ASIA
01 November 2026
Australia’s loss of exceptionalism
Australia has lost its way in this challenging 21st century according to Paul Kelly, whose recent book is reviewed here by John West.
Australia would have seen the twilight of its “exceptionalism”, during the liberal and conservative era, from 2013-22, according to Paul Kelly's recent book. This leaves the country shockingly unprepared for the period ahead.
Kelly is the grand old man of Australian political journalism, who has written a plethora of books on Australian politics dating back to “The Unmaking of Gough”, a 1976 book on former Prime Minister Gough Whitlam. Thus Kelly is able to bring to his subject an unrivalled knowledge of Australian politics, thanks in part to his knowledge of all the main actors in modern Australian politics.
Australia’s exceptionalism began to become unstuck during the Labor governments of Kevin Rudd and Julia Gillard from 2007-13. But it is the
Liberal governments of Tony Abbott (2013 – 2015), Malcolm Turnbull (2015 – 2018) and Scott Morrison (2018 – 2022) that are the focus of Kelly’s attention. And although the current Labor government, led by Anthony Albanese since 2022 is beyond the main scope of Kelly’s narrative, Kelly only sees a continued deterioration in Australia’s performance under Albanese.
There were some international factors behind Australia’s loss of exceptionalism. The global financial crisis of 2008-9 led to a significant downturn in the world economy, and a general retreat from market-based economic reforms. Public debt rose in the Western world.and governments focussed on the security and resilience of local populations. Although Australia benefited from China’s mega stimulus package in response to the financial crisis, it was not immune to other negative aspects of the crisis.
In sharp contrast, Prime Minister Tony Abbott was the most conservative prime minister in the history of the Liberal Party. Malcolm Turnbull was the most progressive. And Scott Morrison was old-fashioned in a rapidly changing world, and had trouble coming to grips with the feminisation of Australian politics. In sum, the Liberal Party had three different prime ministers with three different visions in nine years, a period characterised by hellish infighting and power challenges in contrast to Howard’s broad church. Today, under the leadership of Angus Taylor, the Liberal Party is pretending that it is a united party, but the Australian people know that it’s not so.
The Liberal Party has lost cultural power among the tertiary educated class, professional women, a lot of young people, corporate Australia and a lot of opinion makers. It has been bypassed by the rise of progressive values in Australia, the sexual revolution, the advent of women into the professional classes, and the rise of a multicultural society.
In reality the public has never really supported economic rationalism. But Hawke/Keating and Howard/Costello were able to push through their reforms and get reelected. It was a period of more trust in government and a willingness on the part of the public to go along with reform measures, and support by the media. It is possible neither of the pro-reform governments could have pushed through with reform had they faced today’s conditions.
In the space of a decade, the Liberal Party has gone from being the natural party of government to being basically unelectable. The Liberal Party is confused, divided and uncertain about what it is as a party. The electorate has lost confidence and faith in the Party. The Liberal Party has lost the intellectual debate in this country, as the left of centre has taken control of the national agenda. At the same time, disenchantment with the political system has seen support for and tribal loyalty to the major parties falling.
Today, the Liberal Party is fragmenting on both the left and the right. On the left, “Teal independents” have found electoral success contesting urban seats with a history of representatives coming from the Liberal Party. In particular, they have been advocating for increased action to mitigate climate change. The colour teal is a blend of the blue of the Liberal Party and the green of green politics. Teal politicians won 9 seats in the 2025 Australian federal election. And the Liberal Party is now almost absent from urban Australia.
On the other side, “One Nation”, a far-right political party led by Pauline Hanson, is now “neck and neck” with the Labor government on 28 percent in the latest opinion polls, with the Liberal/National Party Coalition on 23 percent. One Nation’s score is up from 6.4 percent for the House of Representatives in the 2025 elections. Hanson is appealing to the emotions of the Australian people, exploiting a sense of grievance, alienation and a lack of trust in the political system. Her main message of cutting immigration is attracting much support in light of high housing prices and pressure on public services. Kelly thinks that Hanson’s popularity will fade somewhat. Already, the business and academic sectors are staunchly opposed to her draconian proposals for cutting migration.
One example is the division between rural and regional Australia on the one hand, and urban Australia on the other, which is probably just about the worst we’ve seen since Federation. It’s doing immense damage to the country. We don’t understand one another. People in the inner city have no rapport at all with rural Australia and the regions. They do not understand why we’re a wealthy country and the contribution of the resources sector to our wealth.
We increasingly have a culture formed in urban Australia which is ignorant of so much of the nature of this country, its historical evolution, the reason it’s been so prosperous. Even then within the city and suburbs, we are now seeing divisions we have not seen before. We’ve seen One Nation getting quite a lot of support from various suburbs. We’re seeing quite a lot of difference between the states. Western Australia is for example a different world from Victoria.
