Abbott Faces Senate Carbon Test After Australia Election Victory

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Tony Abbott, Australia's prime minister-elect, center, waves to supporters as he stands with wife Margie, second left, and their daughters Frances, left, Louise, second right, and Bridget after delivering his victory speech in Sydney.

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Photographer: Brendon Thorne/Bloomberg

Tony Abbott, Australia's prime minister-elect, center, waves to supporters as he stands with wife Margie, second left, and their daughters Frances, left, Louise, second right, and Bridget after delivering his victory speech in Sydney. Close

Tony Abbott, Australia's prime minister-elect, center, waves to supporters as he stands with wife Margie, second... Read More

Photographer: Brendon Thorne/Bloomberg

Abbott, a former Rhodes scholar and amateur boxer, now faces the challenge of governing as the China-led mining investment boom wanes, crimping tax revenue and driving up unemployment. Close

Abbott, a former Rhodes scholar and amateur boxer, now faces the challenge of governing as the China-led mining... Read More

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“It’s time for the party to further renew its leadership for the future,” Rudd told Labor supporters in Brisbane after conceding defeat and announcing he will step down as leader. Close

“It’s time for the party to further renew its leadership for the future,” Rudd told Labor supporters in Brisbane... Read More

Photographer: Brendon Thorne/Bloomberg

Tony Abbott, Australia's prime minister-elect, delivers his victory speech at the Liberal-National coalition's election function in Sydney. Close

Tony Abbott, Australia's prime minister-elect, delivers his victory speech at the Liberal-National coalition's... Read More

Tony Abbott will be forced to negotiate with minor parties in the Senate as he seeks to scrap carbon pricing and a mining tax, after his coalition won the biggest parliamentary majority since at least 2004 in Australia’s election.

The “incoming government will be getting down to business,” Abbott, 55, told reporters yesterday after returning home from an early morning cycle ride in Sydney. “I’ll be working on building a better future for a greater country.”

His Liberal-National coalition, which ousted the Labor government and left it leaderless after Kevin Rudd stepped down, is pledging to cut red tape and lower taxes to boost the $1.5 trillion economy as a China-led mining investment boom crests. While controlling parliament’s lower house, Abbott’s hopes of delivering on his pledges hinge on independents and minor parties set to gain the balance of power in the upper house.

“In the first 100 days, the new government will try to get as much through parliament as it can,” said Andrew Hughes, who conducts political-marketing research at the Australian National University in Canberra. “Labor will try to put up resistance on scrapping the carbon price, but it may not be able to block it, depending on how the Senate finally plays out.”

‘Fresh Start’

The Liberal-National coalition led in 86 seats in the 150-member lower house to Labor’s 57 as counting continued, according to the Australian Electoral Commission. Forty of the 76 Senate seats were also up for grabs, and results will take days to be released.

Rudd stepped down as Labor leader, saying the party needed a “fresh start” as he conceded defeat to Abbott. Labor has been riven by internal feuding that saw Rudd ousted by Julia Gillard in 2010, only to reclaim the leadership 10 weeks ago in an attempt to boost its electoral fortunes.

After six years in office, the party was consigned to the shortest stint in power in almost four decades, and with its talent pool drained after nine former ministers didn’t seek re-election. Rudd didn’t say whether he would remain in parliament on the backbenches or quit his Queensland seat.

“What’s important is that the Labor party serve as a team, that it’s united, that we defend our legacy,” Acting Leader Anthony Albanese, 50, told Channel 10 yesterday, naming outgoing ministers Bill Shorten, Chris Bowen, Tony Burke and Tanya Plibersek as potential contenders in a ballot for the leadership.

Main Damage

The main damage to Labor came in New South Wales state where it was on course to lose seven seats, including Assistant Treasurer David Bradbury’s district of Lindsay in Western Sydney, a traditional Labor heartland, and Banks, held by Labor since 1949.

In Victoria, Labor was set to cede three seats to the coalition, including the nation’s most competitive district of Corangamite, according to AEC results. Labor saw off a challenge in Queensland, Rudd’s home state, where counting indicated it will lose one seat. It lost at least three seats in Tasmania, one in South Australia, and held its ground in Western Australia, the Northern Territory and the Australian Capital Territory.

Mining magnate Clive Palmer claimed victory in the Queensland seat of Fairfax, even as the AEC said the district hadn’t been determined.

Abbott’s Pledges

Abbott, a former Rhodes Scholar and trainee priest, has promised to repeal Labor’s 30 percent tax on mining sector profits and dismantle its carbon pricing mechanism.

He has also promised to lower the business tax rate, while funding a A$5.5 billion ($5 billion) per year parental leave program. The coalition plans to reduce the civil service by at least 12,000 positions, lower subsidies for carmakers, cancel handouts to parents of school children and return the budget to a surplus equal to 1 percent of gross domestic product within a decade.

“I declare the government is under new management,” Abbott said in a victory speech to cheering supporters in Sydney on Sept. 7. “Australia is once more open for business.”

His success will depend on his ability to navigate legislation through the upper house, which has the final say on bills. The current Senate, where the Greens -- supporters of carbon pricing -- hold the balance of power, remains in place until the middle of 2014.

Budget Deficits

“There’s no way the coalition is going to get an outright majority in the Senate and it’s looking like a Labor-Greens alliance would also fall short of the numbers required to block legislation,” said Nick Economou, a political analyst at Monash University in Melbourne. “A number of minor conservative parties will hold the balance and Abbott will probably have to negotiate with them to get things through.”

Abbott takes the reins of the world’s 12th largest economy after the Treasury last month forecast deeper budget deficits in the next three years and cut its growth estimate for 2013-14 to 2.5 percent from 2.75 percent seen in May. Unemployment will rise to an 11-year high of 6.25 percent by mid-2014, according to government estimates.

“The public will be happy to see the end of a hung parliament because of the political rancor it generated,” said Martin Whetton, an interest-rate strategist at Nomura Holdings Inc. in Sydney. “The equity market will welcome the return of a pro-business government with a parliamentary majority.”

To contact the reporters on this story: Jason Scott in Perth at jscott14@bloomberg.net; Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net; Stephanie Phang at sphang@bloomberg.net

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