4 July 2016

Australian election update. A country divided

Written by: Nic Jarvis, Head of Public Affairs at Edelman

Government Affairs, News, Trust

On Saturday July 2, Australians voted after the longest election campaign (eight weeks) in memory. Prime Minister Malcolm Turnbull’s double-dissolution strategy of a mid-winter election for the Senate and House of Representatives was to get support to outlaw a rogue building trade union and to gain control of a Senate controlled by independents, some elected by less than 2% of the voting public at the 2013 election and who had blocked government legislation, including budget measures.

At the start of the campaign, most opinion polls said the result would be tight but conventional wisdom was Turnbull’s Coalition would be re-elected with a reduced majority. The result was the opposite. With a swing of 3.5% against it, the Coalition lost seats all over the country and Australia is now looking at a minority government that requires negotiation with minor parties and single issue MP’s and Senators to get a second term. Either the Coalition or the ALP could now form government and with final voting figures at 50% for each party, Australia is a very divided country.

Turnbull’s dream of his Coalition beating Labor comprehensively is in tatters and his credibility as leader of the Liberal Party is now in question. Turnbull may still form government (as he keeps claiming he will in press interviews) but the final result is far from clear. A large number of pre-poll votes remain to be counted (around 4 million, versus 11 million actually cast on election day) and the reversal of fortune for the Coalition and gain in seats by Labor means any future administration will be formed on a wafer-thin majority, beholden to sectional interests to remain in power.

Where did it all go so wrong for Turnbull, who won the Prime Minister’s job convincingly in September 2015 and whose personal and Party polls reached almost stratospheric levels but have declined so much in recent months?

The Coalition ran a positive campaign, arguing it is best placed to run a country under significant challenges from the end of the resources boom, lower commodity prices and a changing economic structure. Every time Turnbull or one his ministers opened their mouths during the campaign, it was all about “jobs and growth”. The Coalition seemed to believe the more they said it, the more people would believe them. The electorate clearly didn’t!

The Labor Party, under a revitalised Opposition Leader Bill Shorten, out-campaigned the Coalition. They introduced and outlined more than 100 policies and articulated a vision for the country. They also seeded a highly-negative campaign suggesting the Coalition would dismantle the public health system Medicare, a sacred cow to Australians, scaring a large number of nervous voters. They attacked the Government’s proposed changes to the superannuation industry and company tax cuts which would have seen the corporate tax rate cut to 25% from its present rate of 30%.

From Tuesday 5 July, vote counting will resume across the country by the Australian Electoral Commission to determine who will form government. A final result may be weeks off. While the ALP’s primary vote was its second worst ever, the feeling on Saturday night was that Labor had won and the Coalition has been routed.

The current tally of seats in the 150 seat House of Representatives is 65 Coalition, 64 ALP and 5 independent (including 1 Greens) with 16 still too close to call. The new Senate will have even more independents than the old one.

Whatever the outcome, Australia has re-entered a period of political instability. Some speculate that even if Turnbull forms a government, he may not stay in politics. It is his gamble that saw his party suffer the most. And it may not end up being his decision anyway, as his own party room may turn against him. One scenario is Australia will face another election as soon as late 2016. Not a time of certainty for an economy going through challenging times. And not an environment of certainty for businesses investing in the country, who will need to navigate the new order.

Nic Jarvis – Head of Public Affairs, Edelman Australia

nic.jarvis@edelman.com

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