Minority government? Not so unusual or to be feared | KPMG | AU

Minority government? Not so unusual and not to be feared

Minority government? Not so unusual or to be feared

Grant Wardell-Johnson takes a look at the history of minority governments and hung parliaments in Australia and around the world.


Lead Tax Partner, KPMG Economics & Tax Centre

KPMG Australia


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The flag pole at Parliament House in Canberra, flying the Australian flag

As I write, the count continues. Whether either party will get to 76 seats is at the forefront of many minds. While it is beneficial to have a government, of any colour, with a majority in the House of Representatives, two points should be made.  

The first is that minority government does not necessarily mean bad government. The 43rd Australian Parliament was ‘hung’ but was very productive in passing legislation – both by the standards preceding and following it. 

Other countries that have experienced stable minority government include Canada, from 2006 to 2011. And given that the Scandinavian Film Festival is on throughout Australia it is worth reflecting that Denmark, Norway and Sweden have a long tradition of minority governments, while Finland and Iceland tend to rely on majority coalitions. 

Closer to home, under its Mixed Member Proportional electoral system, New Zealand has had a succession of minority governments since 1996. Confidence and supply agreements between the major and support parties providing stability to govern. 

The second point is that governance in Australia has always required negotiating with other parties on legislation, in the Senate, except in a number of minor periods in our history. Since proportional representation was adopted for the Australian Senate in 1949, the Government has controlled the Senate in only four periods: twice under Menzies from 1951 to 1956 and 1959 to 1962; once under Fraser from 1975 to 1981; and once under Howard from 2005 to 2007. Negotiating legislation through Parliament is the norm for Australia. 

So, what will happen on the tax front when the 45th Parliament is sworn in?

I suspect that the Coalition's company tax reductions will only be considered for smaller businesses in the immediate term, superannuation changes will be passed with some modifications to the Budget proposals, and we will see significant increase in tobacco excise. 

Focus will move from grand tax reform to incremental reform, and the next tier down. Much could be done in this space: consistency of treatment of the employee-contractor divide, greater alignment of accounting and taxation income and expense recognition rules, and the corporate law and taxation concept of a dividend. Redrawing the boundaries on work-related expenses may gain agreement from both sides of politics, along with new rules for taxing the ever growing 'sharing' economy. 

There is much to be done. We must avoid becoming insular and trepidatious, regardless of the final count. 

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