Kelly argues that when there is no shared morality there is no society, and in Australia we increasingly disagree on what constitutes virtue (as is the case in many other Western countries). What this means is political consensus is much harder to achieve. Cultural fragmentation means the decline of trust in politics is guaranteed. It’s not just the failure of politicians.
Paul Keating, when he was treasurer and prime minister, said that his aim was to make Australia a first rate country – a place with a powerful economic engine and a soul to match. Kelly writes that we don't have the economic engine anymore and he thinks the soul is fairly elusive.
In sum, Australia has lost its way and its sense of Australian exceptionalism. Kelly suggests that there are a few reasons for this. First, the challenges now facing the country are quite extraordinary. The economic challenge is much greater now with flat productivity and stagnant living standards. Then there is the unprecedented and difficult transition away from fossil fuels. The transition to renewables will guarantee higher power prices.
Another major force is the fragmentation of the country in social and cultural terms, with the rise of identity politics and the disintegration of shared values. There are also the technological revolution, and the rise of the digital age. Each individual is being empowered to be their own media centre and this is now going to be accentuated with the rise of AI. Most crucially, there is the strategic challenge with the rise of China and China’s aspiration to be the Asian regional hegemon.
These challenges represent an enormous task for governments of either party to address. But our political class doesn’t have the capability to provide worthwhile answers to these challenges, according to Kelly.
Paul Kelly’s book is a massive tome, with around 800 pages. But it is rich with information, and thought provoking for anyone with a stake in Australia’s future, and thus well worth the effort of reading. I’ve read many reviews, and writers take pleasure in quibbling with this and that point. But for my money, the heart of Kelly’s analysis is spot on.
Kelly is the grand old man of Australian political journalism, who has written a plethora of books on Australian politics dating back to “The Unmaking of Gough”, a 1976 book on former Prime Minister Gough Whitlam. Thus Kelly is able to bring to his subject an unrivalled knowledge of Australian politics, thanks in part to his knowledge of all the main actors in modern Australian politics.
Australian exceptionalism
“Australian exceptionalism” was a slogan widely used to refer to the extraordinary period of economic reform, which modernised and globalised the Australian economy during the Labor government (centre-left) of Bob Hawke and Paul Keating (1983-96) and Liberal government (centre-right) of John Howard and Peter Costello (1996-2007). Through this period Australia enjoyed strong growth of its economy and productivity, and the country was widely celebrated for its exceptional performance.Australia’s exceptionalism began to become unstuck during the Labor governments of Kevin Rudd and Julia Gillard from 2007-13. But it is the
Liberal governments of Tony Abbott (2013 – 2015), Malcolm Turnbull (2015 – 2018) and Scott Morrison (2018 – 2022) that are the focus of Kelly’s attention. And although the current Labor government, led by Anthony Albanese since 2022 is beyond the main scope of Kelly’s narrative, Kelly only sees a continued deterioration in Australia’s performance under Albanese.
Waning of Australian exceptionalism
Kelly sees many signs in the mood of a country, once so frothy in its optimism and self confidence. The Australian people are unhappy. They’re restless. They sense that something's gone wrong. They recognize that we’re in a period of stagnant living standards. They know we ought to be doing better. And in that sense, they’re very disenchanted with the political system.There were some international factors behind Australia’s loss of exceptionalism. The global financial crisis of 2008-9 led to a significant downturn in the world economy, and a general retreat from market-based economic reforms. Public debt rose in the Western world.and governments focussed on the security and resilience of local populations. Although Australia benefited from China’s mega stimulus package in response to the financial crisis, it was not immune to other negative aspects of the crisis.
Liberal Party’s unravelling
On the home front, there was a decisive change in political leadership. Former Prime Minister John Howard (1996-2007) used the term ”broad church” to describe the Liberal Party’s ability to house and reconcile two distinct political traditions, notably classical liberalism and modern conservatism.In sharp contrast, Prime Minister Tony Abbott was the most conservative prime minister in the history of the Liberal Party. Malcolm Turnbull was the most progressive. And Scott Morrison was old-fashioned in a rapidly changing world, and had trouble coming to grips with the feminisation of Australian politics. In sum, the Liberal Party had three different prime ministers with three different visions in nine years, a period characterised by hellish infighting and power challenges in contrast to Howard’s broad church. Today, under the leadership of Angus Taylor, the Liberal Party is pretending that it is a united party, but the Australian people know that it’s not so.
The Liberal Party has lost cultural power among the tertiary educated class, professional women, a lot of young people, corporate Australia and a lot of opinion makers. It has been bypassed by the rise of progressive values in Australia, the sexual revolution, the advent of women into the professional classes, and the rise of a multicultural society.
