The 2022 Australian Federal Election - FTI Consulting
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WHITE PAPER The 2022 Australian Federal Election On 21 May 2022, the Australian electorate will go to the polls in what most expect to be one of the hardest fought and most contentious elections during a time when contentious elections have become the norm. To help business navigate this unpredictable landscape, FTI Consulting lays out the path to the election, the various scenarios that could arise, and highlights implications for business. 1. INTRODUCTION – CERTAINTY AND UNCERTAINTY and contentious campaigns in recent years. Along with the rest of the world, Australia has had to The result4 is likely to come down to voting in a small contend with the changing phases of the COVID-19 number of marginal seats across the country. While pandemic over the last three years. The public health the Coalition is in a difficult position, currently holding challenge soon became a global lockdown and, only a one-seat majority, it has often been easier for while Australia initially fared better than some of its an incumbent to hold what they have, rather than an contemporaries, the challenges of administering the opposition try to gain government. vaccine rollout and responding to the Delta and Omicron Broadly, most agree there are four possible outcomes, variants has put enormous pressure on the Australian a victory by either the Coalition or the Australian Labor Government. Party, or a minority government formed by either side The crisis in Ukraine remains a major geopolitical issue for with the support of independents. The importance of the Government and also continues to put pressure on the smaller parties and independent candidates has increased cost of living, fuel prices, and supply chains for Australians. significantly and may well dictate the outcome of this election. On top of these global issues, Australia has also faced devastating floods in 2022, and months of catastrophic With the election looming, we want to provide some bushfires through the summer of 2019 and 2020.Prime information on the possibilities and potential outcomes and Minister Scott Morrison MP and the Liberal National what business can do to navigate this uncertain landscape. Coalition have also failed to pass a number of key legislative Put simply, Australia’s new policy and regulatory regime commitments 1, while concurrently defending itself for the next three years will be decided in May - if the against intense political attacks – from both outside the Coalition wins outright, it will be business as usual. If they Government and within - on a range of high-profile depend on independents in a minority government, the social issues. independents will hold sway over policy and regulation. It has clearly been a turbulent and testing term and, if the If Labor wins (or a Labor Minority Government occurs), content and reaction to the recent handing down of the there will be a substantial shift in policy and regulation. It Federal Budget is any indication,2, 3 the coming election is will be critical for business, especially those in heavily likely to be the culmination of one of the hardest-fought 1. Morrison’s three key laws still in limbo as Parliament ends”, The New Daily, 2/12/21, 3. Coalition splashes $8.6 billion on election pitch to voters”, SMH, 29/03/22, https://thenewdaily.com.au/news/2021/12/02/morrison-key-laws-parliament https://www.smh.com.au/politics/federal/put-it-on-the-tab-coalition-splashes-8-6b-on-pitch-to- voters-20220322-p5a6x6.html 2. Budget in the black with voters but not like 2019: Poll”, AFR, 4/04/22, https://www.afr.com/politics/federal/budget-in-the-black-with-voters-but-not-like-2019-poll- 4. Australian federal election: the seats that may decide the poll”, The Guardian Australia, 5/12/2021, 20220403-p5aaeg https://www.theguardian.com/australia-news/2021/dec/05/australian-federal-election-the-seats- that-may-decide-the-poll
THE 2022 AUSTRALIAN FEDERAL ELECTION regulated sectors, to be agile and adjust business plans to respond to the impact of new policy. THE AUSTRALIAN FEDERAL SYSTEM In these unprecedented times, it might seem like the — Australia is a Constitutional Monarchy and part only certainty is uncertainty, but we can explore the of the UK Commonwealth. implications of the upcoming election and how best to — It is a federation comprising of a national prepare for what comes next. government, six states and two self-governing territories (each with their own parliaments, governments and laws), underpinned by the 2. THE AUSTRALIAN SYSTEM – SETTING THE SCENE Constitution of Australia. Under the Australian Constitution, elections for the House — It is a representative Westminster-style, of Representatives must be held at least every three years; parliamentary democracy with three separate the Prime Minister decides the exact date. arms: Parliament, Executive and Judiciary. Each House member is elected using a system of — The Australian Parliament is located in Canberra preferential voting that is designed to elect a single and comprises two chambers: the House of member with an absolute majority at the end of the Representatives and the Senate. process. — The House is comprised of 151 members6 Under the preferential voting system: who each represent one geographic area of 1. Voters write a number in the box beside every name on Australia. On average, 150 000 people live in each the ballot-paper in a ranked order. electorate, with an average of 105 000 voters. 