Uncertainty reigns in Australian parliament as mining king holds sway
SYDNEY (Reuters) - It took mining magnate Clive Palmer only three days to show Australian Prime Minister Tony Abbott just how uncomfortable life can be in a parliament in which he holds the balance of power.
The neophyte Palmer United Party (PUP), set up by the eccentric billionaire little more than a year ago, on Thursday blocked the repeal of Australia's controversial carbon tax just hours after Abbott publicly said it would pass that day.
While the repeal is likely to succeed in an amended form when it comes back to a vote this week, the fact that it needed Palmer's imprimatur illustrates how much power he has amassed - and his willingness to use it.
The four senate seats Palmer controls give him a de facto veto over a raft of major legislation set to be considered this parliamentary term - which began in the upper house last week - including the repeal of a separate mining tax, as well as healthcare, pension and education reform.
That could prove a major headache for Abbott's conservative government, which was swept to power in an election last September on a pro-business platform of tax and spending cuts, and adds an unwelcome element of uncertainty for investors.
None of that seemed to be bothering Palmer, who sports a mop of white hair and a ruddy complexion, during a recent interview at his Palmer Coolum Resort, a bizarre sub-tropical oasis dotted with dozens of towering motorized replica dinosaurs.
"Al Gore, when he went to Canberra, didn't see the prime minister, he didn't see the leader of the opposition, he didn't see the House of Representatives or the Senate," Palmer said. "He came to my office."
Palmer, who has always opposed the carbon tax, shocked the nation last month when he stood alongside former U.S. Vice President Gore, a leading climate change campaigner, to announce that he would only support its repeal with serious caveats.
But the erratic streak that made him easy to dismiss when he was just a colorful coal baron pledging hundreds of millions to build a scale replica of the Titanic, is fast becoming a concern as he plays kingmaker for an economy facing headwinds from the end of its long resource boom.
Nathan Fabian, CEO of the Investor Group on Climate Change, which represents investors with total funds under management of around A$1 trillion ($938.80 billion), said that the uncertainty Palmer cast over climate legislation was spooking investors.
"They see a void, and that makes it harder to price risk and, of course, that's not what markets like," he told Reuters.
AN "UNPREDICTABLE" PARLIAMENT
Abbott won a decisive majority in the lower house over the center-left Labor Party, but needs support from six of the eight so-called "micro party" senators to overcome opposition in the upper house.
The Senate, which is elected via a complicated preferential voting system, has long harbored fringe candidates who held out for support on pet projects. But they rarely voted in a bloc like the PUP, which has been able to leverage its handful of votes into outsized authority.
Both the upper and lower houses of Parliament can propose legislation in Australia and all bills must be approved in both houses to become law, but only the house of representatives can propose spending bills.
Senator Christine Milne, who leads the Greens Party, told Reuters that the peculiar make-up of this Senate was wilder than anything she had seen in her 25 years in politics.
"It will be an unpredictable parliament," she said.
Palmer, who won a seat in the directly elected lower house in September's election, has long cultivated an image as a "larrikin" - a kind of impish anti-hero who acts out a mistrust of authority rooted deep in Australia's national character.
He has, for example, lambasted the CIA for supposedly colluding with the Greens to destroy the Australian economy and accused Rupert Murdoch's then-wife Wendi Deng of being a Chinese spy.
But none of that has stopped him being taken seriously at home and in Washington, where he is the director of the John F. Kennedy Library Foundation and enjoys close personal ties to the Kennedy family.
Indeed the nickel and coal mining billionaire seems to draw special inspiration from the United States and its leaders, comparing himself to both George Washington and Abraham Lincoln in just the first minute of his interview with Reuters.
A GAME OF RISK
Palmer's decision to support the carbon tax only with major concessions, although welcomed by some investors, reflected just how much uncertainty his shifting positions had injected into the long-term outlook on carbon pricing.
"There are billions of dollars sitting on the sidelines," Milne, the Greens leader, told Reuters. "Multi-national companies and local companies are ready to invest but they are not doing so because they don't have confidence."
Beyond the carbon tax itself, which is likely to be repealed without key elements such as scrapping the A$10 billion Clean Energy Finance Corporation or changes to Australia's Renewable Energy Target commitments, that uncertainty could spread to those other aspects of the budget that are likely to be held up by the PUP.
Palmer has struck a populist tone in decrying efforts to deregulate higher education, the introduction of American-style fees for service healthcare and changes to the pension system that were at the center of the budget unveiled in May.
The worst-case scenario would be for Abbott to call a "double-dissolution" election, a sort of parliamentary nuclear option rarely used in Australia that allows for snap elections for all the seats in both houses to break an impasse.
Abbott has alluded to that possibility in recent weeks as Palmer has continued to chip away at his agenda, although he seems to be backing away from the tactic amid a slump in his popularity.
For Palmer, the very idea that he was creating uncertainty and that investors might be deterred as a result was too ridiculous to consider.
"It might have been good to invest in Hitler's Germany, on that basis, you know? It might have been good to invest in Stalin's Russia," he told Reuters. "You would have had certainty in those conditions, but we say that in the long term those types of regimes come down."
($1 = 1.0652 Australian Dollars)
(Reporting by Matt Siegel; Editing by Alex Richardson)