June 3, 2016

Much in doubt for arms projects & companies after July 2, 2016 Election

This is the once in a fortnight comment on submarine and shipbuilding issues in the runup to Australia's July 2, 2016 Federal Election. 

The table below compares two-party-preferred (2PP) polling (for the House of Representatives,  Lower House of Parliament seats) by percentage for States and Territories in Australia. The Liberal/National Party (LNP) Coalition is the Current Government under Prime Minister Turnbull. The Australian Labor Party (ALP) is the main Opposition party. 

Number of Lower House Seats by State/Territory
(NSW largest with 47...)
LNP Govern
-ment 2PP at 31/5/2016 (%)
ALP 2PP (%)
% Swing Against LNP  Government since September 2013 Election
Victoria (37)
Queensland (30)
Tasmania (5)
ACT & NT (4)
Only swing in favour of LNP,  5.2
Total Australia (150)
Total swing against LNP 3.7 %

The current polling is almost exactly 50:50. That has been the situation for several months. If an Election were held tomorrow either Party could win. Even a party with a smaller vote (like 49.8%  above) could win. If crossbenchers (Greens and Independents) are again prominent it makes the situation of submarine and shipbuilding projects even more unpredictable. 


Much is in doubt for arms projects and companies in the runup to the knife-edge July 2, 2016 Election.

In Australia a Party or Coalition can form Government if it has a majority of seats in the Lower House (of Representatives). Such seats = electorates are held by Members of Parliament (MPs). The Upper House is the Senate, the house of review, which can block legislation and make government unworkable. The Senate is often "hung" ie. the Government needs Senate minor parties and independents ("crossbenchers" that hold the Balance-of-Power) to form a majority to pass legislation. Legislation includes Defence budgets which include naval shipbuilding projects.

I just need to recount some history to explain the current situation:

2010 - Following the 2010 Election both the LNP and ALP only had a minority of Lower House seats amounting to 72 seats each. The ALP managed to attract the support of the necessary 4 Lower House crossbench MPs (1 Green, 3 Independents) to form a Government.

But the price was that the ALP Minority Government appeared weak and indecisive because it had to compromise with its crossbench MPs. The rivalry between ALP leaders Julia Gillard and Kevin Rudd only served to weaken the ALP Government's reputation. The crossbenchers did not support such defence issues as shipbuilding - so no new shipbuilding was authorised 2010-2013

2013 - ALP weaknesses and a vigorous opposition effort by LNP leader Tony Abbott and actual co-Leader Peta Credlin led to the defeat of the ALP in the September 2013 Election. In 2013 the LNP won 90 seats versus 55 seats for the ALP (see right sidebar here). 


In all except its decisive plan for naval shipbuilding the Turnbull Government has appeared weak and indecisive. Turnbull has failed to initiate new and necessary tax revenue raising policies. This has hobbled his Government's ability to pay for key civilian programs (health, education, welfare and industrial support).

Also Turnbull has reason to watch his back because he remains unpopular with the still Abbott-Credlin influenced conservative elements in the LNP.

So readers impressed with shipbuilding under the Turnbull Government may have gained an unrealistic impression of how potent the Turnbull Government really is.

The ALP Leader Bill Shorten enjoys the united support of the ALP (in all but illegal immigrant policy).

What this means is that the Turnbull LNP Government has returned to the weak, indecisive, default position of many/most Australian Governments. This often means minority parties and independents in both Houses of Parliament get elected and hold the Balance of Power. If Turnbull or Shorten need MPs from the Greens to form Government the anti-defence Greens may slow down some submarine/shipbuilding projects in favour of civilian spending.

The Senator Nick Xenophon (NXT) Team is a new and minor party that supports shipbuilding and other centrist causes. NXT may do well in South Australia (perhaps 2 Senate spots and one MP). It is difficult to predict how NXT will do outside of South Australia.

If the ALP has the most seats it may form Government and divert substantial sub/shipbuilding work (first Offshore Patrol Vessels 2018-, then Future Frigates 2020- ) towards ALP heartland Victoria. 

Also if the ALP wins the quiet and efficient Marise Payne will no longer be Defence Minister. The way the submarine and shipbuilding projects were part decided and announced in April 2016 was unusually decisive and efficient by the usually low standards of other Ministers who have "served time" (their attitude) in the Defence portfolio.

So conditions for arms companies could change with little warning after July 2, 2016.


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