Howard's End

UNTIL THIS PAST WEEKEND, John Howard was the great survivor of Australian national politics. In May 1989 he was sacked as leader of the center-right Liberal Party, and quipped that a return to the leadership post would be like "Lazarus with a triple bypass." A few months earlier, a popular Aussie news magazine had dubbed Howard "Mr. 18 Percent," referring to his abysmal poll numbers. But "Lazarus" would rise from the dead, and eventually become one of the most successful prime ministers in Australian history. After regaining the party leadership in 1995, he won four straight federal elections (in 1996, 1998, 2001, and 2004). Tom Switzer, opinion page editor of the Australian newspaper, liked to joke that whenever Howard received a kiss of death it "amounted to mouth-to-mouth resuscitation."

But not this time. In Saturday's federal election, the center-left Australian Labor Party won a landslide victory, securing majorities in both the House of Representatives (where the government is formed) and the Senate. It even appears that Howard will lose his own Sydney-area parliamentary seat. Supporters of the prime minister-elect, 50-year-old Labor leader Kevin Rudd, claim he has a popular mandate to pursue a host of workplace, environmental, and other reforms. Labor also controls every single one of Australia's state and territorial governments. The Liberal Party is in shambles.

Now the second-guessing starts. Should Howard have stepped down as party leader a year earlier and allowed his longtime treasurer, Peter Costello, to contest the election? Should he have acted sooner on climate change? Were his fourth-term industrial relations reforms, known as "WorkChoices," too ambitious? Throughout the campaign, Labor painted the 68-year-old prime minister as being out of touch. Howard's experience may have been an asset, but his longevity in office (nearly 12 years) worked against him. Voters wanted new leadership, provided it was competent. The nerdy Rudd--a former foreign service officer, fluent Mandarin speaker, vocal Christian, and self-described "economic conservative"--seemed like a safe bet.

Despite his crushing defeat, Howard leaves a considerable legacy. He guaranteed full independence for the Reserve Bank of Australia, overhauled the tax system, expanded foreign trade, eliminated the government's debt, and moved the budget into surplus. In his final term, he completed the privatization of Telstra, the communications giant, and reformed industrial relations via the WorkChoices legislation. Earlier this year, the International Monetary Fund praised Australia for its "exemplary macroeconomic management." Unemployment is now hovering around a 33-year low, and GDP growth remains strong. "We are living through possibly the greatest accumulation of wealth, personal and corporate, that this country has seen, at least in the post-colonial era," writes Australian business journalist Steve Burrell.

To be sure, Howard does not deserve all the credit. It was actually a Labor government in the 1980s that floated the currency, slashed tariffs, deregulated the financial markets, and revamped the labor structure. Coupled with tax cuts and privatization, these reforms were critical to opening the Aussie economy and setting the table for future growth. According to John Edwards, chief economist at HSBC Bank Australia, "Between 1991 and 2005 real income per head increased 32 percent in Canada, 35 percent in the U.S., 36 percent in New Zealand, and 38 percent in the U.K., the four Anglo economies to which Australia is often compared. In Australia real income per head increased 43 percent over the period." Despite dire predictions, Australia sailed through the 1997-98 Asian financial crisis relatively unscathed. In recent years, the mineral-rich "lucky country" has benefited from the combination of high commodity prices and China's seemingly insatiable demand for raw materials (especially coal, iron ore, and natural gas).

That gets to one of Howard's most significant foreign policy triumphs: proving that warm relations with the United States and China are not mutually exclusive. On back-to-back days in October 2003, George W. Bush and Chinese President Hu Jintao visited Canberra, the Australian capital. "We're trusted by both sides," Arthur Sinodinos, Howard's former chief of staff, told me. "We have strong interests in developing our relationships with both the Chinese and the Americans." Howard signed a free trade agreement with the United States, and Australia is currently negotiating one with Beijing. In late August, the Australian Bureau of Statistics released data showing that mainland China had eclipsed Japan to become Australia's top trading partner.