1. Political risk in Australia!
Five risks to watch in 2014!
December 2013!
www.politicalmonitor.com.au!
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This presentation provides a brief overview of the top 5 political risks for
Australia in 2014. It presents summary views and should be taken as such.!
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More information is available @ www.politicalmonitor.com.au !
Top 5 political risks for Australia!
December 2013!
3. 1. !SENATE OBSTRUCTIONISM!
The Abbott Government will encounter multiple obstacles to the passage of its
legislative agenda with Labor and the Greens holding a Senate majority until
June 30, 2014 and minor parties and Independents in charge after that.!
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In the short term the Labor – Greens alliance is set to block attempts to repeal
the carbon and mining taxes while longer term the Government will have to
negotiate with the Palmer United Party and Independents to push through its
legislation.!
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This heightens the risk of uncertainty for business about both the timing of key
pieces of legislation and unforeseen outcomes from the Government’s
negotiations with balance of power Senators.!
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Top 5 political risks for Australia!
December 2013!
4. 2. !DOUBLE DISSOLUTION ELECTION!
The risk of a double-dissolution will recede in the new financial year as Labor
and the Greens lose their Senate majority to be replaced by minor parties and
Independents more ideologically in tune with the Abbott Government’s agenda.!
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However, the risk of an early poll can not be fully discounted with new Senators
keen to make their mark and the Abbott Government unwilling to accept
significant legislative amendment. Furthermore, the lack of parliamentary
experience among new Senators heightens the potential for dangerous
brinkmanship and political miscalculation leading to an early poll.!
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As a result there is likely to be an extended period of uncertainty with the
timetable for passage of key pieces of legislation unclear and the risk of a
double dissolution election always prevalent.!
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Top 5 political risks for Australia!
December 2013!
5. 3. !GOVERNMENT BY CRISIS IN VICTORIA!
The nation’s second largest state is governed by a Liberal – National Coalition
holding onto power by a tenuous thread. It is dependent on the support of
Liberal turned Independent MP Geoff Shaw whose relationship with the
Government is fractious.!
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The absence of a clear parliamentary majority provides little certainty for
business and there is scant hope of relief as Victoria enters an election year in
which politics will triumph over policy. Furthermore, that election is not due until
November exposing the state to a year long political circus.!
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Top 5 political risks for Australia!
December 2013!
6. 4. !BUDGET UNCERTAINTY!
With government debt levels on the rise the new Abbott Government is looking
to tighten its belt. Spending cuts and new taxes will all be up for review.!
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The Mid-Year Economic & Fiscal Outlook (MYEFO) will shed some light on the
Government’s plans. However, the May 2014 budget will be the critical staging
ground for the new Government’s fiscal strategy.!
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This exposes firms to a 6 month period of budgetary limbo in which leaks will
be the primary source of information about the Governments budget strategy.!
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Top 5 political risks for Australia!
December 2013!
7. 5. !REVIEW, REVIEW, REVIEW!
Policy uncertainty will be a constant for markets throughout 2014 with the
Abbott Government conducting a number of ‘root and branch’ reviews. !
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Financial services is one sector that will spend the New Year uncertain about its
long term policy outlook. However, many other industries will share their pain
with a wide sweeping review of competition policy that will cut across transport,
power, water, communications and shipping. !
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Government by review - which is not unique to the Abbott Government - risks
stifling investment in respective sectors and throwing up new regulatory
hurdles.!
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Top 5 political risks for Australia!
December 2013!
8. Detailed analysis on these and other political risks confronting investors in the
Australian market can be found @ www.politicalmonitor.com.au!
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About Political Monitor!
Political Monitor is a political risk research and advisory firm. Our analysis
provides insight into the implications of political risk for commercial valuations,
asset selection, investment decisions, strategic planning and operational
decisions. !
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Top 5 political risks for Australia!
December 2013!