Australia’s general election, which took place on August 21, has resulted in a hung parliament. With neither political party able to secure a parliamentary majority, Australia’s proposed introduction of a cap-and-trade carbon trading scheme could be scuppered before its scheduled launch in 2013.
Prime Minister Julia Gillard’s Labour Party failed to secure the 76 seats needed for a second term, capturing an official total of 72 seats - one more than its opposition, the coalition (consisting of the Liberal Party and the National Party) led by Tony Abbott.
However, three Parliamentary votes remain too close to call. Political commentators are predicting that both parties will finish with 73 seats. Both Gillard and Abbott have begun courting the four independent members of parliament for their support in order to form a minority government.
With the future shape of a government still to be determined, attention has already turned to a number of contentious political issues. The country’s proposed carbon cap-and-trade scheme’s prospects are seemingly linked to the outcome of the election.
Gillard has committed her government to introducing a cap-and-trade scheme in 2013, but Abbott has opposed any such move, insisting instead that a coalition government would use fiscal policy to encourage lower carbon emissions.
The fate of Australia’s policy may now lie in the hands of four independent members of parliament. Four of the kingmakers are considered more politically aligned to the coalition – though this may be misleading.
Bob Katter, MP for Kennedy, Queensland, Tony Windsor, MP for New England, and Rob Oakeshott, MP for Lynne, New South Wales, all have previous links to the National Party, but each has subsequently split with the coalition. Adam Bandt, the Green Party MP for Melbourne, is expected to support Gillard's Labour Party.
While three of the independent MPs are considered to be centre-right candidates, both Windsor and Oakeshott are supporters of mandated carbon emission reductions.
While Gillard may be able to secure the necessary support to secure a minority government, one market source in Sydney said he was unconvinced such a government would be able to push through the cap-and-trade proposal.
The uncertainty surrounding the election was expected to hit the country’s financial markets. One FX trader said he had been expecting a turbulent day of trading, though to his surprise the day was relatively stable despite early losses.
Colin Packham Sydney cpackham@fow.com