MNI Australia's Morrison Elected Liberal Leader, PM-Designate

By Sophia Rodrigues

     SYDNEY (MNI) - Scott Morrison has emerged as the leader of the Liberal

Party and is now Prime Minister-designate of Australia, replacing Malcolm

Turnbull.

     Morrison is set to be appointed Australia's sixth prime minister in ten

years after the Liberal Party voted in favor of spilling Turnbull's leadership,

paving way for another Liberal party member to take the position. Morrison won

45 to 40.

     The party meeting took place after his challenger ex-Home Affairs Minister

Peter Dutton delivered a petition containing 43 signatures calling for a meeting

of the parliamentary Liberal Party. The meeting voted 45 to 40 for a leadership

spill, ABC News reported.

     Three Liberal Party members contested for the top position -- Peter Dutton,

Foreign Affairs Minister Julie Bishop and Treasurer Scott Morrison. Bishop was

eliminated in the first round, so the final contest was between Dutton and

Morrison.

     Earlier Friday Dutton, who challenged Turnbull's leadership earlier this

week, was cleared to remain in parliament following an advice from Solicitor

General that he is "not incapable" of sitting as a member of the House of

Representatives by way of section 44 (v) of the constitution.

     Dutton's eligibility was in doubt following reports the childcare company

operated by his family trust had received more than A$5.6 million in

Commonwealth funding since 2014. According to section 44(v) of the constitution

that any person who "has any direct or indirect pecuniary interest in any

agreement with the public service of the Commonwealth" is disqualified from

sitting as a member of Parliament.

     The key catalyst for the current political crisis was announcement by

Turnbull on Monday, under pressure from internal critics, that he's postponing

plans to legislate the emissions reduction target for the National Energy

Guarantee.

     According to reports, the rebels opposed legislating the target because

they claimed Australia was surrendering its sovereignty to the Paris climate

targets and also because Labor government could easily ramp up the emissions

reduction target that had been proposed by Turnbull.

     According to Westpac strategist Sean Callow, the Australian dollar

typically ignores local politics on the reasonable assumption that commodity

prices and yield differentials are the key drivers but the political drama this

week has been a rare occasion when it has hurt the currency.

     But Callow added that the effect on the Australian dollar is likely to be

short-lived. "Instead, the US should dominate market attention in the coming

week, with a great deal of its own political news creating headline risk and Fed

chairman Powell's speech at the annual Fed conference at Jackson Hole," he wrote

in a note Thursday.

     Nomura Strategist Andrew Ticehurst said the current uncertainty can hardly

be helpful for consumer and business sentiment and he will watch this data

closely over the next month or two. 

     At the same time, he noted that Australians have become used to federal

political instability over the past decade but this hasn't prevented a further

extension of 27 consecutive years of growth.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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