IHS Insight : Australia’s Prime Minister paves the way for Parliament’s double dissolution and early elections by 2 July
by Amarjit Singh, senior analyst, IHS Country Risk
- Australia’s parliament has been recalled for 18 Aprilto vote on labour-union reform legislation for the second time. If Parliament once again fails to pass the legislation, Prime Minister Malcolm Turnbull will be able dissolve both houses of the legislature and bring a general election – otherwise due by the end of 2016 – forward to 2 July at the latest.
- A double dissolution of Parliament is unusual; normally, only half the upper-house seats are contested. However, Turnbull had given indications over the double-dissolution option since the government faced opposition to its legislative agenda in the Senate, where micro parties (fringe, single-issue parties) hold the balance.
- On 18 March, the government succeeded in passing voting-reform legislation that increases the difficulty for micro-party candidates to secure election – which renders the double-dissolution strategy more viable as a means for removing the Senate’s micro-party obstacle.
- Already some micro-party senators have said they will not vote for the proposed labour-reform legislation on 18 April, substantially increasing the likelihood of early polls by July 2016.
Although Turnbull’s popularity has declined since he took over as prime minister in September 2015, the governing Liberal-National coalition still leads the opposition Labor Party in the polls, with Turnbull remaining ahead of Labor leader Bill Shorten – indicating a likely government re-election.
For investors, the coalition’s re-election will mean policy continuity, which will generally remain pro-business and pro-foreign investment; although foreign direct investment (FDI) in key sectors, such as natural resources and critical infrastructure, will be carefully scrutinised to ensure Australia’s national interests are not compromised.
In a notable instance, following a controversial port lease to a Chinese company, the government mandated that from 1 April 2016 such deals holding a value of over US$190 million must be approved by Australia’s Foreign Investment Review Board.
Nonetheless, the Turnbull government supports tax cuts for business, and could reduce the 30% corporate income tax as early as the 3 May budget. Turnbull also favours policies to address climate change, announcing on 23 March the creation of a US$762-million Clean Energy Innovation Fund for renewable energy projects.