IHS Global Insight Perspective | |
Significance | Australia's new prime minister, Julia Gillard, has called a snap election for 21 August 2010, giving political parties a minimum period in which to campaign. |
Implications | Gillard's decision to call an early election indicates that the new prime minister and her ruling Labor party are hoping to cash in on the honeymoon-period boost in opinion polls. While Gillard enjoys strong inner party popularity, she needs electoral victory to legitimise her rule after the surprise ejection of Rudd three weeks ago, which is a likely factor in taking Australia into an early poll. |
Outlook | As the country's 14 million voters prepare to choose a new prime minister and a government for next three years, the key issues to dominate political discussion are the parties' mining tax, economy, immigration and asylum-seeker, and climate change policies. While opinion polls give an early lead to Labor, a tight race is expected. |
Snap Election
Australia's new prime minister, Julia Gillard, has called an early national election for 21 August 2010, only three weeks after assuming the premiership following a surprise party coup that ousted increasingly unpopular Kevin Rudd from the leadership position (see Australia: 24 June 2010: Julia Gillard Replaces Kevin Rudd As Australian PM After Surprise Coup). Gillard announced a snap poll after visiting Governor General Quentin Bryce, a direct representative of Queen Elizabeth II, to set an election date as required under the Australian constitution. “Today I seek a mandate from the Australian people to move Australia forward”, Gillard told a news conference in the Australian capital of Canberra, indicating her quest to legitimise her rule after Rudd’s ejection. The decision does not come as a huge surprise; it had been widely expected that Gillard would call an early poll in the second half of 2010 before the April 2011 constitutional deadline.
Key Issues to Dominate Poll
The federal election will see the ruling Australian Labor Party (ALP) compete against the opposition Liberal-National party coalition, headed by Tony Abbott. The two sides converge on many key policy issues, such as economy, immigration, and Australia's involvement in Afghanistan. However, there are also crucial differences in their approaches, particularly in the mining tax debate and climate change policies, which are likely to be key electoral issues. There are also crucial differences in the leadership styles of Gillard and Abbott. Welsh-born Gillard's communicative, consensus style of politics has been seen as a positive change after Rudd’s more authoritarian style. On the Liberal-National side, the climate-change-skeptic Abbott, who replaced formal leader Turnbull in December 2009 after winning a party leadership challenge by just one vote, has taken the increasingly progressive Liberal party back to its conservative roots. While Abbott is a seemingly strong leader, his highly contentious views and "anti-climate" policy could cause a backlash as the majority of Australia's voters strongly support tough climate change measures.
Parties' Platforms | ||
Policy | Labor | Liberal-National Coalition |
Mining Tax | Proposes a watered-down 30% Mineral Resource Rents Tax (MRRT) on coal and iron ore miners' profits instead of the originally proposed 40% under Rudd. Owing to the concessions made to the mining sector, the corporate tax rate reductions from 30% to 28% for non-resource firms will be reduced to 29% for those not under the new MRRT. | Vows to scrap a proposed profit tax on coal and iron ore miners and continue backing the existing system of royalty payments to state governments. |
Economy | Promises to return the budget to surplus by fiscal year 2012/13. The switch from the Resource Super-Profits Tax (RSPT) to the MRRT would cost the new government A$7.5 billion in revenues under May's commodity price forecasts, but Labor says this will not affect its budget goal and has estimated that it will recoup A$6 billion owing to new higher commodities price forecasts. | Pledges to return the budget to surplus by 2013 and commence debt payments. |
Climate Change | Promises to review a carbon-trading emission scheme in line with the government's target to reduce carbon emissions by 5% by 2020. Pledges to increase investment to record A$652 million in renewable energy and energy efficiency measures. | Proposes A$870 million emission reduction fund for incentives to reduce emissions by 5% by 2020 against placing any tax on carbon emissions. |
Immigration | Pledges tough immigration policies and a reduction of Australia's intake to slow rising population figures. Immigration would be linked to the rate at which infrastructure is built. | Would also link the immigration rate to the rate at which infrastructure is built. |
Asylum Seekers | Plans to establish a regional processing centre in East Timor under the auspices of the UN Refugee Agency (UNHCR), and possibly together with Indonesia and New Zealand. | If elected, would restart processing asylum seekers on island camps in third-party countries. |
Foreign Policy | In favour of a continuing Australian presence in Afghanistan. | In favour of a continuing Australian presence in Afghanistan. |
Outlook and Implications
Given that the election must be formally called at least 33 days prior to the polling date under Australian election law, Gillard’s announcement gives the country’s political parties a minimum campaigning period and Australia's 14 million voters only one month to decide who to back. The decision indicates that the new prime minister and her ruling Labor party hope to capitalise on their early honeymoon period. The latest poll, by respected Sydney-based market research company Newspoll and published today (19 July), has found that the Labor party’s support has climbed to 55% from 53% three weeks ago (see Australia: 28 June 2010: Australia's New PM Unveils "Stability" Cabinet to Boost Popularity Ahead of Approaching Election). Although this indicates that Rudd’s replacement with Gillard and her decision to revoke Rudd’s most controversial policies has given her an election-winning lead over Tony Abbott’s Liberal-National coalition, the election itself is expected to be a tight race. Gillard, who was only sworn in on 24 July, could face detriment from the seemingly undemocratic move, meaning that the political sphere in Australia is set to remain uncertain in the short term. However, whatever the outcome of the polls, it is clear the new government will face a number of economic and political challenges, not least in the economic sphere.