By Jonathan Bogais —

It took more than a week after the federal election on July 2, but Australia finally has a new government, albeit a minority one. The challenges Prime Minister Malcolm Turnbull now faces are daunting. The very narrow result means that he needs to reflect on what went wrong during his brief first term in office. Some decline was expected given the high expectations Turnbull faced, but the situation was aggravated by the lack of concrete policy proposals to give substance to his election campaign rhetoric. Two areas important to watch in the wake of Turnbull’s narrow victory are the impact on Australia’s trade agreements and security relationships.

In a sign of possible tumult ahead, observers are already looking forward to the next election expected to be held in three years. The latest election marked the return of Pauline Hanson’s nationalist party One Nation which focused on anti-Asian immigration and anti-Asian trade rhetoric. Although One Nation’s support is not as strong as it was in the late 1990s, Turnbull’s Liberal Party/National Party Coalition will be wary of losing more conservative voters to Hanson in the next election, particularly as anti-immigration parties gain popularity around the world.

However, if the coalition moves too far to the right to counter this anti-immigration sentiment, it is likely to alienate more moderate voters who are opposed to Hanson’s views on immigration and other issues. Whatever strategy the coalition adopts, Turnbull clearly has little room to maneuver to successfully manage the tensions within his own party, an unwieldy Senate, and the electoral challenges associated with an increasingly fragmented party system.

Against this backdrop, political priorities will need to adjust to new political realities. At the top of the to-do list should be measures that either do not require parliamentary approval, or where there is some chance of support from either the opposition Labor Party or the Greens Party, given that mustering a Senate majority from among the independent senators will prove near impossible. Among Senate independents is the Nick Xenophon Team (a team of independents, not yet a party), with Xenophon, an experienced and respected politician who questions the benefits of free trade.

Although previous Australian governments have been pro-active in the building of a network of free trade agreements (FTAs), especially with South Korea, Japan, and China, there is a growing concern in the electorate that these agreements do not deliver the advantages expected. While the political benefits of FTAs are generally accepted by Australians, they remain less convinced of the economic gains.

Activists from the left and right are strongly opposing FTAs and multilateral pacts like the Trans-Pacific Partnership agreement (TPP). Opponents argue that reducing tariffs and quotas is one thing, but more recent trade pacts include investor provisions that potentially allow companies to sue governments over public health policies like plain packaging of tobacco, or challenge the pharmaceutical benefit scheme. Parliament, however, is likely to ratify the TPP as both the Liberal/National Coalition and the opposition Labor Party support it.

Like their counterparts overseas, populists and traditional independents have a growing influence on political decision-making in Australia. It does not seem to be a coincidence that the $38 billion contract to build 12 of Australia’s next fleet of submarines – Australia’s biggest defense investment – was awarded to French company DCNS, which had committed to partly develop the project in an economically-depressed area of South Australia, which is located in Xenophon’s electorate. With the likelihood of long-term employment looming, many traditional Labor voters switched to the coalition and to the Xenophon Team, securing Turnbull a narrow lead.

Both major political groupings in Australian politics have been pressed to manage shifting strategic relativities in Asia, facilitating the U.S. rebalance to Asia with its complex web of alliances while acknowledging China’s rise. Yet, there is a significant lack of regional awareness among Australians who appear mostly unaware of the dynamics behind the interrelationships between the United States and its Asian allies like South Korea and Japan. High numbers of Australians are unaware of the TPP. The same applies to the agreement between the Australian and U.S. governments on the military use of facilities near Darwin in the Northern Territory. While Australians are acutely aware of competition in the U.S.-China relationship, they are confident that this competition is unlikely to descend into an interstate conflict. Australia’s distance from China and the fact that China is Australia’s largest trading partner make Australians probably less anguished about China’s rise than others in the region. However, many Australians are concerned about China’s bullying attitude in the South China Sea and support an Australian sea and air presence to protect freedom of navigation rights in conjunction with other countries.

The result of the 2016 election is unlikely to have an impact on the strategic relationships currently in place between Australia, the United States. and other allies in the region, even taking into account the changing regional dynamics, as both main parties are in agreement. However, this result suggests that Australian and U.S. policy leaders have some work to do to bring the Australian population along with these efforts in preparation for the next election.

Dr. Jonathan Bogais is a non-resident senior associate with the Southeast Asia Program at CSIS. He is also an adjunct associate professor in the Department of Sociology and Social Policy, School of Social and Political Sciences at the University of Sydney. Visit his personal site: www.jonathanbogais.net. Follow him on twitter @JonathanBogais. Read more posts by Dr. Bogais here.