New government to offer stable economy
Monday, September 20, 2010, 3:59 pm
More than a week after the Gillard Government was reinstated to power, the question remains whether it can offer Australia a stable government and a stable economy.
While the opposition fears for Australia, experts are not concerned.
James Cook University Associate Professor Doug Hunt said the arrangements this month between Labor, the Greens and the Independents should provide a stable government for the economy.
“If the Labor party manages to retain a disciplined party room, and if they nevertheless aren’t timid in government, if they still pursue policy, I can’t see why they can’t be stable.”
He said although a minority federal government is relatively new in Australia, it has worked successfully in other countries and should not be an excuse to stop international investment in the country.
“Some people will develop this argument about political instability, uncertainty, risk to investment; I don’t think that’s a very credible argument.”
Australia has had only one other hung federal parliament since the two-party system was established in 1910.
In 1940, the incumbent Prime Minister, Robert Menzies, secured the support of two independent MPs and resumed government.
But during the parliamentary term, the independents changed their alliances to the opposition, creating a Labor government and bringing John Curtin to power.
Earlier this year, the United Kingdom had a hung a parliament which resulted in a conservative minority government being formed by a coalition between the Conservatives and the Liberal Democrats.
Although there were fears the UK would end up at the polls by the end of the year, this now seems unlikely.
Australian Industry Group Chief Executive Heather Ridout said a stable government is important to business, and needs to be able to make tough decisions in contested areas that are fundamental to longer-term prosperity.
“The strength of our economy, our fiscal position, our location close to the new centre of global economic growth and our human and physical resources base gives Australia a lot of opportunities and choices.
“To realise these, we need to restore our flagging productivity growth, make further gains in workforce participation, build our business capabilities and equip ourselves to manage the structural pressures that are associated with the minerals boom.”
University of South Australia Emeritus Professor Kevin O’Brien said he feels there will be a very limited impact on international trade and investment by the Australian minority government.
“There will obviously be a little bit of uncertainty in the resources area until the question of the taxes is sorted out, but I think basically, the demand for our exports will continue regardless of the government.”
He said there is uncertainty about the broad policy direction, especially with a large impact from the Greens.
“They will be pressing the carbon tax area and putting the price on carbon.
“Those sorts of issues have the potential to raise costs for Australian industry, and that will have in the longer term an impact on Australia’s competitiveness and return on investment.”
Professor O’Brien is confident Australia will have economic growth.
“I think that Australia is on the surge of a commodity boom that’s going to continue for at least the next few years.”