CMAX Advisory closely follows political developments internationally and analyses implications for businesses operating in Australia.
We develop a weekly report of the most important political news in Australia, utilising our understanding of complex political issues and processes to inform companies of relevant developments and forecast likely outcomes.
This week's top story
23 April 2019
Parties narrow focus on specific seats
Media coverage of the election campaign is converging on a collection of prominent marginal electorates. The current minority government situation means both major parties have moved onto the attack, a disposition which will be particularly taxing for the Government.
Seats belonging to prominent conservatives in the Government or with controversial preselection contests have attracted particular attention. Minister for Home Affairs Peter Dutton —who led the August 2018 leadership challenges against former Prime Minister Malcolm Turnbull — is facing a difficult race in his highly marginal Queensland seat of Dickson. Meanwhile, former Prime Minister Tony Abbott is being challenged by multiple high-profile independents. Prime Minister Scott Morrison’s decision to defy the local branch’s preselection vote in the New South Wales seat of Gilmore has fragmented the conservative vote in the already marginal Liberal-held seat. Meanwhile, the controversy surrounding the departure of Labor Member for Lindsay Emma Husar has raised the Government’s hopes of winning the western Sydney electorate.
With both major parties short of a majority, the Government and the Opposition are both seeking to gain seats at the next election. This is particularly difficult for the Government, which will need to defy the polling trend and hold all its existing seats while winning seats from the Opposition. This will impose a significant burden on the Liberal Party’s campaigning resources, which are already depleted after two demanding state elections. With the Opposition and independents emboldened by the Government’s internal discord, those resources will be required to shore up seats which previously seemed unassailable. This is comparable to the 2013 federal election, where the minority Labor Government attempted to reach a majority and experienced a landslide defeat.
Unemployment rises slightly
The Australian Bureau of Statistics has released the labour force statistics for March 2019, which show the seasonally adjusted unemployment rate increasing by one point to five per cent. The trend unemployment rate remained at five per cent, while the trend underemployment rate was also unmoved at 8.2 per cent. The increase in unemployment occurred despite an 18,000 person rise in full-time employment. With the election campaign focussed on fiscal issues, this development will probably enter political debate, but is unlikely to change the course of the campaign. However, this could hold some significance for interest rates, as last week the Reserve Bank of Australia signalled a potential rate cut if unemployment increased.
Government faces scrutiny over water deal
Former Deputy Prime Minister Barnaby Joyce has received criticism for approving an A$80 million water buyback from Eastern Australia Agriculture (EAA) without scrutinising the details of the agreement. The main area of contention is EAA’s parent company Eastern Australia Irrigation, which is based in the Cayman Islands and has historical links to Minister for Energy Angus Taylor. The Government has defended the decision, saying the Labor Party bought water from the same company while in government. However, the Opposition states it made the purchase through an open tender, as opposed to the Government’s private negotiations. The Opposition’s framing here aligns with its criticism of the Government’s decision to award security firm Paladin a contract through a limited tender, despite questions around the company’s record and capacity. While neither major party has not committed to a formal inquiry into water management, the party which forms government after the election will be under considerable pressure from the crossbench to initiate a Royal Commission into the issue.
China signals WTO action over Huawei ban
China has raised objections at the World Trade Organisation (WTO) about Australia’s decision to exclude Huawei from the construction of its 5G network. China is yet to lodge a formal complaint, but a Chinese diplomat raised the issue at the WTO’s Council on Trade in Goods, describing the ban as discriminatory. A challenge would likely be unsuccessful as the WTO allows exceptions to its rules where national security is concerned.
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