Australian Political Uncertainty
Team Veye | 03-Sep-2018
The former Australian Prime Minister Malcolm Turnbull resigned from Parliament on 31st Aug’18, Friday, triggering a by-election that could bring down the unpopular conservative government. It’s being speculated that the by-election in Turnbull’s Sydney electorate could be held as early as 6th Oct’18. The House of Representatives Speaker Tony Smith was stated quoting that he was considering possible election dates.
In last week developments, Scott Morrison had ousted Malcom Turnbull to become Australia’s new Prime Minister. The politics in Australia slipped into chaos due to this dramatic development and Morrison won the vote in the contest for the liberal party. Morrison, 50, who has been serving as the country’s treasurer, defeated former home affairs minister Peter Dutton by 45 votes to 40 at the closed door leadership vote. Morrison is likely to lead the conservative party, which is known as the Liberal Party, in a general election expected in the coming months.
Scott Morrison is respected by investors and analysts see his elevation to Australian prime minister as a positive outcome, with the latest bout of political instability unlikely to hurt the economy.
Morrison presided over the economy as the government sought to return the budget to surplus and simultaneously cut personal income and small-business taxes. He is expected to continue along the same economic path after climbing into the prime minister's chair.
He is more of a known quantity and is perceived as less likely to make radical shifts in policy than if Peter Dutton had been elected. Morrison is looked upon as a reasonably sensible policy maker, receives respect from the investment markets in his role as treasurer and is seen giving the Liberals a better chance of victory in the coming federal election.
One uncertainty remains whether Morrison will have to introduce policies to please the right of the party, which had pinned its hopes on the more conservative Dutton. Dutton had called for cutting immigration and removing taxes on soaring energy prices, which analysts warned could slow the economy and blow out the federal budget.
The current Australian political situation has given traders some inspiration, but the betting markets still have Labor winning the election fairly comfortably and the risk remains that we get gridlock in the Senate.
Some traders were concerned that Labor policies might wind back negative gearing and capital gains tax discounts, plus potential shifts in industrial relations and wage policies, may be a negative for some business sectors. Analysts believe that this could very well mean removal of franking credits on Dividends which will surely have a huge impact on the Australian Stock Exchange and how people invest.
But at the moment, it’s too early to forecast the implementation of all these changes just on the basis of speculation even as Australia looks forward to an early general election. Only time will tell what the outcome is and what’s in store for everyone.
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