Conservatives Win the Parliamentary Elections in Australia

          

           A conservative coalition of candidates won the parliamentary elections in Australia yesterday.  Tony Abbott will become the next Australian prime minister.  The conservatives won a large majority in the lower house, but results in the upper house were uncertain. 

The conservative victory ends six years of rule of Australia by the liberal Labor Party, which had led Australia’s first post-war minority government.  Ending the political instability in which Labor had to accede to the demands of the leftist Greens and other fringe partners in its coalition in order to maintain power, during which Labor was plagued by internal infighting, was one of the appeals of the conservatives to the voters.  In fact, Labor had changed leadership twice during its rule, as recently as three months ago, at which point the former Prime Minister returned to power. 

            Lower taxes, a crackdown on asylum-seekers, reducing foreign aid and increasing defense spending were the main planks of the conservative platform.  Specifically, abolishing the carbon tax, which was born by the public, and the mining tax were the most significant and popular conservative proposals.  The latter had exacerbated the decline of the mining boom that had kept Australia prosperous, despite the global recession.  The result of the tax was far less revenue than projected, which has prevented Australia from balancing its budget.  The fiscal lesson from Down Under is clear: raising taxes reduces revenue because it reduces economic growth.

          Reducing taxes are likely to stimulate the Australian economy and keep it from falling into recession and, together with the proposed spending cuts, help it to balance its budget while allowing it to boost its defense, which could be helpful to the United States and its other allies.  Under conservative Prime Minister John Howard from 1996-2007, Australia was a staunch ally of the U.S. in the War on Terrorism.