August 24, 2018 / 3:42 AM / in 3 months

Instant View: Australian Treasurer Scott Morrison to become new prime minister

(Reuters) - Treasurer Scott Morrison will become Australia’s new prime minister after winning a Liberal party leadership vote on Friday, ending an internecine battle that has scarred the conservative government ahead of an election due by May 2019.

FILE PHOTO: Australia's Treasurer Scott Morrison speaks during an interview with Reuters at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina, July 22, 2018. REUTERS/Marcos Brindicci/File Photo

IVAN COULHOUN, CHIEF ECONOMIST, NATIONAL AUSTRALIA BANK:

“We will have to see how things develop but Morrison’s selection as Liberal leader likely gives the government a better chance at the next election than if Dutton had been elected leader. At this point, the betting markets strongly favour a change of government (Labor $1.37 , Government $3.05).”

PAUL DALES, CHIEF ECONOMIST, CAPITAL ECONOMICS, SYDNEY:

“The political chaos...has increased the downside risks to the Australian dollar for both this year and next. The real issue is not who is going to be prime minister for the next few months, but who is going to be in the top job after the next election. It is possible that the change of leadership will boost the standing of the ruling coalition in the opinion polls. But it is also possible that the public will resent the infighting within the government, thereby boosting Labor’s current lead in the polls.”

TANIA CONSTABLE, CEO, MINERALS COUNCIL OF AUSTRALIA:

“The Australian minerals sector encourages stable government following the Liberal Party leadership change along with a focus on the economic reforms needed to deliver growth and prosperity for Australian businesses and households. Our industry is keen on working with the government for decisive action to ensure a strong economy. This includes a competitive investment environment and less red tape.”

KON KARAPANAGIOTIDIS, CEO, ASYLUM SEEKER RESOURCE CENTRE:

“Today’s news of a new coalition government under the reign of Scott Morrison spells disaster for refugees and people seeking asylum. A Morrison government and its inclination towards draconian and harsh policies instils fear in those seeking safety.”

PAUL BLOXHAM AND DANIEL SMITH, ECONOMISTS, HSBC:

“What has been somewhat surprising has been that the increasing volatility in politics has occurred despite a strong economy. Australia has had five changes of Prime Minister since 2010, which is an unprecedented period of political volatility, despite the economy being in its 27th year of continuous GDP growth, having not had a recession since 1991. However, it is likely that volatility in federal politics has made it harder for Australian policymakers to achieve much-needed reform which could lift Australia’s productivity growth, which has been weak, much as it has been elsewhere.”

SHANE OLIVER, CHIEF ECONOMIST, AMP CAPITAL

“Scott Morrison winning the vote is a reasonably good outcome from an economic and investment perspective. He did not bring on the challenge so can’t be blamed for the instability. More importantly he is seen as a reasonably sensible policy maker, is respected by investment markets in his role as Treasurer and is seen as a centrist giving the Liberals perhaps a better chance of victory in the coming Federal election. This probably explains why the share market and the $A had a bounce on the news that he will be the new PM.

“Second, while he will probably continue with the Goverment’s existing budgetary strategy, the abandonment of the policy to cut the tax rate for large companies along with the budget coming in a better than expected does provide scope for earlier and bigger tax cuts for low to middle income earners which could help economic growth.

“Third, the latest leadership turmoil and Scott Morrison’s relatively low margin of victory (of 45 to 40) still poses the risk that there may still be more turmoil ahead, all of which could weigh on consumer and business confidence just as it did under the last Labor Government.”

KERRY CRAIG, GLOBAL MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT:

“The near term market reaction to these types of events is nearly always negative, but this event has been so widely expected that markets are, so far at least, taking it in their stride. Even if there is a sell-off in the coming days, the negative reaction doesn’t always persist for long and may not be the biggest determinant of how markets behave in medium term.

Political changes may swing sentiment but they don’t alter the fundamentals of the local economy or corporate outlook. Unless there is assumed to be a large change in monetary or fiscal policy or the regulatory backdrop in the near term, investors will go back to focusing on what important – the health of the economy and corporate fundamentals.”

MARTIN PETCH, VICE PRESIDENT, MOODY’S INVESTORS SERVICE:

“The changes in the leadership of the ruling Australian Liberal Party have no implications for Australia’s sovereign credit profile. Moody’s is assuming the absence of significant changes in the nature and implementation of policies. Australia’s Aaa rating is supported by the country’s very high level of economic strength and moderate level of government debt.

“Our assessment of Australia’s institutional strength takes into account a greater degree of fragmentation in broad political representation at the level of the Commonwealth over recent years which, at times, constrains the capacity of successive governments to pursue policy changes.”

MARTYN ILES, MANAGING DIRECTOR, AUSTRALIAN CHRISTIAN LOBBY:

“We look forward to continuing our constructive conversation with the government on religious freedom....Religious freedom must be a priority for the Morrison ministry in light of increasing numbers of Australians who are getting into trouble with the law for living out their faith.”

ANNETTE BEACHER, CHIEF ASIA-PAC MACRO STRATEGIST, TD SECURITIES, SINGAPORE:

“PM Morrison is the most market-friendly option, having successfully negotiated through multiple portfolios such as Social Security, Border Security, and more recently presiding over a substantial improvement in the budget balance as Treasurer. Parliament and the markets will be closely watching post-vote polls to gauge if Morrison can even up the balance towards the Liberal-National coalition and away from the Labour Party under Bill Shorten. The skew towards the Labour Party at this stage ensures they they will form government at the next election.”

TONY JOHNSON, CEO, ERNST & YOUNG:

“We welcome the election of Scott Morrison as Prime Minister and extend our congratulations. There remain major challenges for the nation to resolve when it comes to tax reform, international competitiveness, cutting red tape and securing energy supply. Most importantly the business community needs policy certainty to promote investment and improve business confidence. The political turmoil of the past decade has come at the cost of our global competitiveness. We must return to the serious business of economic reform.”

SIMON BRIDGES, LEADER, NEW ZEALAND NATIONAL PARTY ON TWITTER:

“Congratulations to @ScottMorrisonMP on becoming Prime Minister of Australia. In talking to Scott, I’ve been struck by his warm regard and intimate knowledge of New Zealand. He will be a great friend to our country.”

ALIX FOSTER VANDER ELST, CAMPAIGNER, GREENPEACE AUSTRALIA:

“Make no mistake, Scott Morrison is just a more polished version of Tony Abbott. He has shown over his career that he...will not hesitate to continue selling out the environment at the behest of his mates in the fossil fuel industry. With large sections of Australia in severe drought and being scorched by dozens of mid-winter bushfires, Morrison is a leader the country simply cannot afford....We need an election now to demand a greener, fairer country.”

PHIL BORKIN, CHIEF ECONOMIST, ANZ:

“We don’t see wholesale changes in the policy agenda. Moreover, this latest leadership spill is occurring against a stronger economic backdrop than in previous episodes. The Australian fiscal situation is now healthier and the economy has better momentum (in part because the terms of trade is no longer falling sharply), arguably providing the economy with more resilience.”

Reporting by Sonali Paul; Editing by Michael Perry

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