Fading of economic reform
None of these three Liberal leaders could make a persuasive case to the public regarding the need for continued reform – key for reigniting productivity. Moreover, the public weren't interested in economic reform. It was in the midst of complacency off the back of very generous living standards for quite some time. There was a sense of denial about what was in the genuine national interest. There was a reluctance on the part of the public to face up to it.In reality the public has never really supported economic rationalism. But Hawke/Keating and Howard/Costello were able to push through their reforms and get reelected. It was a period of more trust in government and a willingness on the part of the public to go along with reform measures, and support by the media. It is possible neither of the pro-reform governments could have pushed through with reform had they faced today’s conditions.
Decline of Australia’s centre-right politics
One of the most surprising trends has been the decline of centre-right politics in Australia. Since its formation in late 1944, Australia’s Liberal Party (in Coalition with the National Party) has governed federally for approximately 50 years, compared to approximately 24 to 25 years for the Australian Labor Party over the same period.In the space of a decade, the Liberal Party has gone from being the natural party of government to being basically unelectable. The Liberal Party is confused, divided and uncertain about what it is as a party. The electorate has lost confidence and faith in the Party. The Liberal Party has lost the intellectual debate in this country, as the left of centre has taken control of the national agenda. At the same time, disenchantment with the political system has seen support for and tribal loyalty to the major parties falling.
Today, the Liberal Party is fragmenting on both the left and the right. On the left, “Teal independents” have found electoral success contesting urban seats with a history of representatives coming from the Liberal Party. In particular, they have been advocating for increased action to mitigate climate change. The colour teal is a blend of the blue of the Liberal Party and the green of green politics. Teal politicians won 9 seats in the 2025 Australian federal election. And the Liberal Party is now almost absent from urban Australia.
On the other side, “One Nation”, a far-right political party led by Pauline Hanson, is now “neck and neck” with the Labor government on 28 percent in the latest opinion polls, with the Liberal/National Party Coalition on 23 percent. One Nation’s score is up from 6.4 percent for the House of Representatives in the 2025 elections. Hanson is appealing to the emotions of the Australian people, exploiting a sense of grievance, alienation and a lack of trust in the political system. Her main message of cutting immigration is attracting much support in light of high housing prices and pressure on public services. Kelly thinks that Hanson’s popularity will fade somewhat. Already, the business and academic sectors are staunchly opposed to her draconian proposals for cutting migration.
Fracturing of Australian society
Kelly argues that Australia is an increasingly fractured country, we are becoming a nation of various tribes, people live within their own tribal bubble and have their own firm beliefs, based on their own experience of life. And too often that experience is divorced from the rest of the national community.One example is the division between rural and regional Australia on the one hand, and urban Australia on the other, which is probably just about the worst we’ve seen since Federation. It’s doing immense damage to the country. We don’t understand one another. People in the inner city have no rapport at all with rural Australia and the regions. They do not understand why we’re a wealthy country and the contribution of the resources sector to our wealth.
We increasingly have a culture formed in urban Australia which is ignorant of so much of the nature of this country, its historical evolution, the reason it’s been so prosperous. Even then within the city and suburbs, we are now seeing divisions we have not seen before. We’ve seen One Nation getting quite a lot of support from various suburbs. We’re seeing quite a lot of difference between the states. Western Australia is for example a different world from Victoria.
Kelly argues that when there is no shared morality there is no society, and in Australia we increasingly disagree on what constitutes virtue (as is the case in many other Western countries). What this means is political consensus is much harder to achieve. Cultural fragmentation means the decline of trust in politics is guaranteed. It’s not just the failure of politicians.
Taking stock
Kelly argues that we’re now in a new historical phase where governments lack the ability and capability to meet the challenges facing the country. We lost our way in the decade 2013-22. We lost the magic.Paul Keating, when he was treasurer and prime minister, said that his aim was to make Australia a first rate country – a place with a powerful economic engine and a soul to match. Kelly writes that we don't have the economic engine anymore and he thinks the soul is fairly elusive.
In sum, Australia has lost its way and its sense of Australian exceptionalism. Kelly suggests that there are a few reasons for this. First, the challenges now facing the country are quite extraordinary. The economic challenge is much greater now with flat productivity and stagnant living standards. Then there is the unprecedented and difficult transition away from fossil fuels. The transition to renewables will guarantee higher power prices.
Another major force is the fragmentation of the country in social and cultural terms, with the rise of identity politics and the disintegration of shared values. There are also the technological revolution, and the rise of the digital age. Each individual is being empowered to be their own media centre and this is now going to be accentuated with the rise of AI. Most crucially, there is the strategic challenge with the rise of China and China’s aspiration to be the Asian regional hegemon.
These challenges represent an enormous task for governments of either party to address. But our political class doesn’t have the capability to provide worthwhile answers to these challenges, according to Kelly.
Paul Kelly’s book is a massive tome, with around 800 pages. But it is rich with information, and thought provoking for anyone with a stake in Australia’s future, and thus well worth the effort of reading. I’ve read many reviews, and writers take pleasure in quibbling with this and that point. But for my money, the heart of Kelly’s analysis is spot on.