Australia's citizenship crisis continues to be headache and distraction for Government

Australia’s ongoing citizenship dilemma has sprouted a number of far reaching consequences. The country’s constitution forbids holding political office by individuals of dual-nationality and, beginning in July, a number of MPs have been forced to resign, largely due to citizenship inherited from their parents and never revoked. The saga crested this autumn, when it was revealed that Deputy Prime Minister Barnaby Joyce held citizenship in New Zealand. By mid-November, the amount of resignations meant that Prime Minister Malcolm Turnbull’s majority coalition had been reduced to a minority, needing the cross-bench support of independents. The government has since agreed to a universal disclosure scheme, giving members until Tuesday, December 5th to disclose their citizenship status. It is estimated that up to additional 10 MPs could have to appear before Australia’s High Court, which would result in an unprecedented amount of vacancies that carries into 2018.

Turnbull’s government limping into the New Year

Already, the Opposition has used their newfound power to pressure the Government into opening an inquiry into the banking and financial sector – something that Turnbull’s majority coalition had vehemently blocked for more than a year. The inquiry faces public support after a number of scandals in the industry, but the inquiry will take over a year and cost A$75m (£42m; $56m).

With Australia entering its 26th consecutive year of economic growth, the inquiry shouldn’t significantly impact businesses and investors. It does, however, undermine Turnbull’s authority and leadership, and does not bode well for business’s confidence in his Government. In the short term, the Government will continue to face attacks on its legitimacy, as well as possible challenges to policy passed at the height of the citizenship scandal. In the long term, they risk being unable to legislate on further important economic matters, such as company tax cuts. Other areas that could face challenge include:

  • Penalty rate cuts
  • Appointments of the Murray-Darling Basin Authority and National Offshore Petroleum Safety and Environment Authority
  • Grants under the Building Better Regions Fund
  • The Water Act – particularly where the Minister determines claims to irrigators
  • The Petroleum Resource Rent Tax – in areas of mineral and gas exploration

The Government is expected to survive while Joyce and others, having revoked their non-Australian citizenships, re-contest their seats. As expected, Joyce won his by-election and will return to Parliament, but it may not be enough to ensure Turnbull’s tenure. It’s worth noting that no Australian prime minister has served a full three-year term since 2007.  With no standout alternative, Turnbull’s government will survive through the New Year, but we predict an early election in 2018.

While another change in Government would by no means create shocks that the business community couldn’t absorb, Australia does find itself at risk of complacency. Companies and the government will have to be more vocal going forward to speak out against the revolving door of leadership and policy, and advocate for economic momentum and stability.

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Gregory Holland

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