Bolsonaro says EU-Mercosur deal should trigger ‘domino effect’ boosting Brazil trade

(Reuters) – Brazilian President Jair Bolsonaro said on Saturday that the free trade treaty agreed by the European Union and South American bloc Mercosur should trigger a domino effect, encouraging other countries to also negotiate with Brazil.

The EU and Mercosur concluded two decades of talks on Friday, committing to more open markets in the face of a rising tide of protectionism.

“Surely other countries will be interested in negotiating with us, Japan included,” Bolsonaro told journalists on the sidelines of the G20 summit in Osaka, adding he expected a “domino effect”.

Asked about his encounter with U.S. President Donald Trump, Bolsonaro said they discussed ways to expand commercial ties, concerns about the Venezuela crisis, and the upcoming elections in Argentina. “There is a possibility that he (Trump) will visit Argentina next month,” Bolsonaro added.

He noted the importance of China as Brazil’s largest trade partner, saying he planned to “undo any misunderstanding” caused during his election campaign, when he criticized Chinese domination of key economic sectors in Brazil.

Bolsonaro also said he could visit the Asian country in the second half of 2019, possibly in October. “Maybe in the same trip we stop by Saudi Arabia,” he said.

Later on Saturday, Brazilian newspapers reported that Bolsonaro canceled his bilateral meeting this Saturday with Xi Jinping at G20 due to a delay in the agenda of the Chinese President.

Reporting by Gabriela Mello and Pedro Fonseca in SAO PAULO; Editing by Daniel WallisOur Standards:The Thomson Reuters Trust Principles.

Brazil and Australia negotiate direct flights from 2020

AIRWAY 1

Countries that have never had a direct flight, Australia and Brazil will be able to debut a route in the first quarter of 2020 between the cities of Melbourne and Sao Paulo. The information was revealed by Brazilian officials and the Australian ambassador to Brazil, Timothy Kane, after the end of the visa requirement for Australian tourists visiting the country of South America.

According to Kane, the state of Victoria would have the interest and financial resources to propose a direct flight between the cities of Melbourne and Sao Paulo, the financial capitals of both countries. “This flight will be another tool to expand our air connection, as well as facilitate connection with other countries, such as New Zealand, Papua New Guinea, Malaysia, Singapore, Thailand and China. From Shanghai and Beijing, the Chinese will be able to reach Brazil with just one connection, “said Gilson Neto, president of Embratur, a state-owned company that encourages tourism in the country – according to him, Brazil received only 60,000 of the 150 million Chinese tourists in 2018.

Australia has sent just over 40,000 tourists to Brazil last year, an increase of 24% compared to 2017. Currently, one of the most accessible routes to Oceania is through Santiago de Chile where LATAM has a direct flight to Melbourne held five times a week with a Boeing 787, plus a daily frequency to Auckland, New Zealand. Qantas flies four times a week from Sydney to the Chilean capital – the plane used on the route is the Boeing 747-400.

Since Chile and the Australian city started to be linked by direct flight, passenger movement has grown significantly – in 2018 there were 135,000 Australian tourists in Chile.

Possible candidates

Although the two representatives did not reveal possible details of the flight, it is more likely that it will also be operated by LATAM and Qantas, partners in the Oneworld alliance. The direct distance between Sao Paulo and Melbourne is just over 13,000 km, which can in theory be covered by aircraft of both airlines. Qantas could use the Boeing 787 (14,000 km range in the -9 version) and LATAM would have the Airbus A350-900 as the most indicated aircraft, with a range of about 15,000 kilometers.

Qantas even stated in 2017 that it had an interest in flying to another cities in the Americas like Rio de Janeiro in the next decade, but with aircraft capable of covering the route. Today the airline flies only to Houston and Dallas from Sydney, and Los Angeles, San Francisco and Vancouver, from Melbourne, but wishes to have a direct flight to New York, for example.

If the frequency is actually created, it will be the longest direct flight from Brazil, about 15 hours long. Currently, the longest route operated in Sao Paulo is made by Emirates Airline that connects Dubai to the Brazilian city with the Airbus A380.

Australian banks rally as conservative election win eases fears of new curbs

SYDNEY (Reuters) – Australian bank shares posted their biggest rally in a decade on Monday as a surprise conservative election win eased regulation fears, though a housing downturn and strict rules baked in since a misconduct inquiry could temper longer-term bullishness.FILE PHOTO: A board displaying stock prices is seen at the Australian Securities Exchange (ASX) in Sydney, Australia, February 9, 2018. REUTERS/David Gray

With every major opinion poll suggesting a win for the center-left opposition Labor party, bank stocks had traded at multiples below the broader market partly because of the party’s policies to end tax breaks for landlords and for share investors who don’t earn other income.

