More political instability for Australia ahead

August 22nd, 2010

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Now that the election is over, Australia has a first hung parliament in 70 years. What this means that no political party has an outright majority to form a government. However, what can happen is that either the Labor or Coalition party can form a minority government by dealing with the minor parties and independents.

Regardless which party forms the government, it can be easily toppled with a vote of no-confidence in parliament. When that happens, either the people have to go back to the polls again or the other party form the next government.

If the global macroeconomic headwinds of deflation comes and puts the Australian economy under enormous stress in the months to come, we can expect more political instability as blame shifting, polarisation of views and strife increases. This is an environment that is hardly conducive for sound economic policies and doing business.

Watch this space.

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  • Pete

    Hard to say which way the independents will go. There is a reason they are independents – they don’t want to be affiliated with a particular party.

    I think there could easily be a potential for vote of no-confidence if the independents try and throw their weight around early on. Perhaps the independents would be smart to choose a side and try and ?influence? decisions, rather than outright block them, etc. Because next time around (ie, if we go back to ballot) they might have little-to-no say at all.

    On the plus side, a Govt like this could at least damper some of the crazy, reactive economic experiments that have been done in the last term. Perhaps no more giving out $900 spending money to Harvey Norman shoppers. No more increases to the FHOG. Etc etc.

    But I wouldn’t trust pollies to do anything that is right…only what is popular. Perhaps we would see the opposition (whoever that ends up being) crossing the floor on some issues. It could happen.

  • Castor

    When TSHTF, there may be a situation of Rome burning while the politicians argues what should be done.

  • Pete

    Good point.

    Although, (time for an analogy) is it better to let Rome burn (recession) or to use all of the cities water supply to put it out (stimulus)? The end result either being a purging and cleansing (fire), or further problems down the track (population die of thirst).

    It’s a pretty bad analogy 😉
    My point being that doing nothing might be the best thing a Government can do sometimes.

  • Ademac

    With the Watermellons (green on the outside red in the middle) in control of the senate, even if we do get a minority govenment, it won’t work.

    The best we can hope for is that TSHTF soon and we can start cleaning up the mess afterwards, with a vastly differant political landscape.

  • Luke

    Oh please, Watermellons (sic)? Is it AdemacCarthy by chance?

    Besides, we all know 2 facts: a) we haven’t had sound LONG-TERM economic policies by either party for years and b) all parties subscribe to the same keynesian economics. I can guarantee if the Liberals were in power their keynesian advisers would have suggested an economic stimulus plan to follow the rest of the world.

  • Arthurrobey

    The Limits to Growth, Business as Usual scenario yields the best outcomes. The decrease in population curve is the most gentle.
    We can get a steady state economy if we take drastic measures by 1982.
    The BAU shows a steep decline in per capita industrial output starting around about now, as we have to move capital from industry into agriculture to avoid famine.

    Doubling the resource base makes pollution go asymptotic and population rises to a higher peak and then crash dramatically.

    I tried taxing carbon as it saw the light of day in the model, but because the sign is the same as the capital input to population growth,(-) this leads to instability.

    So, long live BAU.

  • Pete

    Incidentally, Media Watch did a good program tonight about the media’s role in the election. They’ve become pathetic, reporting on fluff and pointless things, whilst avoiding the real issues. The media are to blame as much as the politicians.


    You can download the video here: