Election 2016: What’s going on in the Senate, and what does it mean for industry?

senate

This post sets out what we know about the new Senate so far, the positions of the likely players, and the implications for industry.

Counting is still underway in the aftermath of the July 2 election, and much attention is focused on the House of Representatives and whether the Coalition or the ALP will form government.

But whoever takes office, and whatever agreements they may make with House cross-benchers, they will require further support in the Senate to pass any legislation. This post sets out what we know about the new Senate so far, the positions of the likely players, and the implications for industry.

Finalising the Senate count will take much longer than for the House; the allocation of preferences and calculation of final quotas for the election will not take place until at least 16 July, 13 days after the vote. At the moment we can only judge the makeup of the Senate by the count of first preference votes and the indicative quotas calculated by the Australian Electoral Commission.

Those first preference votes are sufficient in most States to determine the identity of around 10 of the 12 Senate seats up for election in each State, and both of the seats in each Territory. The remaining seats will depend on the flow of preferences, which is even harder to predict than previously due to the newness of the Senate voting arrangements.

The chart below sets out the seats parties have firmly won by earning 0.95 or more of a quota on first preferences (in solid colours); the seats they have probably won by gaining more than 0.7 of a quota (in dashed colours); and the seats that are not clear and will depend on preference flows (in black):

senate

The seats in doubt could see more Coalition, ALP or Greens Senators elected, and it is likely that minor parties will also win further seats. Pauline Hanson’s One Nation party achieved a full quota in Queensland, and around half a quota in each of NSW and WA, as well as a third of a quota in each of SA and Tasmania. Many other minor parties ran and could yet be represented.

Crossbench parties

It is clear that as well as the Coalition parties, the ALP and the Greens, the Senate will include two or more Nick Xenophon Team Senators; Derryn Hinch; Jackie Lambie; and one or more One Nation Senators. Below is a brief summary of each grouping’s election policies and recent priorities.

Nick Xenophon Team

Election policies

NXT ran on a platform that is broadly centrist, with support for elements of ALP policy (restoring the Gonski school funding model) and Coalition policy (restoring the full private health insurance rebate), together with a firm emphasis on encouraging domestic industries (strengthen anti-dumping rules, give preference for local producers in government tendering). Their climate and energy policy combines Coalition and ALP ideas for a low-cost baseline-and-credit emissions trading scheme.

Priorities

Preserving and creating jobs, in particular by saving steelmaker Arrium and avoiding wider job losses from the end of domestic car manufacturing.

Seats

At least two Senate seats, and likely three. NXT is likely to hold a blocking vote in the Senate crossbench: legislation opposed by a major party and the Greens will not be able to pass without their support. NXT will also have at least one Member of the House, potentially holding the balance of power there.

Derryn Hinch’s Justice Party

Election policies

Hinch ran primarily on criminal justice issues, including tougher sentences, bail and parole for violent offenders, and a national public database of sex offenders. Many of these issues are primarily in the hands of the States. His wider priorities are unclear.

Priorities

The national public database of sex offenders is Hinch’s top priority.

Seats

One seat.

Jackie Lambie Network

Election policies

JLN ran on a platform of measures to increase higher education spending, support Tasmania through a payroll tax-free special economic zone, and assist veterans through increased pay and more generous welfare indexation. To pay for this, JLN proposes halving the foreign aid budget and introducing a financial transactions tax. On energy they oppose carbon pricing and support new hydro-electric projects and a referendum on nuclear power.

Priorities

Since the election JLN have stated four top priorities, all from outside their published platform: reversing cuts to aged care; maintaining the Schoolkids Bonus and Family Tax Benefit payments; establishing a 50 cents per litre levy on milk sales for two years to assist dairy farmers; and using Defence spending and other government contracts to create jobs.

Seats

One seat.

Pauline Hanson’s One Nation Party

Election policies

One Nation ran on a platform to reverse the economic, foreign, immigration and trade policies Australia has pursued since the Second World War. As well as a range of social and security policies, they propose:

  • withdrawal from international tax treaties and the imposition of additional taxes on multinational businesses, intended to raise $100 billion annually;
  • withdrawal from the United Nations and most international treaties and trade agreements;
  • a zero net migration policy, with delayed citizenship, compulsory health checks and an English language requirement for authorised migrants, together with repeal of the Racial Discrimination Act and the abolition of multiculturalism;
  • reintroduction of high tariff protection for agricultural products and manufactured goods to pursue an import substitution model.

Priorities

Since the election One Nation has nominated job creation, reforming family law in favour of divorced fathers, and restriction of foreign investment as its top priorities.

Seats

At least one seat, and potentially up to four seats. If One Nation does gain three seats or more, they may hold a blocking vote in the crossbench, similar to that expected for NXT.

Implications

The Senate is still taking shape, but it appears that a potential Coalition Government would have three options to pass legislation:

  1. Pass with support from the ALP, which is often forthcoming on the many uncontested issues that Parliament addresses;
  2. Pass with support from the Greens, with whom they have successfully negotiated on particular issues; depending on final numbers, further crossbench support may be needed;
  3. Pass with support from nearly all the non-Greens crossbenchers. This proved increasingly difficult in the last Parliament as the crossbench fragmented.

The diversity of the Senate crossbench will make it difficult for the Government to pass legislation with their support; at a minimum, multiple deals will be required on individual priorities. However, the crossbench have policies and priorities that are either unacceptable to the major parties, or contradict other crossbenchers’ policies. It is also possible that parties with multiple Senators will fragment, as the Palmer United Party did in the last Parliament.

Overall it appears impossible to pass the Coalition’s legislation to restore the Australian Building and Construction Commission or tighten regulation of Registered Organisations.  The Coalition’s proposed company tax cuts are opposed in part or entirely by most crossbenchers, and only the small business cuts may be able to pass.

The result puts an even greater premium on support across the major parties. Legislation and policies passed with bare majorities cobbled together with controversial minor parties are unlikely to be stable or durable. Business priorities, including on taxation, infrastructure, workplace relations, and energy and climate, will not be able to advance and endure unless there is agreement between the Coalition and the ALP.

Click here for a full presentation covering the currently known House and Senate results and their implications.

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Tennant Reed
Tennant is Principal National Adviser – Public Policy at Ai Group. He has worked heavily on climate and energy issues, advising Ai Group’s Leaders’ Group on Energy and Climate Policy and developing reports on natural gas supply, energy prices and energy efficiency. He also works on a range of issues related to manufacturing and innovation. Previously he was an adviser in the Department of Prime Minister and Cabinet, working on fiscal policy, stimulus and infrastructure.

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