2. If a candidate gains an absolute majority of first Members are elected for a 3-year term. preference votes, they win the seat. — The Senate is comprised of 76 senators, twelve 3. If no candidate receives an absolute majority, the from each of the six states and two from each of candidate with the least number of votes is excluded the mainland territories. and their votes are redistributed according to second — Senators are elected for six years so, generally, preferences half of the Senate is up for election every three 4. This process of redistribution continues until one years, when the House is up for election. candidate receives more than 50 per cent of the vote. — Legislation must pass both the House of The preferences of seemingly minor candidates who are Representatives and the Senate to become law in knocked out early in the count can therefore be Australia. very important. — Australia has a compulsory voting system and all Following the election, the Australian Government is Australians over 18 years must vote on election formed by the party or coalition with a majority in the day in person or by post. House. The Prime Minister is the parliamentary leader who has the support of a majority of members in the House. party preferred’ voting intention is only really a measure of overall voter sentiment. There are many historical As government is determined by having control of examples of situations where a government has been the majority of seats in the House, it is important to formed with less than 50 percent of the overall vote but understand that it is the number of seats that determines with a majority of seats in the House. Consequently, who wins an election and not who wins the cumulative political parties and professional pollsters pay significant number of votes at a national level. attention to marginal seats because that is where the This is why any national polling5 that measures ‘two contest for government can be won or lost. 5. “NewsPoll”, The Australian, accessed 5/04/22, https://www.theaustralian.com.au/nation/newspoll 6. About the House of Representatives”, Parliament of Australia, https://www.aph.gov.au/About_Parliament/House_of_Representatives/About_the_House_of_ Representatives
THE 2022 AUSTRALIAN FEDERAL ELECTION The composition of the Senate and the ability to the population. That is, if the ALP received 52% of the two manage the Senate, is also crucial to the agenda of any party preferred vote in the poll, apart from the undecided government. Few modern Australian governments have votes, and the Coalition received 48% of the two party enjoyed a majority in both Houses. The ability to negotiate preferred, apart from the undecided votes, then those legislation through the Parliament is often down to a few undecided votes would also be split 52/48. key individual Senators with specific agendas. In 2016, that formula didn’t work. The polls leading up to the election recorded the ALP at 52% and the Coalition at 48%, but the undecided voters didn’t behave as the 3. THE MAIN PLAYERS – AN INCREASINGLY COMPLEX pollsters predicted. Instead, they actually voted in greater PICTURE numbers for the Coalition, giving them a narrow victory. The main parties contesting this election in the House are: The pollsters are sure they have fixed the mistakes in their the Coalition (Liberal and National Parties), the Australian formulas and are more confident in their ability to predict Labor Party (ALP), the Greens, Katter’s Australian Party, the the outcome in 2022; of course, that remains to be seen. Centre Alliance, the United Australia Party, and a range of Colouring the situation further are the more than 30 independent candidates. Voices candidates that have emerged. They are a loosely- In the Senate, it is a more complicated picture, with related group of independent candidates who are running dozens of single-issue parties and candidates hoping to on the basis of dissatisfaction with the platforms of the gather enough preferences to gain important sway by major parties. In recent times, they have stood for greater having an influence on the balance of power. These parties action on climate change, maintaining funding for the cover the gamut of issues, from environmental concerns to Australian Broadcasting Corporation, and increased immigration and nationalist reform. government integrity, tapping into liberal voters who Predicting