I posted yesterday on what was thought to be a boring election in New Zealand perhaps turning very interesting indeed: New Zealand election back in focus
And there may well be potential for Australian politics to come into the market’s sights, too. Bloomberg reports: Gaffes Worsen Abbott’s Woes as $37 Billion in Cuts Stranded
Says the article (bolding is mine):
- Unscripted comments by Prime Minister Tony Abbott’s ministers have led to a swathe of damaging headlines for his government, burning political capital and distracting from its efforts to win support for unpopular budget savings as parliament resumes today
- The slipups have drawn ridicule from some upper house lawmakers, whose votes the government needs to secure A$40 billion ($37 billion) of savings and revenue-raising measures
- A year after winning office on a pledge to restore “adult government,” failure to enact the legislation risks Abbott’s election promise to return Australia to surplus and may undermine business confidence
The article quotes Saul Eslake, chief Australia economist at Bank of America Merrill Lynch:
- The budget stand-off “could lead to a deterioration in business confidence, if firms were to come to the view that the current parliament is no more capable of managing the nation’s finances than its predecessors … That could, in turn, materially adversely affect the outlook for investment and employment in the non-mining sectors of the Australian economy”
More details at the article, including a discussion of how the current PM needs the support of upper house senators to pass the laws proposed in the May budget.
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RBA head Glenn Stevens may very well get his wish for a market sell 0ff of the Australian dollar, but I don’t think he will be happy if it comes about because of a fall in business confidence due to political tensions.
