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Australia – Failed Gamble Heightens Risks

Elections were held on July 2 to fill all 150 seats in the House of Representatives and all 76 seats in the Senate. Prime Minister Malcolm Turnbull called a “double-dissolution” election in hopes of strengthening his government’s position in the upper house, where the lack of a majority has posed a persistent impediment to passing legislation. The plan backfired badly, as the governing coalition—made up of Turnbull’s LP and the rural-based NP, along with the smaller CLP and the LNP—suffered a net loss of three seats in the Senate, leaving it nine short of a majority, while its 15-seat majority in the lower house was reduced to just one seat.
Turnbull will have no shortage of potential partners to woo. However, attempting to cobble together a majority coalition that includes independents and members of small parties will be a very time-consuming endeavor that requires somehow reconciling incompatible demands. The alternative of seeking a compromise with the Greens, who control nine seats in the Senate, would imply the shelving of some items on the legislative agenda and the watering-down of others, a strategy that is all but guaranteed to sow discontent within the governing coalition.
Turnbull’s position is made all the more difficult by the lingering bitterness of his predecessor, Tony Abbott, who has an ax to grind with the prime minister after being ousted from leadership of the LP in a party coup back in September 2015. Abbott’s sniping over Turnbull’s horse-trading with a crossbench senator provoked a response from the prime minister that amounted to calling Abbott a liar from the House floor. Given the narrowness of the government’s majority and the fact that Abbott is not without allies in the LP, Turnbull can ill-afford to further alienate a figure who would no doubt take some pleasure from seeing him fail.
The current parliamentary term does not officially expire until 2019, but with many contentious issues coming down the line, it is likely that voters will return to the polls well before the deadline, possibly as early as 2017. Judging from the results of recent state election in Northern Territory, where the main opposition ALP defeated the incumbent minority CLP administration in a landslide, the ALP would probably stand a very good chance of winning an election held within the next 18 months.
It appears the ALP may get some help in that regard from an unexpected source. Brendon Grylls, the NP’s leader in Western Australia, has proposed a massive increase in the state tax on mining operations.
Beyond any negative economic impact that might result from an increase in the tax bill for mine operations, Grylls’ proposal has lent validity to the ALP’s claims that mining firms are not paying their fair share of taxes. ALP member Wayne Swann, a former federal treasurer, alleges that BHP Billiton avoided paying taxes for more than 10 years, a claim that will undoubtedly stoke the resentment of sections of the electorate that believe they are overtaxed and that the mining companies are getting a free ride, and all but ensures that a tax increase for mine operators will feature prominently in Labor’s campaign platform at the next election.
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