an outcome is very difficult especially in are unlikely to vote Labor, but might consider a credible, this unprecedented period of uncertainty. In recent ‘small-l’ liberal independent candidate. They believe that state elections, the pandemic favoured incumbents in action on these issues is being stymied by conservative Queensland, Tasmania, Australian Capital Territory, elements within the two parties. Northern Territory and Western Australia. In the most Perhaps half-a-dozen have a chance of winning their seats. recent election in South Australia, however, the Labor Given a scenario in which neither major party wins enough Party claimed a decisive victory over the incumbent seats to govern outright is a real possibility, successful Liberal Party government which illustrates that the Voices candidates may find themselves at the centre of advantages of incumbency cannot be taken for granted.7 negotiations around forming a minority government with Existing uncertainty has been compounded by the the ALP or Coalition. recent unreliability of political polling. In Australia the If nothing else, they will prompt the Coalition to defend main issue has been a failure in methodology. Each seats they have traditionally taken for granted, which poll asks the question, ‘If an election was held today. means they’ll have to divert resources from defending who would you give your first preference to?’ with the other seats or winning new ones. possible answers including ‘The Coalition’, ‘the ALP’, ‘The Clive Palmer and the United Australia Party (UAP) are also Greens’, ‘Undecided’ and some version of ‘Other parties increasing their profile. The party spent more than $50 or independents’. A formula is then used to calculate million in the lead-up to the 2019 election and, as is the preference flows and determine which of the two main case today, this advertising was aimed against both the parties will receive the highest two-party preferred vote. ALP and the Coalition at the start of the campaign, the In previous years, pollsters split the ‘undecided’ using a UAP is expected to increasingly target Labor now that the mathematical formula along the same lines as the rest of election campaign has officially begun. 7. Steven Marshall’s Timing Problem”, The Australian Financial Review, 18/03/22, https://www.afr.com/politics/steven-marshall-s-timing-problem-20220318-p5a5zv
THE 2022 AUSTRALIAN FEDERAL ELECTION The UAP is tapping into the groundswell of right-wing populist opposition to COVID-19 public health measures CAMPAIGN GOLDEN RULES – lockdowns, mask requirements, and vaccine mandates — Avoid being a backdrop during the campaign: – that has been rising in Australia and across many political parties have long memories. other countries during the pandemic. The re-election of various state governments during the pandemic suggests — Adjust the timing of business announcements: the audience for Palmer and the UAP may not be large, this will avoid political fallout before and during but based on his advertising spend alone, it is certain the election campaign. that Palmer will have an impact. It is possible the UAP — Avoid being captured by party announcements could stymie the ALP’s targeting of conservative-leaning during factory visits: unless there is a specific electorates, thereby bolstering the possibility of a minority strategy and need for this. government, as well as the likelihood of the UAP gaining a — Don’t pick winners: you may end up at the wrong seat in the Senate. post-election party! Similarly, albeit with less of a national profile, Katter’s Australian Party and the Centre Alliance will continue to have a say in the composition of the Senate, and further As widely predicted, the budget was squarely aimed at complicate things for the major parties on preferences in delivering a short-term boost to families and middle- key seats. income earners in what has been described as a springboard into an election campaign with relief for petrol prices, a tax break for lower income workers and 4. SCENARIOS AND OUTCOMES - IMPLICATIONS FOR one-off payments for those on welfare. BUSINESS The Government has pledged to increase10 defence Navigating the election period will be a challenge, but spending, promising a $10 billion boost over the next there are some indicators that may make it easier. decade in the area of cybersecurity as well as increasing The last Federal Budget8 before the election was handed the numbers of those in uniform. down on 29 March. With the budget so close to the There was a considerable boost11 for business in the election, it provided an indication of the Government’s region with $7.1 billion allocated to establish strategic priorities leading into the election campaign. investment hubs in the Northern Territory, north and Compounded by the impacts of the pandemic and the central Queensland, the Pilbara and the Hunter – these conflict in Ukraine, Australians are struggling with the areas will be