The key points are as follows:
- The Australian Federal election has delivered a messy result suggesting an even more difficult Senate for the Coalition if it is able to form government and the risk of return to minority government.
- The risk is that we will see a further slippage in the budget outlook – with a downgrade in Australia’s AAA sovereign rating looking increasingly likely – and that significant economic reform will remain off the agenda. This is dampener for long term economic growth and share market returns.
- That said, it’s not a disaster as the period of true minority government over 2010-13 saw the economy continue to grow and it’s not unusual for Australian governments to face a difficult Senate.