IHS Global Insight Perspective | |
Significance | Australia is facing its first hung federal parliament in 70 years, following the failure of new prime minister Julia Gillard to win an outright majority for the incumbent Labor Party in the 21 August election. Since the inconclusive result, a powerful bloc of independents has emerged as kingmakers and have set about issuing demands to the major parties. |
Implications | The election and the negotiations that have taken place since are unprecedented for this generation of Australian politicians. Three relatively unknown politicians have been rocketed to centre stage and the major parties' attempts to court them have already shifted the political agenda in the country. The stability of the de facto two-party system has also been shaken. |
Outlook | In the short term, negotiations could lead to shifts in policy on key issues like environmental and mining legislation. The stability of any government created in these circumstances is also uncertain, and further elections cannot be ruled out within the next 18 months. In the longer term it is possible that this unusual election marks a shift in the country's party system. |
After a race that went down to the wire, Australia's photo finish election is proving hard to read. With the favourites unable to make headway over each other—neither the incumbent Labor Party nor the opposition Coalition won the 76 seats required for an overall majority within the 150-seat House of Representatives—the question of the victor has come down to an unprecedented horse-trading session over the allegiance of a handful of independents.
Photo Finish
The results of the election were particularly close and while it soon became apparent that neither of the main parties had won the 76 seats necessary for a majority in the 150-seat House of Representatives, a number of seats remained in contention days after the election (see Australia: 23 August 2010: Election 2010: Australia Analyses Poll Outcome amid Uncertainty). However, by 26 August the results had effectively been finalised, with the Australian Broadcasting Commission putting Labor on 72 seats and the Liberal/National Coalition on 73, with four independents and one Green member of parliament (MP).
Three of the independents—Rob Oakeshott, Bob Katter and Tony Windsor—were quickly declared the winners in their seats and formed a bloc to negotiate with the two main parties. The fourth independent, Andrew Wilkie, whose victory took longer to confirm, has been careful to distance himself from this grouping. In contrast, the Green MP Adam Bandt shared a platform with Oakeshott, Katter and Windsor at the National Press Club in Canberra, leading Oakeshott to declare that "a new gang of four is in town". This is likely to prove an exaggeration of the "gang's" strength—Bandt has effectively given his support to Labor already—but even diminished, the "Gang of Three" remain Australia's kingmakers.
From Sure Thing to Even Money
The current situation is even more remarkable considering that at the beginning of 2010 Labor were the firm favourites to win the next election. By April, however, their decline had begun, when then prime minister Kevin Rudd was forced into a humiliating about-turn on a flagship emissions trading scheme (ETS), the centrepiece of his environmental policy. Rudd's decision not to force an early election on this issue was regarded as cowardice by many in the environmental lobby and this played no small part in the swing from Labor to Greens that helped elect Bandt.
Rudd then attempted to bring in a new 40% Resource Super Profits Tax (RSPT), to be levied on all mining activity within Australia, provoking an intense adverse reaction from the country's leading mining companies. Factions within the Labor Party who sought Rudd's removal, emboldened by the controversy, consequently effected a leadership transition (see Australia: 24 June 2010: Julia Gillard Replaces Kevin Rudd as Australian PM After Surprise Coup).
However, rather than solving the party's problems, Rudd's ouster provoked resentment among his supporters and encouraged the perception that Labor was internally divided. A series of damaging high-level leaks in July were widely attributed to Rudd or his disgruntled supporters and the Labor party was seen as performing poorly in Rudd's home state of Queensland, a key electoral battleground. A public reconciliation between Rudd and Gillard on 5 August did much to improve Labor's chances (see Australia: 5 August 2010: Australian PM Receives Boost from Ousted Predecessor as Polls Suggest Opposition Victory Likely) but even after the election, recriminations continued within Labor party circles over Rudd's ouster.
What also surprised the country was the disciplined and effective campaign run by opposition leader Tony Abbott. Once memorably labelled the "Mad Monk" (he had trained to be a priest in his youth), and having previously described climate change as "crap", Abbott had been considered as too extreme in his right-wing views for the majority of Australians. However, a campaign which attacked Labor in-fighting and called for "grown-up government" in Canberra struck a chord with many voters and by the time of the election, the race was almost too close to call (see Australia: 20 August 2010: Election 2010: Australian Rivals Head to the Polls Neck and Neck).
Horse-Trading with Cattlemen
The stage is now set for days of political horse-trading, as the gang of three seek to gain concessions from the two main parties on the part of their rural constituents. Katter put it in his characteristically blunt manner when he said: "I've bought and sold cattle for a large portion of my life, and I'd like to think I could drive a deal".
Although the three are former National MPs and even though their constituents would naturally tend towards the Conservatives, this does not mean that they will necessarily back the Coalition. Indeed, there remains a great deal of personal antipathy between the three men and National Party Senate leader Barnaby Joyce, whom Windsor has previously described as a "fool".
Instead, the three independents have made it clear that they will put the interests of their electorates first in terms of making a decision, with health, education and constituent access to broadband internet key priorities. Moreover, in a seven-point letter released yesterday the group also highlighted the issues of government stability, reform of the manner in which parliament conducts business, and openness regarding the two main parties' economic plans.
This latter issue has divided Labor and the Liberals, with Gillard stating that she would let the independents check her government's sums. In contrast Abbott has stated that the civil service have trouble understanding opposition economic policy and has offered instead to have an accounting firm associated with the Liberals audit their policies; an offer which Katter said made it look like Abbott has "something to hide".
The three also appear close to Labor on the issue of broadband access, a key issue for Australians living in the country's vast outback. The Labor government is currently rolling out a US$42-million national broadband network, and Abbott's opposition to the scheme and proposal of a cheaper alternative proved unpopular during the campaign. Tellingly, he has moderated his position somewhat since then.
Another key area for negotiation will be the environment. The elections saw Bandt—the Green Party's second ever and only current MP—take a formerly safe Labor seat in Melbourne on a 10.5% swing against the incumbents. The Greens also posted their strongest ever performance in the Senate election, up from five seats to nine. With the Greens potentially holding the balance of power, particularly in the Senate, there may well be moves towards re-introducing the ETS and strengthening the mining tax, which was watered down by Gillard (to a 30% rate, to be levied solely on the iron ore and coal industries) following Rudd's ousting.
Outlook and Implications
Although the Greens have said they will speak to both main parties, it is hard to see the party backing the Liberals in any kind of formal deal and Bandt in particular appears to have made his choice in favour of Labor. This would leave Abbott with the option of trying to govern either as a minority Liberal/National administration, or with a slender majority in the House of Representatives. Under such an arrangement, it is likely that any controversial legislation would be stymied by a hostile Senate. In contrast, if Labor could rely on Green Party support in the Senate, the two parties would hold a majority of 40 seats in the 76-seat legislature when the newly-elected body next sits in July 2011. This would make it easier for any future Labor-led government legislation to gain Senate approval.
Given the Greens' hold on the Senate and the personal animosity between the independent MPs and members of the National Party, it is arguable that a Labor-led administration would be more stable than a Coalition-led government and this remains the most likely scenario. That said, the next few days and weeks will be uncharted waters for this generation of Australian politicians and the possibility remains of further elections in the medium term. The last time there was a hung parliament at the federal level, in 1940, the government collapsed after a year. In the meantime all bets are off—almost literally, as Oakeshott has called for a freeze on betting on the federal election—as Australia struggles to come to terms with an unfamiliar political situation and one that it is possible might become a long-term fixture.