Economy

Everything old is new again: Welcome to your Labor Government

Mon 23 May 22, 1:27pm (AEST)
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Key Points

  • Anthony Albanese will be sworn-in as the 31st prime minister of Australia
  • Markets tend to go up post-election, regardless of who wins
  • Albanese vows to make Australia a renewable “superpower"

The wash-up of Saturday’s federal election feels a little like a re-enactment of the Rocky Horror Show this morning; a lurch to the left, and we’re doing the time warp again on climate change. Haven’t we been here before?

Even though there are around 12 seats still to be decided on and Labor’s majority still to be confirmed, Anthony Albanese will soon be sworn-in as the 31st prime minister of Australia.

The market has voted with its feet this morning, with the All Ords Index up around 0.50% going into lunch, despite the ASX SPI 200 futures trading 0.2% lower to 7129 at the US close on Friday.

But based on CommSec research, the market tends to go up post-election, regardless of who wins.

For example, Commsec data suggests that following every one of the eight federal elections held since 1998 the All Ords and the A$ have both risen in the 15 trading days after poll date.

Australia voted for more aggressive stance on climate

Meantime, businesses have wasted no time in calling for an urgent productivity drive deemed necessary for Australia to deliver sustainable growth, wage increases advance the transition to clean energy.

Business Council of Australia (BCA) chief Jennifer Westacott was also quick to recognise the election outcome as strong desire by voters to see government prosecute a more aggressive stance climate agenda.

But while the BCA has backed Labor’s plan to use the safeguard mechanism to increase limits on industrial emissions, it has gone one step further than Labor and called for a 2030 emissions reduction target of 46 to 50% below 2005 levels.

Australia a renewable “superpower"

Both business and electorate at large clearly share common delight in Anthony Albanese‘s vow to make Australia a renewable “superpower” and there’s growing speculation of an uptick in spending on new green projects.

As a case in point, the Clean Energy Investor Group (CEGI), expects Labor’s win to put a rocket under spending, especially given the party’s plans to increase the share of renewables in the national electricity market to 82% by 2030.

The CEGI attributes much of the -17% drop in financial commitments for new large-scale renewable energy projects last year to $3.7bn to policy uncertainty and grid connection issues.

Inflection point

CEIG CEO Simon Corbell believes the election outcome marks an inflection point for clean energy investment opportunities in Australia.

"The message from the incoming Prime Minister is clear. He wants Australia to be a renewable energy superpower. And that will send an enormously positive signal, right across the sector, about the opportunity in the Australian market,” Corbell noted.

In addition to ending Australia’s reputation as a climate laggard, Albanese is also expected to push for greater uptake of electric cars, promising a nationwide network of charging stations and reduced taxes on environmentally friendly vehicles.

Pinky promise

Meantime, while the resources industry has welcomed the opportunity to work alongside Labor, it was also quick to remind the incoming government of the need to keep to its promises to walk a more moderate line, especially in the face of pressure by climate-advocacy group 350 Australia and others for a rapid and wholesale shift away from fossil fuels.

Much to the industry’s relief, Labor doesn’t have plans to put a price on carbon, and expects emissions reductions to come via energy efficiency, agricultural offsets and expected increases in renewables.

A new cohort of independents

Labor’s desire to take a more moderate approach may be at odds with the expanded cohort of independents the incoming government will be forced to deal with when it comes to lawmaking.

As a case in point, Greens leader Adam Bandt wants a commitment for no new coal mines in Australia, which Albanese has also so far rejected outright.

While there were at last count at least 114 new coal and gas mining projects at various stages of approval, the $64,000 question is whether the Greens' demands for their support could cast doubt over any number of energy projects.

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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