Australia could have its first minority government in 70 years, a worst-case scenario for investors, with an election-eve poll showing the ruling Labor party drawing level with the conservative opposition.
The vote looks so close, the result may have nothing to do with policy, but simply come down to which leader, Prime Minister Julia Gillard or the opposition’s Tony Abbott, voters like best.
Australian Assistant Treasurer Chris Bowen said the election was so tight that a hung parliament was just a likely as either a re-elected Labor government or a victory for the conservative coalition.
“It’s just so close that any of those are eminently possible,” he said in a telephone interview after a Newspoll survey showed Labor and the opposition even with 50 percent of the two-party vote.
“There’s opinion polls out this morning, some saying 50-50. I think this will go right down to the wire and be the closest election in 50 years,” Bowen added.
Without a clear winner, the next government would have to rely on a handful of independent or Green lawmakers to form a government, leaving policies such as Labor’s new mining tax in limbo and creating market uncertainty.
Two of the three key independents, who may decide who takes office in the event of a hung parliament, have said they cannot guarantee passage of a minority government budget, leaving the possibility of a fiscal crisis or a short-lived government.
Even a razor-thin win by Gillard would diminish her mandate to introduce the 30 percent resource tax, the cornerstone policy of her campaign, and leave her weakened as she seeks to have a hostile Senate pass the tax.
Labor has also pledged to take action on climate change with a possible carbon trading scheme and to construct a US$38 billion fiber-optic national broadband network.
Gillard deposed former Labor prime minister Kevin Rudd on June 24 in a desperate bid by the party to avoid electoral defeat, but she has struggled to woo voters, with many angry at the party coup that dumped Rudd.
A Reuters Poll Trend published on Wednesday showed Labor was poised for a narrow win and the Galaxy poll yesterday tipped a narrow win for Gillard.
In a unique snap poll with an Australian twist in Darwin, a 4.9m saltwater crocodile, which last month tipped Spain to win the World Cup, tipped a Gillard win by chomping on a chicken carcass dangled below her image.
Betting agencies show the government is still favorite and opinion polls say Gillard remains the preferred prime minister.
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