Liberals Win Power in All But One of Australia’s States

Photographer: Lisa Maree Williams/Getty Images

Tony Abbott, just days before being elected as Australia’s Prime Minister, listens as Tasmania’s Liberal leader Will Hodgman speaks during a press conference, on September 3, 2013 in Launceston, Australia. Close

Tony Abbott, just days before being elected as Australia’s Prime Minister, listens as... Read More

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Photographer: Lisa Maree Williams/Getty Images

Tony Abbott, just days before being elected as Australia’s Prime Minister, listens as Tasmania’s Liberal leader Will Hodgman speaks during a press conference, on September 3, 2013 in Launceston, Australia.

Prime Minister Tony Abbott’s Liberal party won control of all but one of Australia’s states after a Tasmania election victory, helping his bid to cut red tape and sell infrastructure assets.

Tasmania’s Liberal leader Will Hodgman defeated Labor Premier Lara Giddings, whose party was in power for 16 years, in the March 15 poll. In the South Australia election held on the same day, neither Liberal leader Steven Marshall nor Labor Premier Jay Weatherill won enough support to form a majority government after 69 percent of votes were counted.

The Liberals consolidated their grip on Australia’s states after Labor under former Prime Minister Kevin Rudd in 2007 controlled government at federal, state and territory level. This will help Abbott push through his agenda of removing unnecessary business regulation, and encouraging governments to sell assets to fund new infrastructure investment. South Australia and Tasmania, with the highest unemployment rates in Australia, have been hampered by the states’ faltering economies and voter fatigue after more than a decade of Labor rule.

“The results confirm the swing of Australian voters to the right of center is still on,” Zareh Ghazarian, a Melbourne-based professor at the Monash University School of Political and Social Inquiry, said by phone yesterday. “Labor is in a very brittle position. Even if the Liberals don’t win in South Australia, it still highlights just how unpopular Labor is.”

September Victory

The Tasmania election victory gives Abbott power that rivals that of former Liberal Prime Minister John Howard, who controlled all but one state in 1996. Abbott led the Liberal-National coalition to federal victory in the September election.

“It’s not the complexion of the state governments that counts, it’s the competence of the state governments which counts,” Abbott said in a March 14 Australian Broadcasting Corp. radio interview. “The problem that we’ve had in South Australia and in Tasmania is that we’ve got very long-serving state Labor governments which are well past their prime.”

The loss in Tasmania is a further blow to Labor, Australia’s oldest political party. Now it only holds sway in the Australian Capital Territory and may be forced into a minority government in South Australia, pending the outcome of the ballot.

“The only way is up for Labor, when you’re that far down” Haydon Manning, an Adelaide-based politics professor at Flinders University of South Australia, said by phone yesterday. “It’s usually only been a short period when we’ve had the country one way or the other before it’s broken. The problem for Labor is that in Queensland and New South Wales, there doesn’t look like much hope.”

Abbott, Hockey

Abbott will see the Tasmania win as a chance to help fix what he described in his 2009 book “Battlelines” as a “dysfunctional federation” -- the overlapping of responsibilities between state and federal governments that can result in the duplication of regulations.

Stalemates at meetings of federal, state and territory governments meant “the pursuit of national reforms becomes a frustrating political merry-go-round, always needing just one more meeting or just another funding agreement to finalize,” Abbott wrote.

Treasurer Joe Hockey is encouraging state governments to sell infrastructure such as ports, rail and energy utilities to free up funds for new projects. The push is a key part of Australia’s agenda for its presidency of the Group of 20 nations this year.

The nation faces an infrastructure funding gap of about A$300 billion ($271 billion), according to a June government report.

Slow Lane

Hodgman and whoever wins power in South Australia will face the challenge of turning around their economies. In its “State of the States” report released in January, the Commonwealth Bank of Australia (CBA) said the two states were “clearly under-performing other economies.”

Both are in the slow-lane of the nation’s two-speed economy -- the result of a mining boom in the nation’s north and west that has boosted the local currency and made industries elsewhere such as manufacturing and food production less competitive.

In the past 10 years, Australia’s economy has grown 34 percent compared with expansion of 27 percent in South Australia and 20 percent in Tasmania, according to calculations based on Australian Bureau of Statistics figures.

Furniture Man

An unemployment rate of 6.7 percent in South Australia, which only trails Tasmania on 7.3 percent, may worsen as auto manufacturing plants and component makers close in the wake of decisions by Toyota Motor Corp., Ford Motor Co. and General Motors Co. to stop building cars in Australia by 2017. South Australia has a AA credit rating from Standard & Poor’s with a stable outlook.

Marshall, 46, is a former managing director of his family-owned furniture retailer and an executive at other South Australian businesses. First elected to parliament in 2010, his policies center on economic growth, encouraging private-sector investment and creating jobs.

“We will do everything we can to form a government,” Marshall said in Adelaide. “It’s going to be an anxious few days in South Australia.”

Preference Votes

The Labor party received 36.7 percent of first preference votes with the Liberals taking 44.3 percent, according to the state government website based on 69 percent of votes being counted. Labor is forecast to hold 23 seats, meaning it would need the support of one independent to form a minority government, the ABC reported.

In the island state of Tasmania, Labor in 2010 formed a minority government with the support of the Greens. It has a AA+ debt rating from S&P with a stable outlook.

Hodgman, 44, comes from a family steeped in Tasmanian politics, with father, grandfather and uncle all having served as lawmakers. A former solicitor first elected to parliament in 2002, he has said his number one priority as premier will be reducing Tasmania’s unemployment rate to the national average of 6 percent. Other policies are rebuilding the state’s timber industry and recruiting new police.

To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Edward Johnson, Chris Bourke

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