. To my mind, this has reduced China's ability to position itself at the centre of the global economic order, Belt and Road notwithstanding. However, if we take a ten year time horizon, it's not hard to see how new payment structures might emerge.
The Middle East is important to Australia, but it is not a core strategic concern. It is also not an area where we have or can have much strategic influence. For both reasons, it pays Australia to keep a lower profile. This segues neatly into the Wentworth by-election.
The Wentworth By-election
The Wentworth by-election was held on Saturday 20 October 2018 to select a replacement MP for Malcolm Turnbull who had resigned from Parliament for his loss of the PM role. It was seen as important because a loss would reduce the Government to a minority position in the House of Representatives, although this did not mean loss of Government given the number of cross-benchers, members not belonging to either Government or Opposition. The election was important, too, as a first test for new Prime Minister Morrison after the turmoil associated with Mr Turnbull's removal from power.
For the benefit of those outside Sydney, Wentworth covers the Sydney eastern suburbs that lie along the south shores of Sydney Harbour. All of Australia's electoral divisions have their own special features. In Wentworth's case it covers an area that is traditionally wealthy and conservative. It also has a relatively high proportion of Jewish voters, from memory around 13%.
The seat has been presented as blue ribbon Liberal. That's not quite true, although it is true that Labor has never won it.
Wentworth has been undergoing basic change along two dimensions, size and composition.
The number of Federal electorates is relatively fixed. Each seat must have a an equivalent number of electors within a defined bound, with boundaries adjusted at regular intervals in light of population change. In rural areas facing slow or declining population growth the outcome has been a massive expansion in the geographic size of electorates. These changes are less acute in urban areas, but even there boundaries have tended to expand while there have been constant boundary variations Wentworth remains a geographically small electorate, the second smallest in the Federal Parliament, but it has added and sometimes subtracted areas with history and composition different from the original core.
The composition of the electorate has also been greatly affected by social, economic and demographic change. Its location close to the city, its proximity to beaches and parks, has attracted young professionals, many of whom rent the growing number of apartments; some 48% of the electorate now rents. For at least the last three decades, the seat has been seen as socially progressive while still conservative on economic issues. However, there has been something of a divide between the inner core of exclusive older suburbs and the surrounding areas that have moved in and out of the electorate. As we shall see in a moment, this division was reflected in the latest vote.
For those who are interested, Antony Green's overview of the seat provides more information on boundaries and composition of the electorate, while Wikipedia provides an overview of the vote in the seat since federation.
Malcolm Turnbull won the seat in 2004 after a bitter pre-selection battle with the sitting Liberal Member Peter King. There were concerns at the time about expansion in the Green vote. Mr King was seen as too conservative, while Mr Turnbull was a high profile candidate who combined wealth and corporate success with more progressive attitudes seen as better attuned to the majority view in Wentworth. Mr Turnbull won the seat with a 55.48% two party preferred vote, down from the 57.86% recorded by Mr King at the previous election.
Again for the benefit of international readers, many Australian jurisdictions operate a preferential vote system in which you vote 1 for your first preference and then number the other candidates in order of preference. Should no candidate receive a majority on the primary vote, the second preferences of the other candidates are distributed starting with the candidate with the lowest number of votes who is then eliminated. The process continues until a candidate achieves a a majority.
The term two part preferred, 2pp or TPP, is used to describe the vote between the top two candidates after distribution of preferences. While preferences are not formally distributed where a candidate achieves a majority on the primary vote, it has become practice to calculate the 2PP figure even in these cases.
In his first election with former member Peter King running as an independent, Mr Turnbull achieved 41.79% of the primary vote, 55.48% in 2PP terms. By the 2016 election, Mr Turnbull had increased his primary vote to 62.26%, his 2PP vote to 67.5%, making this a very safe Liberal seat. The question then became whether or not the dumping of Mr Turnbull as PM and his sudden resignation might change the equation.
A large field of candidates nominated, of which the four main ones were Dave Sharma (Liberal), Kerryn Phelps (Independent), Tim Murray (Labor) and Dominic Wy Kanak (Greens).
The Liberal party preselection campaign had been a little messy. It coincided with allegations of bullying and sexist discrimination in Federal Parliament. There were arguments that the Liberal party should endorse a woman, with the lead candidate for Liberal preselection withdrawing on the grounds that the Party should do just that. This opened the way for Mr Sharma, a former diplomat and ambassador to Israel, to win the nomination with Mr Turnbull's apparent endorsement.
Labor's Tim Murray, already preselected, began campaigning early and seemed to be attracting support if the enthusiasm of his campaign workers, including youngest. is any guide. The decision of Kerryn Phelps to run as an independent changed the equation. Dr Phelps is a former AMA president, a well known local doctor and a councilor of the City of Sydney. Phelps is also married to Jackie Stricker, a former primary school teacher, converted to Judaism after her marriage and is a well known campaigner for gay rights. With her nomination, the real contest became Sharma v Phelps. To a degree Labor and especially the Greens ran dead to maximize the chances of a Phelps victory. Both lost votes as a consequence.
