What can India expect from the new government in Australia?

The outcome of the ongoing Australian elections are unlikely to trigger significant policy shifts in India-Australia bilateral relations, writes NPFP fellow’16 Hemant Shivakumar

Soon after the 2016/17 budget was announced in early May, the Australian Prime Minister Malcolm Turnbull announced an expected double dissolution of the Parliament, calling for elections on the 2nd of July 2016. While PM Turnbull was widely expected to win going into the elections, Turnbull’s flip-flop and lack of clarity issues such as superannuation, negative gearing and the Safe Schools funding have weighed heavily on the popularity of the Liberal Coalition and looks to have costed them dearly in the Senate.

For New Delhi, a new government post-elections down under is unlikely to trigger significant policy shifts. Both Malcolm Turnbull and the Opposition’s Prime Ministerial candidate Bill Shorten broadly share similar views on engaging with India. India and Australia can therefore expect sustained focus on key bilateral matters such as energy, economic relationship, maritime security and disaster management among others until 2019, when both countries will go to the national polls again.

Economic partnerships

Firstly, India’s economic growth is a huge attraction for Australia. The new government in Australia will aim to plug the decline in India-Australia trade through the Comprehensive Economic Cooperation Agreement (CECA). Australia will also encourage New Delhi’s integration – into the Asia-Pacific economic architecture – through key trade treaties such as the Regional Comprehensive Economic Partnership (RCEP) and the Asia Pacific Economic Cooperation (APEC) community.

However, despite Canberra’s motivations to forge stronger economic ties with New Delhi, Australia’s diplomatic attention will focus on China. Beijing’s assertive actions in the South China Sea offer significant concern to Australia’s decision-makers already, but building stronger Sino-Australia ties remain an overarching priority. Even structural changes and re-balancing in the Chinese economy will not scupper Canberra’s domestic political enthusiasm towards Beijing. During an official visit to China in April 2016, the Australian PM endeavored to focus on the economic relationship amidst regional security concerns.

New Delhi will also find that Australia will maintain a tepid attitude towards large-scale investment in India. During his visit to Australia earlier in March, Finance Minister Arun Jaitley actively solicited Australia’s big fund bodies – the sovereign wealth, super and pension funds – to explore investing in infrastructure and rail in India. But Australian investors remain shy of buying into the Indian market – partly deterred by regulatory hurdles and less attractive returns on their investments. India can hope that its reformist agenda and slow growth in developed markets eventually attracts large investments from conservative big fund agencies in Australia.

Maritime Security

Secondly, as USA continues to rebalance in the Asia-Pacific, maritime cooperation has come to symbolize the growing strategic convergences in the India-Australia partnership. Australia’s Defence Whitepaper 2016 underlines how it views India’s role as a partner in the Indo-Pacific sphere. The Indian Defence Minister’s endorsement of Australia’s Indo-Pacific concept at the recently concluded Shangri-La dialogue in Singapore and PM Modi’s vision of the Indian Ocean convey both eagerness and direction to Australian policymakers. Canberra will be keen to use forums such as the Indian Ocean Rim Association (IORA) and the East Asia Summit to build consensus on regional maritime leadership and cooperation.

Energy Security

Finally, energy security and cooperation will be a key driver in India-Australia engagement. Although Adani’s proposed US$ 10 billion Carmichael coal mine project in Queensland has run into rough weather, importing high quality coal from Australia remains vital for India’s power necessities. While political leaders in Australia have dithered on tackling project delays over the last few months, the new government could possibly squeeze initiative to tackle the many roadblocks in the project.

On the other hand, India’s uranium imports from Australia are due to begin and Australia has backed progress in nuclear cooperation too. In the near future, renewable energy will also emerge as an important component in the India-Australia energy mix. If Australia’s support for the International Solar Alliance – which India launched at the Paris talks in 2015 – was any indication, Australia will leverage its comparative strengths in solar power generation to initiate solar energy technology transfer to New Delhi.

Both national governments in India and Australia should be credited for maintaining constant momentum in bilateral ties over the last few years. Visits by the Indian Prime Minister and the Finance Minister to Australia have cemented the growing strategic ties but relations remain sub-optimal and need both economic and geopolitical heft. While sustained focus on key issues will remain, both nations should expand cooperation in sectors such as agricultural research, tackling climate change issues, and aid partnership.



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