With those proposals now off the legislative agenda, shares of the top banks stormed to their biggest single-session rise since the 2008 financial crisis.

Shares of No. 1 lender Commonwealth Bank of Australia jumped as much as 7%, its biggest gain since 2009, while No. 2 lender Westpac Banking Corp was up over 8%, its biggest trading day by volume in 10 years. That pushed the broader Australian market up 1.4% and the financial sub-index 5.7% higher, the sharpest gain since November 2008.

The third-largest lender Australia and New Zealand Banking Group Ltd rose 7% and No. 4 player National Australia Bank Ltd was up 7.5% on the first trading day since the election.

The combined market value of the “Big Four” banks added over A$25 billion.

“The election outcome has removed the downside risk that certain policies posed to asset values (but) banks are now following the law that they should have been following for 10 years and the election outcome won’t change that,” said Deutsche Bank banking analyst Matthew Wilson, referring to responsible lending rules.

“We now return to the fundamentals associated with the extent of household debt.”

Australia’s central bank has warned of sluggish inflation as a housing correction and wage stagnation erode people’s spending power right in the aftermath of a protacted borrowing frenzy when house prices were rising rapidly until 2018.

Banks have already earmarked some A$6 billion to reimburse wronged customers, mostly for inappropriately charged fees, amid sustained criticism about an practice aired in an industry inquiry known as “fees for no service”.

Even after Monday’s rally, the Big Four banks were trading below their valuations before November 2017 when the inquiry was announced.

“The problems for the banks are not going away just because the government remains the same,” said ​Sean Sequeira, chief investment officer at Alleron Investment Management.

“Slowing credit growth, increases in regulatory costs, a slowing economy and other issues related to the Royal Commission haven’t gone away.”

Reporting by Byron Kaye; Editing by Sam HolmesOur Standards:The Thomson Reuters Trust Principles.

Winning during economic slowdown, Australia’s Morrison must halt rot

SYDNEY (Reuters) – Surprisingly retained by Australians in a national election over the weekend, Prime Minister Scott Morrison’s center-right government now needs to find a fast way out of a worrying slowdown in an economy that has been recession-free since 1991.Australian Prime Minister Scott Morrison speaks to the media as he arrives at the Horizon Church in Sutherland in Sydney, Australia, May 19, 2019. AAP Image/Joel Carrett/via REUTERS

The Reserve Bank of Australia (RBA) is expected to cut interest rates, already at record lows, later in the year, but economists say Morrison should be administering some fiscal stimulus in the coming months, rather than remain fixated on delivering Australia’s first budget surplus in a decade.

“If they really are hell bent on delivering a surplus, the Australian economy and its people will suffer,” said Frank Stilwell, an emeritus professor and Keynesian economist at the University of Sydney.

“They can’t deliver tax cuts and budget surpluses in a stagnant and possibly declining economy,” Stillwell said, describing the campaign pledges as false promises.

The housing market is suffering its worst downturn in a generation and wages growth is anemic, leading households to sharply cut back on spending.

During the election campaign, Morrison trumpeted the record pace of job creation, and the help that planned tax cuts would provide for millions of indebted households, all to be accomplished while his Liberal-National coalition government brought the budget back toward a surplus.

Financial markets celebrated an election result that confounded opinion polls, finding “relief from the elimination of the threat of Labor’s less business-friendly policies,” according to Eleanor Creagh, economist at Saxo Bank.

Australia’s benchmark equity index climbed to an 11-year top and the local dollar bounced off a four-month trough of $0.6862 touched on Friday to be last up 0.6% at $0.6911.

“Whilst the markets are up today on the back of the Morrison government returning to power, our suspicion is in the second half of the year fiscal stimulus may be required,” said Perpetual’s head of investment strategy Matthew Sherwood.

Australia’s $1.3 trillion economy is sputtering.

Growth braked to an annualized 0.8 percent in the December quarter, unemployment is ticking up and inflation is still elusive, giving three good reasons to administer policy stimulus.

The March quarter was probably even worse. The data will be released next month. But forecasts show economic growth is likely to have been the weakest since the 2008 global financial crisis.

PROSPECTS FOR RATE CUTS

As clouds gather, the government has already responded by reducing some pressure on the cost of living by raising subsidies for childcare, encouraging power companies to cut electricity bills and announcing lower income taxes.

But more will be needed, analysts said, even as the center-right coalition is inclined to slash government debt and deliver a budget surplus next year.

“Greater confidence and intentions are required to turn the cycle and encourage demand to pull activity forward. If these spirits stay hibernated downside risk will remain elevated,” Morgan Stanley strategist Chris Nicol said.

Otherwise, he said, slowing growth and a lag-effect from tax cuts could open the door for further economic disappointment and hurt corporate earnings.