key in the election outcome. sudden rise in the cost of living with record high fuel prices There was also support12 for businesses that employ and increases in the weekly grocery bill for families. apprentices with $2.8 billion added to the more than $5 billion delivered to trades and apprentices since the beginning of the pandemic. As the election campaign begins in earnest, however, business should recognise that it provides both “Obviously, I’m focusing on winning the next opportunity and risk. It is critical that any business is election. But I’m very proud of the fact that not seen to take sides which is especially important in Australia’s economic recovery now leads an election cycle like this one. Businesses should watch the world” 9 for election campaign announcements and explore the – Treasurer The Hon Josh Frydenberg MP implications then, where possible, look to their industry 8. “Budget documents», https://budget.gov.au/2022-23/content/documents.htm 10. “Budget 2022-23 delivers record investment in Defence and supporting our veterans”, Department of Defence, 29/03/2022, https://www.minister.defence.gov.au/minister/peter-dutton/ 9. “Practical and temporary’: Frydenberg’s budget pitch to voters”, The Australian Financial Review, media-releases/budget-2022-23-delivers-record-investment-defence-and 29/03/22, https://www.afr.com/politics/federal/cash-splash-pours-billions-into-must-win-seats- 20220328-p5a8pf 11. ”Federal Budget 2022-23 Key Policies at a Glance”, William Buck, 29/03/22, https://williambuck. com/news/business/general/federal-budget-2022-23-key-policies-at-a-glance/#:~:text=The%20 Government%20is%20investing%20%247.1,manufacturing%20hubs%20in%20these%20regions 12. “Budget 2022-23”, Budget.gov.au, 29/03/22, https://budget.gov.au/2022-23/content/download/ glossy_jobs.pdf, p.10
THE 2022 AUSTRALIAN FEDERAL ELECTION ELECTION YEAR CALENDAR Pre-Election Election Autumn Mid-Winter Spring Session Parliament Campaign Session Break of Parliament Budget Easter Election Old Senate New Senate Budget Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Business Existing Golden New Budget New Senators & Election commitments and Priorities legislation Rules Ministers Committees new legislation and & staff Budget association to advocate on their behalf on these key policy a consistent agenda. A minority government creates the issues in party election statements and platforms. need to prioritise wider consultation with backbenchers It is important for business to know which electorates and independents, meaning that MPs have more input their business footprint extends to and to understand into the policy agenda. This creates opportunities to how campaign commitments might have a direct and work within the system to bring matters to national local impact. This is especially important as the upcoming prominence. To be successful, the Government must campaign will likely coalesce around a small number of concentrate on building relationships through the marginal seats. The outcomes in these seats – especially parliament and compromise on individual issues in those in rural and regional areas – will be critical, no more pursuit of their overall strategy. so than if an independent wins and finds themselves in a Additionally, business should guard against a sole focus balance of power position. on results in the House. The Senate will be critical for Making election predictions is always fraught, not least in a the passing of legislation as the Government will need period of enormous uncertainty, but it is worth highlighting to work much more closely with minor parties to reach that for the second time in Australian federal politics there is agreement. Business, especially Government Business a real possibility of a minority government. Enterprises, will need to watch for Senate Committees and inquiries in new term to look for opportunities but also to If a minority government is formed by either party, identify where they might be in the Government’s sights. they may have a difficult time governing. However, if the experience of the Gillard Government (the only With such a short election campaign and then a short other federal minority government in Australia’s history Parliamentary sitting before the mid-Winter break, since the Second World War) and the current Trudeau- the best time to engage with Ministers will be in their led Government in Canada are any guide, a minority electorate during the break. There will be a mini-budget government can still execute a significant policy agenda – or another August budget after the election, especially if how they go about it is crucial. Labor wins. The Spring session will focus on implementing election commitments, so this is the time to get business The key to engaging with a minority government revolves proposals into the policy mix. Watch out for new Senate around compromise, building relationships, and pursuing Committees and inquiries driven by Independents.
