O'Sullivan: John Howard bounces back

By FRAN O'SULLIVAN

Can a dead cat bounce? You betcha!

Just look across the Tasman at Prime Minister John Howard's astounding election success if you want proof.

Howard, a solid - but stolid - political manager, had been all but written off by his countrymen six months ago. But extraordinary luck and ruthless manipulation over the Middle Eastern asylum seekers have saved his political skin.

Early this year, Australia was "going through a patch" and its political chief executive did not command respect.

Howard was dead meat; everyone knew that it was odds-on the Government would change at the next election. Even his body language signalled defeat. The Olympic triumph had fast receded into history.

"Branchitis" was robbing Australians of their traditional self-confidence as business icons like AMP, BHP, AXA Asia, CSR and Foster's examined whether they should shift overseas, following Rupert Murdoch's News Corporation and Rio Tinto.

The difficulties of running global businesses from Australia were just too tough in the Globalisation Age. Australia was too distant from its markets and its own home base was too small to grow significant businesses.

Sound familiar? It's the sort of cultural cringe that New Zealand knows only too well. But toss in a few Australian corporate collapses - One.Tel, HIH Insurance - and a bit of outright xenophobia over Singapore's pitch to gain control of some prime Australian assets and the "Lucky Country" had begun to sound as if it was working up to give its Prime Minister a good kick in the pants.

By May, even Howard's US allies were simply going through the motions. Last year, his officials organised a campaign to pitch for a free trade agreement with the US which would catapult Australia's earnings capability.

Howard planned a trip to Washington to meet President George Bush mid-year to secure a commitment to negotiate a deal and an international success which would have raised his own leadership out of the doldrums. But well before his visit, officials from US Trade Representative Bob Zoellick's office were privately confiding that the Bush Administration would not open negotiations until after the Australian elections.

The Administration would not waste political capital by starting negotiations ahead of an election with a Prime Minister who looked to be a dead loser. Better to wait until there were Labour governments on both sides of the Tasman and pursue a joint deal, if at all.

But all this was before two extraordinary crises - the Tampa refugees and the September 11 terrorism attacks - provided Howard with an opportunity to whip up prejudice on one issue and play the safe pair of hands on the other, using all the advantages of incumbency to control the political play.

No politician gets to the top if he or she is a complete waste of space. Howard developed strong political management skills during the years it took him to get to The Lodge. But the Australian Prime Minister is not a visionary or even an inspirational politician.

At the Apec meeting in Shanghai last month, he kept international business movers and shakers waiting for 40 minutes before arriving to give his scheduled keynote address.

The speech was clearly geared to the Australian audience back home. The requisite soundbites would be played into the campaign positioning Howard as a leader on the world stage. But to the audience his delivery was extraordinarily plodding. He was bereft of any charisma. In contrast, President Bush gave a commanding performance.

Back on his own patch, Howard has played deftly to the global insecurity engendered by the terrorist attacks. The advantage of incumbency allowed him to act as Australia's leader in challenging economic times and take the high ground as Prime Minister on the US-led alliance against terrorism.

During the election he repeatedly hammered his major election themes: the Coalition was best suited to manage the Australian economy and to protect Australia's security in uncertain times. Economic management - particularly low interest rates - would be the primary reason to underpin voters' intentions, he said at his final campaign doorstop interview.

Major election planks included pledges for continued Budget surpluses, $A1.4 billion for disadvantaged students, a pledge that there would be no sale of Telstra shares until services to the bush improved, and a "baby bonus" of between $A500 and $A2500 for newborns.

His opponent, Labor's Kim Beazley, basically left his run too late. Beazley outperformed Howard in television debates but his focus on GST as an election issue was misplaced, policies were held back too late to get public traction before the election, and he failed to ruthlessly use political advertising to undermine Howard.

Ironically, Howard's re-election probably suits New Zealand more than a Beazley victory would have.

Prime Minister Helen Clark and Howard have forged an accommodation with the transtasman Social Security Agreement.

Australia will continue to carp that New Zealand has not pulled its weight on regional defence. But claims that New Zealand is free-riding on Australia's Budget commitments are likely to lessen because of Clark's unambiguous stance on terrorism.

Howard played to latent xenophobia when Middle Eastern asylum seekers arrived. Clark won international kudos as a humanitarian by agreeing to accept 150 refugees from the Tampa.

But it is an inescapable fact that both countries have lagged in economic performance behind more dynamic regions in recent years.

In the early 1990s, New Zealand's pretensions to superiority on public policy were still in full force despite empirical evidence that Australia was starting to surge ahead on personal income growth and GDP per capita.

Many Australians - with justification - had admired New Zealand's success in achieving policy reforms. The Reserve Bank Act, Employment Contracts Act, Fiscal Responsibility Act, GST and the productivity leaps associated with the privatisation of Government businesses had contributed to Australian jealousy.

But that perception has unravelled since the advent of MMP electoral reform and the clear political failure to get some urgent implementation of proposals to increase international investment in New Zealand and rebuild our talent base.

Howard and Clark - whether they like it or not - will inevitably be politically bracketed by the US when they separately seek a clear commitment from the US to pursue a free trade deal.

Each will wave the Anzac flag, but if the US does reward our respective loyalties by opening its doors with a trade deal, both countries stand to benefit.

Toss in a halfway decent regional security relationship - again - and capture some of the spirit that drives the US culture of success and Australia and New Zealand will escape the slow decline to a regional backwater.

Are Howard and Clark up to it?