Even if he keeps the top job, Malcolm Turnbull's troubles have only just begun

Whatever the final seat count, the 2016 election has gone badly wrong for Malcolm Turnbull. This was meant to be the election that would award him a resounding mandate and provide sufficient numbers in the combined House of Representatives and Senate to pass key legislation easily.

But, at best, Turnbull will be forming a government with only a narrow majority. In a much-less-desirable outcome, he’ll be negotiating with minor parties and independents to form a minority government in a hung parliament. In the worst scenario of all for the Coalition (though it seems less likely at this stage), Labor could form a minority government.

Alternatively, Australia may need to go to another election to resolve matters.

As when he was previously leader of the Liberal Party, Turnbull’s political judgement is being seriously questioned.

The Liberal Party could reasonably have expected the outcome to be better than this. Turnbull remained disciplined and on-message during an (excessively) long campaign, with no more false starts such as the debacles over floating ill-considered GST or state taxation ideas.

The impact of Brexit on economic markets should have reinforced Turnbull’s narrative of needing a stable, responsible and business-friendly government in uncertain times.

That simple message of stability should have cut through more easily than Labor leader Bill Shorten’s more complex argument that Brexit showed the dangers that can arise when conservative leaders give in to the right of their parties, as well as the need for government policies that protect workers’ wages and benefits.

So how did things go so wrong? And what are the implications for Turnbull’s leadership?

Turnbull’s campaign

Election outcomes are decided by multiple factors, including those particular to local electorates. But there were significant problems with Turnbull’s campaign.

It is not just that Turnbull was not as comfortable as Shorten when campaigning among ordinary voters. Labor repeatedly raised questions about how comfortable Turnbull was with some of the policy positions he was putting forward. It suggested he had betrayed some of his previous positions on issues from same-sex marriage to climate change in order to placate conservatives in his party.

Turnbull strongly denied that his own positions had shifted. Despite this, he went to the election with, for example, Tony Abbott’s policy of holding a plebiscite on same-sex marriage – an idea he had originally opposed.

Such issues reinforced the perception that Turnbull had shifted position, and so could also not be trusted when he denied government plans to privatise Medicare or initiate cuts to penalty rates.

Electors’ memories of past assurances from Julia Gillard and Abbott that were contradicted in office further reinforced this lack of trust. This was despite criticisms that Shorten was over-reaching by arguing the government was intending to fully privatise Medicare rather than merely substantially cutting benefits and increasing user-pays contributions.

Nonetheless, despite the Abbott policy legacies, Turnbull’s own campaign was still somewhat different from a John Howard or a Abbott one. He did not mobilise culture war issues to the extent that his predecessors would have. Abbott’s criticism that “national security has played almost no part in this campaign” is partly a reflection of this.

While Abbott would probably have used the Orlando shooting to highlight the Islamic State “death cult” and repeat his arguments about Islam’s need for a reformation, Turnbull had an Iftar dinner with Muslim leaders in which he made far more measured comments, assuring Muslims they were valued members of a multi-faith and multicultural society.

“Small-l” liberals, which Turnbull professes to be, and many security experts will applaud him for this. But social conservatives will use it against him.

While Howard and Abbott had campaigned with a combination of neoliberal (free-market) economic policy and social conservatism, Turnbull’s campaign focused more on economic policy.

Labor was depicted as big-spending, anti-business and disastrous for economic growth. By contrast, Turnbull promised a bright Australian future if the Liberals were elected, in which an agile and innovative government would encourage industry to generate jobs and growth. The centrepiece of the plan was a tax cut for business, with much made of the opportunities opened up by (Abbott-era) free-trade agreements.

Turnbull’s talk of agility, innovation and flexibility in exciting times is designed to encourage an entrepreneurial culture. It sounds more like motivational speaker Tony Robbins than Tony Abbott, and suggests that Turnbull sees exhorting Australian private enterprise to do its best as a major part of the prime minister’s role.

This is in turn because he sees the key role of government as being to reduce taxation and other barriers to private enterprise, and to facilitate market-based solutions, rather than for government to intervene more decisively.

However, the Liberal Party’s preference for neoliberal, market-based solutions (this predates Turnbull’s leadership though he is a particularly enthusiastic supporter) caused some stumbles. It made the government hesitant to provide extra financial support for areas of Australian industry to avoid job losses. Eventually, the threats to seats in South Australia (particularly Christopher Pyne’s) led to promises of submarines and ships being built in South Australia.

Initially the government merely utilised anti-dumping measures (designed to make market competition fairer) to protect steelmaker Arrium. Eventually the government also agreed to fund new equipment.

South Australian senator Nick Xenophon was among those who argued that such reluctant and piecemeal support was not enough, and that the government needed a stronger plan to encourage and support Australian manufacturing industry and jobs.

More fundamentally, the election result suggests many voters were not convinced by Turnbull’s arguments that the government had a solid plan for jobs and growth. This includes his claims that the benefits of tax cuts to big business would eventually flow through to them.

Turnbull had not adequately countered Labor’s arguments for a more socially equitable economic growth, or populist arguments from a range of minor parties and groups, including Xenophon’s.

Lessons from the campaign for Turnbull’s leadership

Even if Turnbull does retain the prime ministership, he will do so in extremely difficult circumstances. His leadership is clearly under major threat. He promised stability in uncertain economic times but may not even be able to offer stability in parliament.

He is the leader of a post-Howard Liberal Party in which conservatives had become dominant and found it hard to deal with a small-l liberal leader with more socially progressive views. Issues such as how the same-sex marriage plebiscite is handled will now be even more incendiary within the party. Key Turnbull supporters such as Peter Hendy and Wyatt Roy have lost their seats.

Turnbull’s neoliberal support for market forces and public sector cuts has been broadly supported in the Liberal Party since the 1980s, but is apparently no longer so popular with voters. This is an issue that goes beyond Turnbull’s leadership, which the Liberals need to acknowledge.

Turnbull faces an increasing protest vote for independents and minor parties. This includes those, such as the Nick Xenophon Team, that have questioned the free-trade agreements that Turnbull sees as central to Australia’s economic development.

The Senate seems likely to be even less manageable than it was before the double dissolution. Jacqui Lambie has been returned and Pauline Hanson’s political career has been resurrected. The Senate is also likely to feature colourful senators like Derryn Hinch. Both Lambie and Hanson project themselves as looking after battlers who are economically disadvantaged in today’s Australia, while playing on fear of the “other”.

Yet economic stability will be hard to offer in an international economy still not fully recovered from the global financial crisis and now further battered by Brexit and the issues it poses for Europe.

Also, a Turnbull government would face major problems as Australia attempts to transition into a technologically advanced manufacturing country. As Turnbull has acknowledged, this includes increasing competition from Asian economies and the unemployment that could result from technological disruption. Yet it is not clear what Turnbull’s solutions would be if market forces fail to deliver.

Above all, if returned, Turnbull would need to convince ordinary voters they will have a good life in the exciting future he sees for Australia. His own future depends on it.