Australia

Gillard Flailing

Prime Minister Julia Gillard’s minority ALP government is continuing to hang on to power with the backing of members of the Australia Greens and three independent lawmakers. However, the fragility of the government’s parliamentary majority has forced Gillard to cede a substantial amount of influence over policy to her non-ALP partners, at the risk of further eroding her already sagging popular support, which has left her vulnerable to a challenge from her predecessor as party leader, Foreign Minister Kevin Rudd.

The government recently managed to secure approval of a controversial carbon-tax scheme that Gillard only pursued under pressure from the Greens, but passage of a bill that would impose a 40% windfall profits tax on mining companies has been blocked by one of the government’s independent backers. Gillard is counting on revenue from the mining tax to fund tax breaks for businesses, increase pension benefits, and finance improvements to regional infrastructure, all of which she hopes will boost her approval rating.
The next election does not fall due until 2013, and the virtual certainty of a landslide victory for the Liberal-National opposition coalition in the event of a snap poll will probably ensure the survival of the government for the time being. However, policy implementation will remain erratic, and the opposition’s pledge to abolish the carbon-tax plan if returned to power can only heighten the level of uncertainty, with negative consequences for investor confidence.

Forecast Summary

SUMMARY OF 18-MONTH FORECAST

SUMMARY OF FIVE-YEAR FORECAST

For more information, check out the Australia Full Report!