IHS Global Insight Perspective | |
Significance | The result reflects a general dissatisfaction with the mainstream Australian parties that is all the more marked considering that the system has traditionally provided for very stable government. Either Labor or the Coalition will form a government with the support of three or four independent and Green MPs, and will be forced to adapt their policies and rhetoric accordingly. Whatever the outcome, this election marks a significant development in Australian politics. |
Implications | The policy implications are likely to emerge over the next week as negotiations run their course. Australia's broadband network, environmental legislation and the controversial mining tax are all issues of concern to the four MPs whose allegiance will determine the composition of the next government and this could presage significant developments in those areas. |
Outlook | Continued uncertainty bodes poorly for the country's currency and investor confidence. There is the possibility of a further election in the medium term, if talks fail or if the new government proves unstable. |
Hung Up on the Issues
After what proved one of the most memorable campaigns in living memory it would almost have been anticlimactic if the Australian federal election on Saturday (21 August) had not provided an equally interesting result. In this regard the polls haven't disappointed: Australia faces its first hung federal parliament in 70 years, the Labor party has suffered a shocking rebuff for an incumbent party and the opposition have failed to achieve a clear victory. As the government and the opposition struggle to reach the 76 seats necessary to form a government, the main winners look set to be the Green party, three independent members of parliament and the country's constitutional scholars.
The first thing to note about the results is that they are still uncertain, with estimated and reported outcomes having fluctuated wildly in the days since the polls. According to the Australian Electoral Commission (AEC), as of today the Labor party had 72 seats, the Coalition 70, the Greens one and independents two. Five seats remained doubtful. This was on just over 75% of the vote counted. Taken together, the vote saw a 2.04% swing against Labor, but it nonetheless won 50.66% of the two-party preferred vote. What is more, the result is genuinely uncertain in a number of seats. For instance, a counting error in the seat of Dunkley, initially thought to have been won by the Liberals, means that declaration of a result will now have to wait for postal and absentee votes to be counted. The AEC has indicated that up to one million postal votes could be received up to 13 days after the election. In 2007 the AEC counted 700,000 postal votes.
Outlook and Implications
So far, the uncertainty has in general favoured Labor, with the expected seat distribution shifting from a slight Liberal lead to an equal split of 73 seats each by today. It will probably be at least a week before the final results are in, meaning that until then incumbent Labor prime minister Julia Gillard and conservative opposition leader Tony Abbott will be negotiating without a clear idea of how many seats they will need to secure the majority. In the meantime, however, it looks as if both Labor and the Coalition will be competing for the support of the three independents and the one Green MP.
Given that Green MP Adam Bandt is virtually certain to side with Labor, the question now facing Gillard and Abbott is how to secure the support of the three independent MPs: Rob Oakeshott, Tony Windsor and Bob Katter. All three started their political careers in the National party, but it should not be assumed they will support their former colleagues against Labor. Broadband looks to be a key issue in negotiations, with all three having highlighted this as a priority. Reflecting his arguably weaker position on this issue during the campaign (see Australia: 20 August 2010: Election 2010: Australian Rivals Head to the Polls Neck and Neck), Abbott has already indicated he could be willing to compromise on the subject. Environmental issues will also play a part, as Oakeshott supported the emissions trading scheme.
The possibility remains of a new election being called within months. Hung parliaments are relatively common at the state and territory level and stable governments have been established under such conditions in Tasmania earlier this year and in the state of Western Australia in 2008. However, the last time there was a federal hung parliament was in 1940 and the coalition government formed in the aftermath of the election collapsed after a year. In particular, a Coalition government with a narrow—perhaps only one-seat—majority, would be particularly unstable given low popular support for Abbott as prime minister.
Equally, however, there are questions being raised about Gillard's leadership. The strong reaction to her predecessor Kevin Rudd's removal (see Australia: 24 June 2010: Julia Gillard Replaces Kevin Rudd As Australian PM After Surprise Coup) undoubtedly played a part in Labor's poor result, despite their public reconciliation in early August. Indeed as with much in Australian politics at present, the leadership of both major parties is uncertain in the weeks and months ahead.