Australia’s Election: Politics on the Edge

29 September 2010 (Last Updated September 29th, 2010 18:30)

The election of Julia Gillard as Australia's PM signalled a brief respite in one of the most bitterly fought elections. The consensus, which resulted in the first minority government in 70 years, remains intact for now, but serious questions remain over its longevity. We take a look at some of the more volatile items on the agenda, beginning with defence.

Australia’s Election: Politics on the Edge

After five weeks of earnest debate following Australia's first ever hung election, reigning Prime Minister Julia Gillard was once again sworn in as leader of the country's 43rd parliament albeit with a majority of only one seat.

The swearing in of the new leader on 14 September put an end to an impasse that emerged after the incumbent Australian Labor Party led by Gillard and the Liberal / National Coalition led by Tony Abbot won 72 seats in the 150-seat House of Representatives, four short of the requirement for a majority government.

After five weeks of heated discussion and debate, Gillard eventually won the backing of support of three independents and a Green lawmaker, resulting in a 76-74 margin and the right to form a minority government.

The centre-left leader described the political atmosphere as "remarkable and demanding". Wise words made more pertinent after they were uttered shortly after Gillard re-elected party colleague Harry Jenkins as speaker, depriving her precarious ruling coalition of a vital vote as parliament resumed.

With Labor now holding a one-seat majority, the future of Australian politics is tenuous at best as almost any one voice of dissent could spell the end of Gillard's stay as Australia's leader. With the mist of speculation still hanging over Australia's political scenery, we take a look at a few key areas likely to rock an already shaky boat over the coming months.

"Military trade between Australia and the US has been boosted by the removal of export licences."

Defence

Upon Julia Gillard being sworn in as prime minister, her first act was to move Stephen Smith from foreign minister to defence minister. The Australian Army was rocked soon after by the incident leading to the death of the 21st Australian serviceman in the Afghan conflict. The incident was attributed to poor mission planning and inadequate force protection, although a full enquiry has been promised.

Smith had already visited Afghanistan, where he concluded that Australia could not expect to increase the number of active troops in the country during the transition period, but would continue to support alliance efforts.

Military trade between Australia and the US was also boosted by the removal of export licences. Previously, all trades had to be approved by congress and, although almost all were met with approval, the elimination of the licenses promises to increase trade between the two nations. Former Defence Secretary Robert Gates had complained that the rules undermined alliances in April 2010.

The forefront of discussion, however, has been the vital role Australia plays in the pacific region and what foreign policy the country should adopt. Although the past has very much seen Australia support the US, many critics within the country have suggested that it may be time to accommodate China's rise as a new Pacific triangle looms.

An opposite view would be to continue to support the alliance and offer Darwin as a possible location for the US's largest military base in the Asia-Pacific region, a move which would certainly endear the country to the US even further and allow a much greater presence for the US military.

The two opposing views come on the back of last year's defence white paper, issued to argue the case for a large-scale investment in the Australian military following the appraisal that the nation can no longer rely on the security the alliance can provide, or China to remain peaceful as it continues to threaten Tibet and Taiwan.

Health policy

Despite Australia's Labor Party managing to scrape together enough seats in the House of Representatives to form a new government, the slim margin of 76 seats to the centre-right Coalition's 74 makes it vulnerable to political dissension, including in its future healthcare policies.

First and foremost of these is Labor's plan, set in motion by former Prime Minister Kevin Rudd, to implement wide-reaching hospital reform, increasing federal investment in healthcare funding from 40% to 60% while leaving administrative power with the states.

"The forefront of discussion has been the vital role Australia plays in the pacific region."

In March 2010, the Australian reported that Nicola Roxon, who retained her position as minister for health and aging after the election, and Prime Minister Julia Gillard talked up the prospect of broad healthcare reform, suggesting that the government could hold a national referendum on the subject even if refused permission by the Senate. Given that there is strong criticism of the reform from a powerful opposition party as well as some states, it remains to be seen whether Gillard's fragile government will be willing to push this issue further in its second term.

On announcing her continuing role as the Australian Government's minister for health and aging on 11 September 2010, Roxon set out some of the key health goals that the government would be pursuing in its next period in power. "The health team will continue to oversee the delivery of vital health services to the community – and will have a strong focus on implementing existing, agreed reforms, ensuring their benefits to the whole country, as well as shaping an important second-term health agenda in aged care, mental health and dental services," she stated. So as well as building on existing progress, the government has announced three new priorities to push in the coming years.

The push for improvement to mental health services will likely be particularly welcomed by the Coalition and the Australian Greens, as both parties made strong promises in this area in the run-up to the election. With both parties pressing for mental health reform and the single Greens MP in the House of Representatives forming a key part of Gillard's minority government, investment in Australian mental health seems likely to receive a noteworthy boost.

Australian mental health services were not the only section of healthcare to feel the benefit of the election result, however. One specific hospital secured significant federal funding as a result of the Labor Party's negotiations with independent MPs to secure backing. Tasmanian independent MP Andrew Wilkie secured a promise from the party to provide an initial payment of A$100m to help redevelop the Royal Hobart Hospital in Tasmania in return for his support.

Mining tax

"Many critics have suggested that it may be time to accommodate China's rise as a new Pacific triangle looms."

In May 2010, the Australia Government was locked in negotiations with more than 80 mining companies on details of a new super profits tax. The news followed an announcement by mining giant Anglo-Swiss Xstrata, which quickly raised the stakes in a protest over Australia's plans to glean more taxes from the sector, announcing it would halt investments in two projects in the country and put the creation of 3,250 jobs at risk.

The threshold at this point was set at around 6% and although the tax was not set to come into effect until mid 2012, anger across the industry was widespread. Mining companies publicly expressed their fears that mine expansions could be put at risk and investment could be pushed overseas.

Uncertainty over the tax proposal then wiped billions of dollars off Australian mining firms' market value and added to pressure on the Australian dollar.

At the start of September, Australia's new minority government revealed plans to continue with the mining tax, but not before political wrangling over the plans revealed the fragility of the center-left Labor Party administration. As part of a deal to get legislators to throw their support behind a Labor government, Prime Minister Julia Gillard and Deputy Prime Minister Wayne Swan promised to hold a public summit of tax experts by June 30 2011 to discuss options for tax reforms recommended in 2009 in a Treasury department report. But Swan surprised onlookers by announcing that Labor's plan to impose a new 30% tax on iron ore and coal miners' profits, which are burgeoning with the voracious demand for raw materials from Chinese and Indian manufacturers, will not be submitted for review at the summit.