The Liberals had a difficult and sometimes chaotic campaign in which the popular fault lines in Australian politics were clearly on display.
The environment is an important issue in Wentworth. Having just rejected Mr Turnbull's National Energy Guarantee, the Government went into the by-election without a really coherent environmental narrative. Difficulties here were compounded later in the campaign when Mr Turnbull's son entered the campaign to argue that the Liberal Party candidate must be defeated to deliver an environmental message to the Government. With Mr Turnbull refusing to be involved in the election on the grounds that he had left Parliament, this gathered a lot of media attention.
The campaign began against a backdrop of allegations about bullying and discrimination against women in the Federal Parliament. Then someone leaked the recommendations of the Ruddock inquiry into the adequacy of legislative protection for religious freedom. This ignited a debate about existing provisions that might allow discrimination against gay students and teachers. The Government tried to hose this down, but this is another Wentworth hot button issue.
Then came the fiasco of the Government's apparent support subsequently withdrawn for Senator Hanson's it's ok to be white motion. At the very least, this suggested continued disorganisation within the Government at a time when it was trying to present a degree of coherence. To compound the problem further, the papers started carrying stories of a possible leadership challenge within the National Party apparently triggered by an interview with New England MP Barnaby Joyce in which he said that he wasn't seeking to regain the leadership but would accept it if he was drafted. While there is some dissatisfaction with Michael McCormack's leadership, I couldn't see a challenge as a real possibility and indeed the Party lined up behind the leader. However, the coverage certainly wasn't helpful to the Liberal campaign in Wentworth.
Prime Minister Morrison then threw another curled ball, announcing that at the suggestion of Dave Sharma the Government was considering shifting the Australian embassy to Jerusalem. This was in fact part of a broader statement including apparent continuing recognition of East Jerusalem as capital of an independent Palestinian state and needs to be seen in that context, but the timing and the reference suggested an attempt to woo the Jewish vote. If so, that was a serious error of judgement at several levels. Wentworth includes many Liberal Jews who do not necessarily support the current Israeli Government position as well as many centre or centre left voters sympathetic to the Palestinian position.
With apparent defeat looming, the Liberals including former PM John Howard made last minute appeals to voters to vote for Mr Sharma to preserve stability in Government. You can imagine how that went down given the circumstances that had triggered the by-election in the first place! It also exposed the Government to subsequent attack that since it had lost the by-election it could not, on its own words, guarantee stable government and should therefore call a general election.
By-election Results and Aftermath
Counting on election night quickly showed a strong swing against the Liberal Party with its vote down 24% at one stage to below 40%. This led ABC election analyst Antony Green to call the seat for Dr Phelps around 7.14pm. I went to bed reasonably early The results seemed quite clear-cut and I had become tired of talking heads pontificating about the scale of the loss, what a disaster it was for the Government and the reasons for the defeat.
I woke to similar commentary in the morning. Blame shifting had also begun, with some coalition MPs blaming the loss on Mr Turnbull's failure to campaign. I thought that was a bit rich in the circumstances. However, in the count itself, things were not quite what they seemed. Towards the end of the count on Saturday, counting of postal votes strongly favoured Mr Sharma. By Sunday night, there was an outside chance that Mr Sharma might still win. In the end, Dr Phelps won with 51.22% of the vote after preferences compared to 48.79% for Mr Sharma, a margin of 1.849 votes. In the primary vote, Mr Sharma received 43.08% of the vote, down 19.10%, compared to Dr Phelp's 29.19%.
Looking at the full numbers, a few things stand out.
The first is the relative narrowness of Dr Phelp's final victory. If only 925 additional voters had voted Liberal 1 or Liberal 2 Mr Sharma would have won. I bolded the or because in this by-election with its likely protest vote against the dumping of Mr Turnbull, the Liberals needed disaffected protesting Liberals to make the part number 2, thus registering a protest vote while ensuring that at least some of those votes still flowed to Mr Sharma once preferences were distributed. The decision of Labor and Greens to run dead was, I think, designed in part to prevent this.
The second thing to stand out is the divided nature of the electorate, with a relative divide between the Northern harbour suburbs (Sharma) and the booths in the western and southern portions of the electorate (Phelps) reflecting their different demographics.
The third thing to stand out is the way the postal votes favoured Mr Sharma. These were generally cast earlier. There seems to have been a shift to Dr Phelps in the last week or ten days of the campaign.
I am left with the strong impression that the Liberals could have won Wentworth despite external factors, including Mr Turnbull's sacking. They failed because they ran a bad campaign, especially in the last week or ten days. Instead of keeping their campaign focused on positive issues, economic management and local needs, they became distracted. The appeal to voters to vote for Mr Sharma, the Jerusalem announcement, smacked of a certain level of desperation. I think that this failure is the real lesson from Wentworth.
On his blog Happy Antipodean, Matthew da Silva had a rather nice piece What motivates Malcolm Turnbull? I have included it here because of, among other things, its description of Sydney's Eastern Suburbs.