THE 2022 AUSTRALIAN FEDERAL ELECTION This period of greater access to the policy agenda is a over policy. For business, this means that compliance will real opportunity for business but, on the other hand, be high on the agenda. a minority government might also result in the major The Australian Government will continue to closely watch parties remaining on a campaign footing. This will mean foreign investment proposals, especially by China and in they will spend the term of government trying to win key sectors, such as logistics and technology. Australia’s points towards the next election where they would aim Foreign Investment Review Board (FIRB) - which examines to win an outright majority. Finding a path to engage with foreign investment proposals for national security government in a meaningful way through this turbulence and national interest implications – has said it will be would likely prove a challenge. assessing applications with the protection of sensitive Regardless of the outcome of the election or the make-up Australian data as a priority. of the parliament, there are some things that won’t change While the FIRB process will remain an important check for and some challenges that any incoming government will business, the recent announcement of greater cooperation have to contend with. between Australia, the United Kingdom and the United The pandemic is not over and remains a concern while States through the AUKUS agreement has the potential cost of living – despite the short term relief afforded by the to provide a significant increase in foreign investment in budget measures announced on 29 March – will continue Australian businesses, predominantly from the United to be a bigger issue for voters this year. States. The agreement will help deepen cooperation While the Australian economy has weathered the effects of and investment between the countries, specifically in the Omicron variants reasonably well, with global ratings the sectors of cyber, artificial intelligence, quantum agency S&P reaffirming Australia’s AAA credit in January technologies, aerospace, resources, and manufacturing. based on an ‘improving’ fiscal outlook, the effects of the AUKUS will be a big priority for the next government as crisis in Ukraine on fuel prices and supply chains will it sets out to turn intentions into tangible outcomes for continue to have a big impact on Australians. Australian businesses, workers, and the economy. Even with the cost of living measures announced, a tax Finally, there are policy issues that have remained cut designed to boost consumer spending is expected, unresolved in this current term, including calls to establish regardless of the election outcome. The next government a federal independent corruption commission, the fate of will have to look to restrict spending in 2023 to address the stalled Religious Discrimination Bill, the fulfillment of Australia’s large Budget deficit. Further tax reform will be the Indigenous Voice to Parliament plan, and increasing on the agenda if a return to more robust levels of growth pressure for faster and more comprehensive action on and record iron ore exports do not continue. climate change. While the establishing of a National Cabinet as a forum for There will be renewed pressure to deal with these the Prime Minister, Premiers and Chief Ministers to meet hangover contentious issues swiftly so they do not and work collaboratively through the pandemic has been dominate the next term and, if a number of independent a necessary and, overall, beneficial measure over the Voices candidates are elected, the focus will be acute, last two years, it has also brought into sharper focus the along with renewed campaigning for equal pay and tensions between the Federal Government and the States. attention to issues of gender. As Australia navigates the next phase of the pandemic, and plans for a sustained, long-term recovery, these tensions 5. Conclusion and differences will likely increase. How an incoming government approaches this relationship will be crucial in If the last decade in global government, politics, and preventing National Cabinet from becoming just an added elections has shown anything, it is that predicting what layer of debate and an inhibitor of national business. might happen on 21 May is difficult to say the least. Businesses can ensure they are prepared and able to The Australian Competition and Consumer Commission navigate uncertainty, however. will have a new Chair – lawyer Gina Cass-Gottlieb – who is widely expected to have a greater focus on enforcement
THE 2022 AUSTRALIAN FEDERAL ELECTION Indeed, the outcome of the South Australian State Election Cost of living issues, especially as regards fuel prices, will has illustrated that, in Australia, incumbency should not remain front of mind for Australians as the effects of the be taken for granted and that the electorate does not Ukraine crisis continue to be felt. appear to fear change. While all four outcomes remain a possibility, it is highly At the end of it all, no matter the outcome of the election, likely that the next government will need to compromise there are some things that won’t change over the next and seek ever closer relationships across the parliament, three years. with stakeholders, and business if it is to realise its agenda. Australia will still be contending with the impacts of This will provide fertile ground for businesses that can the global pandemic, and the Government – whether align with the central focus of the new government. new or returned – will prioritise continued economic rationalisation and budget repair. DAVID WHITELY SHANNON WALKER Senior Director Senior Director +61 4 7511 0928 +61 414 694 476 david.whitely@fticonsulting.com shannon.walker@fticonsulting.com The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals. FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm.FTI Consulting is an independent global business advisory firm dedicated to helping organisations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. FTI Consulting professionals, located in all major business centres throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges and opportunities. ©2022 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com
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