Australia's Turnbull survives ballot to remain prime minister

[CANBERRA] Australia's Prime Minister Malcolm Turnbull survived a leadership vote as he faced down critics within his own party dismayed by the government's slumping poll ratings.

Mr Turnbull defeated Home Affairs Minister Peter Dutton by 48 votes to 35 in a ballot of Liberal Party lawmakers on Tuesday. Still, the dissent has weakened the prime minister and widened rifts within the government, making another challenge likely. Mr Dutton resigned from the Cabinet following the vote, Sky News reported.

"The dead-man walking scenario looks writ large over Turnbull," said Haydon Manning, an associate professor of politics and public policy at Flinders University. "This has the classic look of a two-stage act - the first challenge narrowly fails but sets the scene for a successful second one."

Mr Turnbull, 63, has struggled for policy traction and political authority since his Liberal-National coalition retained office in 2016 by a razor-thin margin. The government has trailed the main opposition Labor party in opinion polls ever since, and with elections due by May, disquiet over Mr Turnbull's leadership has been growing.

His authority was wounded in the past week as several backbench lawmakers threatened to vote against a key energy policy, demanding the government provide more support for the coal industry and abandon its Paris Agreement emissions target.

Australia's dollar fell 0.1 per cent to 73.34 US cents as of 9.41am in Sydney and was weaker against all of its G-10 peers.

Mr Turnbull has been dogged by misfortune and missteps since the 2016 election. While he shepherded through legislation allowing same-sex couples to marry, has shrunk the budget deficit and enacted tax cuts for small businesses, other policies have been stymied in Parliament.

The country has had 27 years without recession, yet the government has failed to reap a political dividend due to stagnant wages, spiraling power bills, high levels of household debt and property prices that are beyond the reach of many Australians.

The leadership turmoil is nothing new. Mr Turnbull himself seized power by defeating Tony Abbott in a ballot of Liberal lawmakers in 2015. The previous Labor government was equally chaotic - with first term prime minister Kevin Rudd ousted by his deputy Julia Gillard, only to claw his way back to the top job weeks before losing the 2013 election.

Such political dysfunction has damaged the nation's prospects, with successive governments failing to enact reform across key areas such as energy, housing policies and taxation.

Unless he can swiftly heal rifts within the government and close Labor's lead in opinion polls, Mr Turnbull may face a further challenge - potentially as soon as the next parliamentary sitting in September. The opposition party leads the government 55 per cent to 45 per cent, according to a Fairfax-Ipsos poll published Monday - a wide enough margin to win the next election by a landslide.

"He needs to pull a policy rabbit out of the hat that somehow shows strength of leadership and unify the government," said Mr Manning. "The fact the vote is so close means Turnbull would have to have a faultless run to lead the government to victory at the next election, and the chances of that look increasingly remote."

BLOOMBERG