Sydney: Australia was facing a prolonged period of political and economic instability on Monday, July 4, as key independents who could determine the outcome of a cliffhanger national election ruled out doing a deal with either of the major parties.
The exceptionally close vote leaves conservative Prime Minister Malcolm Turnbull chasing support from independent and minor parties to retain power, the very groups he called a risky double dissolution election to circumvent.
The centre-left opposition Labor Party was also courting a quartet of new potential independent power brokers, and rumbling grew about Turnbull’s future as leader of the centre-right coalition.
Saturday’s election was meant to draw a line under a period of political turmoil that had seen four prime ministers in three years. Instead, it left a power vacuum in Canberra and fuelled talk of a challenge to Turnbull’s leadership of the Liberal Party, which leads the coalition, less than a year after he ousted then prime minister Tony Abbott in a party-room coup.
The Australian dollar and shares dipped in early trade on July 3, after no clear winner emerged, pointing to policy paralysis ahead and perhaps threatening the country’s triple-A credit rating.
However, both ticked up after Moody’s Investors Service said short-lived political uncertainty would have limited implications for Australia‘s coveted triple-A credit rating. Fitch echoed that sentiment, but warned of the dangers of prolonged political gridlock.
Moody’s warned that the rating would be threatened if a push to repair the budget deficit is undermined.
“Looking ahead, trends in Australia‘s credit profile will be determined by whether fiscal objectives are effectively implemented, whether external financing conditions remain favourable and how housing market developments affect domestic growth and financial conditions,” Marie Diron, Senior Vice President at Moody’s, said in a statement.
Turnbull said on Sunday, he remained “quietly confident” of returning his coalition to power for another three-year term. In the meantime, he is governing in caretaker mode until a winner is declared. That could still take several days, electoral officials have said.
However, Andrew Wilkie, one of the four independents, said the vote showed Turnbull has no mandate to impose his election agenda, which included cuts to healthcare and a $50 billion corporate tax break over 10 years.
“Neither the Labor Party or the Liberal Party have a God-given right to rule,” Wilkie told ABC radio. He said he was adamant he would “do no deals”.
A second independent, Cathy McGowan, also said she did not intend to decide which side to support until the votes were counted and parliament resumed.
“There is enormous disappointment with the way the government has been working,” McGowan said.
Vote counting for the upper house Senate resumed on July 4 but counting for the lower House of Representatives does not restart until July 5.
The delayed counting is a result of new security measures imposed by the Australian Electoral Commission.
The Labor Party had won 67 seats to the coalition’s 65 before counting was paused on the weekend, with the Greens picking up one seat and independents claiming four. The major parties need 76 seats to form a majority government in the House of Representatives.
With the result of 13 seats still in doubt, political pundits were predicting one of two main scenarios: the coalition scrapes across the line by picking up nine or more of the undecided seats, or it fails to reach 76 and has a hung parliament where neither side holds power.
Small parties are also likely to do well in the Senate, with Pauline Hanson’s One Nation on track to win between two and four seats, marking the return of the right-wing anti-immigration activist to parliament after an almost 20-year absence.