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Whyalla ‘wipeout’ tests Major Parties in an election year

News this week that ASX-listed Arrium (formerly OneSteel, spun out of BHP, ASX:ARI) was placed in voluntary administration comes at a time when South Australia was already shaping up as a key battleground state for any federal election this year, Double Dissolution or otherwise.

Administrators Grant Thornton were called in this week by Arrium’s board after a debt restructure deal was rejected by creditors including Australia’s Big Four banks.  Whyalla’s steelworks and mining operations employ around 3,000 people, and represents around 10% of the town’s direct employment.  Associated economic activity from OneSteel’s operations is exponentially more significant to the town again.

(If Whyalla is familiar to you but you can’t recall why, this video may help)

With rampant commentary on other major employment generators in South Australia, such as car manufacturing and submarine building & maintenance, this development with Arrium creates a significant headache for the Government, and its most high profile South Australian (and incidentally Minister for Industry) Christopher Pyne.

Roy Morgan’s poll in late March had the Coalition Government suffering a 7.5% swing against it in South Australia, moving to a 55.5-44.5 split to the Labor Opposition.  This would have a significant impact on the Turnbull Government, requiring Pyne to focus heavily on retaining his seat rather than campaigning elsewhere, and the likely loss of Hindmarsh & Boothby.

Bill Shorten understands what’s at stake in South Australia, and last week in Adelaide committed a Labor Government to building 12 submarines through the Australian Shipbuilding Corporation in the state.  He dismissed a hybrid model, or an off-the-shelf purchase from a more developed shipbuilding nation.  With the controversy around the reliability of the Collins-class subs, it’s possible this commitment will play well in SA, but less so elsewhere.

The other complicating factor in South Australia is Nick Xenophon.  Senator Xenophon made a number of remarks about the Arrium situation and other issues at the National Press Club this week (read here), and he is clearly prepared for a double dissolution election, having registered and organised his “Nick Xenophon Team” to field candidates in SA and other states.  As pointed out by another cross-bench Senator this week, with Xenophon’s record of voting more than 60% with the Greens in the Senate, an expanded Xenophon “Team” could spell trouble for a re-elected Coalition Government.

 

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