Turnbull confident of forming government despite election limbo

by NZ Adviser04 Jul 2016
(Bloomberg) -- Australia’s Prime Minister Malcolm Turnbull said he was confident of forming a majority government by the end of the week, even as Saturday’s election failed to deliver a conclusive winner.

“Australians seek greater certainty, greater clarity, stability in their government,” Turnbull told reporters on Sunday in Sydney. As many as 12 seats are undecided, with postal votes to be counted from Tuesday expected to favor his Liberal-National coalition, he said. “We will have a resolution by the end of the week, no doubt about that.”

Turnbull’s coalition was ahead in 66 of the districts that make up the 150-seat lower house and Bill Shorten’s Labor led in 72, according to the Australian Electoral Commission.

The Australian Broadcasting Corp. put the coalition just behind with 65 seats to Labor’s 67. It predicted five would go to independents or smaller parties, with 13 seats in doubt. At least 76 districts are needed for a majority government.

The tight result is a blow to Turnbull, who was seeking a mandate from voters nine months after seizing the leadership from unpopular predecessor Tony Abbott. Instead, both major parties suffered from a lesser version of the backlash against mainstream politics that has swept through Western Europe and the U.S.

Some commentators predicted the 61-year-old former banker may be be unable to form government without the help of independent lawmakers -- a result that could jeopardize his political future and prolong uncertainty in a nation that has churned through six prime ministers in eight years.

“This is a bad election result for the government and Turnbull’s leadership is now tarnished,” said Zareh Ghazarian, an author and lecturer at Monash University’s School of Social Sciences. “This has undermined the prime minister’s credibility and he’s in a much weaker position.”

For an explainer on the major issues during the campaign, click here.

Shorten, 49, said Turnbull had failed to deliver the stability he had pledged the Australian public and had lost his mandate to govern.

Saturday’s election reflects to a lesser extent the unhappiness with mainstream political parties that has sent a populist shiver through Western Europe and the U.S. The primary vote for the coalition and Labor fell to its lowest level since 1943.

“We are seeing Australia join the international trend toward populist politics,” Resources Minister Josh Frydenberg told the ABC Sunday.

That shift resulted in a stronger showing by a new party formed by South Australian Senator Nick Xenophon, and the probable reemergence of anti-Muslim immigration campaigner Pauline Hanson in the upper house. That will make it difficult for the next government to enact policy reforms, including reining in a fiscal deficit, without potentially lengthy negotiations and compromises.

“People feel neglected,” said Xenophon, who supports greater protection for Australian industry. “People are sick of this toxic politics where the major parties throw mud at each other, where they don’t sit down and solve the nation’s problems.”

‘Isn’t Normal’

Turnbull’s address to the Liberal headquarters at a Sydney hotel came only in the wee hours of Sunday. Meredith Pogson, 29, was among the party faithful watching the results on television monitors as the festive mood soured.

“The fact that we were waiting so long, we figured something’s not right, this isn’t normal,” Pogson said, of the lag in Turnbull’s appearance. Asked what went wrong in the campaign she replied: “Not understanding his people.”

Markets typically don’t respond to Australian elections, as there are limited differences between the major parties on fiscal issues and the central tenets of economic policy. However, uncertainty around the result may exacerbate volatility stemming from global events including Britain’s vote to leave the European Union.

Australia, the world’s most China-dependent developed economy, is seeking new drivers of growth after prices for its iron ore and coal exports plunged, cutting government revenue. While annual growth has accelerated toward its 30-year average of 3.2 percent and unemployment has fallen to 5.7 percent, Australians don’t feel richer, with wage growth at a rate last seen a quarter century ago and core inflation slowing to the weakest pace on record. Income inequality is above the OECD average and widening. 

Turnbull’s pitch to voters included cutting taxes for small businesses and cracking down on union corruption. Yet business leaders have accused the government of dithering on economic reform. Some voters were also frustrated that he didn’t steer a more socially progressive path, including allowing same-sex marriage.

Shorten promised increased funding for health and education, along with stripping tax perks for landlords that have pushed house prices out of reach for some city-dwelling Australians.

“Three years after the Liberals came to power in a landslide, they have lost their mandate,” Shorten said in a speech to jubilant supporters late Saturday. “Mr. Turnbull’s economic program, such as it was, has been rejected by the people of Australia.”

Once it’s clear who will form government, attention will turn to the Senate. Since 2013 a group of independents and micro-parties have held the balance of power, blocking A$13 billion ($9.7 billion) of budget savings and complicating government efforts to rein in a deficit forecast to reach A$37.1 billion next year.

Despite Turnbull amending voting laws the Senate may remain eclectic, with populist firebrands including former soldier Jacqui Lambie, and controversial broadcaster Derryn Hinch tipped to win upper-house seats. Xenophon’s party is forecast to pick up as many as four spots.

“Even if Turnbull’s government is returned, it may find his legislative agenda is again frustrated in the upper house,” said Australian National University political analyst Andrew Hughes.

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