Perpetual’s Sherwood, and a majority of more than 40 economists polled by Reuters in late-April expect at least two central bank interest rate cuts this year.

Investors now await a crucial speech by RBA Governor Philip Lowe on Tuesday for stronger clues to the timing of any rate reductions.

Earlier this month, the central bank said an easing might be needed if the labor market did not stay strong. Since then, data have showed the unemployment rate rising to 5.2% in April from a decade low of 4.9% even as hiring beat forecasts.

Then, there is also the risk from slowing global growth as a tariff-war between the United States and China turn bitter by the day.

Australia’s export-heavy economy is largely reliant on global trade so a tariff war is bad news for the nation.

“I think the bigger issue that Australia faces is a home-grown one, led by the housing market. We can augment that with trade war risks,” Sherwood said.

Reporting by Swati Pandey; Editing by Simon Cameron-MooreOur Standards:The Thomson Reuters Trust Principles.

Australia’s conservative coalition secures parliamentary majority

SYDNEY (Reuters) – Australia’s conservative coalition secured an outright parliamentary majority on Monday following a shock election victory, allowing Prime Minister Scott Morrison to progress his legislative agenda without the support of independents.Australia’s Prime Minister Scott Morrison with wife Jenny, children Abbey and Lily after winning the 2019 Federal Election, at the Federal Liberal Reception at the Sofitel-Wentworth hotel in Sydney, Australia, May 18, 2019. AAP Image/Dean Lewins/via REUTERS

Morrison’s coalition defied forecasts to be re-elected on Saturday in what he called a political miracle.

The Australian Electoral Commission (AEC) on Monday said Morrison’s coalition has won 76 seats in Australia’s parliament, which is comprised of 151 elected lawmakers.

The AEC said the coalition is ahead in one of the three seats that have not been declared.

RELATED COVERAGE

Respected Australian Broadcasting Corporation election analyst Antony Green said the Morrison’s coalition will retain its lead in at least one more seat, allowing it to select a parliamentary speaker and still retain a majority.

The result sent Australian banking, property and health-related stocks to an 11-year high on Monday as investors cheered.

After a long and bitter election campaign, Morrison said Australians have had enough of politics.

“They’ve had their say, they’ve made their decision. Now they expect us to get on with it so they can get on with their lives,” Morrison told 2GB Radio in Sydney. “That’s what the quiet Australians have said and I’m going to honor that.”

One of Morrison’s first tasks after being sworn in will be a cabinet reshuffle after the retirement of several front-benchers. The personnel shift will be closely watched for signs of policy changes.

“The cabinet reshuffle will indicate whether he plans to move on polices such as climate change,” said Rodney Tiffen, Emeritus Professor of Political Science, University of Sydney.

“A big signal will be whether he moves the ministers for environment and energy. If he replaces them with people who have argued for stronger action, it will be marker.”

Morrison has rejected efforts to increase the use of renewables to generate electricity, arguing it would damage the economy which relies on coal-fired power and mining exports.

The coalition has stuck to an official target to cut carbon emissions by 26-28% from 2005 levels by 2030, but the United Nations has warned Australia was unlikely to meet this goal.

The defeated opposition Labor party campaigned on more aggressive targets, aiming to cut carbon emissions by 45 percent by 2030 and reach 50 percent renewable power by 2030.

The re-elected Liberal-led coalition has no renewable energy target beyond 2020.

Reporting by Colin Packham; Editing by Michael PerryOur Standards:The Thomson Reuters Trust Principles.

In coal we trust: Australian voters back PM Morrison’s faith in fossil fuel

MELBOURNE (Reuters) – Australia’s re-elected Prime Minister Scott Morrison once brandished a lump of coal in parliament, crying, “This is coal – don’t be afraid!” His surprise win in what some dubbed the ‘climate election’ may have stunned the country, but voters should know what comes next in energy policy – big coal.FILE PHOTO: A reclaimer places coal in stockpiles at the coal port in Newcastle, Australia, June 6, 2012. REUTERS/Daniel Munoz/File Photo

Battered by extended droughts, damaging floods, and more bushfires, Australian voters had been expected to hand a mandate to the Labor party to pursue its ambitious targets for renewable energy and carbon emissions cuts.

Instead, they rejected the opposition’s plans for tax reform and climate action, re-electing a Liberal-led center-right coalition headed by Morrison, a devout Pentecostal churchgoer who thanked fellow worshippers for his win at a Sydney church early on Sunday.

The same coalition government last year scrapped a bipartisan national energy plan and dumped then-prime minister Malcolm Turnbull because he was viewed as anti-coal.

Power companies and big energy users, who last year rallied behind the national energy plan to end a decade of policy flip-flops, said on Sunday they wanted to work with the coalition anew to find ways to cut energy bills and boost power and gas supply.

“We just need this chaotic environment to stop and give us some real direction,” said Andrew Richards, chief executive of the Energy Users Association of Australia, which represents many of the country’s largest industrial energy users.

The country’s power producers – led by AGL Energy, Origin Energy and EnergyAustralia, owned by Hong Kong’s CLP Holdings – want the government to set long-term goals to give them the confidence to invest an estimated A$25 billion ($17 billion) needed for new power supply.

“Customers are looking to energy companies and the government to get bills down and secure our energy supplies,” said EnergyAustralia Managing Director Catherine Tanna.

“We have an opportunity now to reset our relationships and recommit to working toward a clear, stable and long-term energy policy,” she said in comments emailed to Reuters after Saturday’s election.

At Origin Energy, Chief Executive Officer Frank Calabria said in emailed comments he would be looking for appropriate policy that would allow the company to invest in a pumped hydro project and gas exploration in the Northern Territory.

DIVISIVE DEBATE

Australia has endured years of divisive debate on energy policy, with attacks by the Liberal-led coalition on Labor’s “carbon tax” policy helping to bring down the government of then-leader Julia Gillard in 2013.

Despite top companies, from global miner BHP Group to Australia’s biggest independent gas producer Woodside Petroleum, calling for the country to put a price on carbon emissions, the Liberal-led coalition killed the carbon price mechanism in 2014.

Its own attempts to fashion a bipartisan national energy policy foundered amid fierce opposition from coal supporters and climate skeptics on its right-wing.

Its policy now is focused on driving down power prices and beefing up power supply. For the moment that includes underwriting a new coal-fired power plant and providing A$1.38 billion toward a A$4 billion energy storage expansion at state-owned hydropower scheme Snowy Hydro, designed to back up wind and solar power..

While the coalition stuck to an official target to cut carbon emissions by 26-28% from 2005 levels by 2030, the United Nations warned last year Australia was unlikely to meet this goal.Slideshow (4 Images)

The opposition Labor party campaigned on more aggressive targets, aiming to cut carbon emissions by 45 percent by 2030 and reach 50 percent renewable power by 2030. The re-elected Liberal-led coalition has no renewable energy target beyond 2020.

ADANI JOBS = VOTES FOR COALITION

In the election, stopping a coal mine in the northern state of Queensland proposed by Indian conglomerate Adani Enterprises was the catchword for inner city voters in the south pressing for tough action on climate change.

Labor, torn between its traditional union base and its urban environmentally conscious supporters, made no commitments on the Adani mine. The move backfired in the mining heartland of Queensland, where voters with jobs in mind handed the Liberal-led coalition crucial seats in the election.

Adani Mining Chief Executive Lucas Dow said the state Labor government, which has repeatedly extended environmental reviews of Adani’s Carmichael mine, should learn from Labor’s defeat in Queensland, listen to its own voters and let the mine go ahead.

“As evidenced by this weekend’s election results, Queenslanders have no tolerance for political actions that are unjust and put people’s livelihoods at risk,” Dow said in a statement.

A spokesman for Queensland’s Department of Environment and Science said departmental representatives had met with Adani on Monday and “negotiations are continuing” on the company’s plans.

Energy users and the power industry, however, see the transition to cleaner energy as inevitable, with states pushing ambitious targets out of line with the national government.

At the same time, Australia, the world’s second-largest exporter of coal for power, faces falling demand for coal as its biggest customers – Japan, South Korea, China, Taiwan and India – are shifting towards cleaner energy, said Tim Buckley, a director at the Institute for Energy Economics and Financial Analysis.

“I would expect the coalition to fight a rearguard action that will slow the transition, but they can’t stall it,” he said.

Reporting by Sonali Paul; Editing by Richard Pullin and Kenneth MaxwellOur Standards:The Thomson Reuters Trust Principles.

Australia PM struggles to meet tax relief election pledge, central bank urges stimulus

SYDNEY (Reuters) – Australia’s re-elected coalition said on Tuesday it would struggle to deliver tax breaks for tens of millions of voters by July 1, a cornerstone of it’s election campaign, as the central bank called for stimulus to aid a slowing economy.Australian Prime Minister Scott Morrison speaks to the media as he arrives at the Horizon Church in Sutherland in Sydney, Australia, May 19, 2019. AAP Image/Joel Carrett/via REUTERS

Treasurer Josh Frydenberg said parliament may not convene in time to pass the tax legislation, promised for July 1, due to vote counting and checking of results from Saturday’s election.

“The legislation needs to be passed and it will be the first priority of business once the parliament resumes,” he told reporters in the capital Canberra.

“It is not likely that the parliament will resume before the end of June because we have to wait for the writs to be returned,” he added.

The central bank, which is considering its first interest rate cut since 2016 as soon as next month, said on Tuesday tax relief was needed to boost an economy hit by a slowdown in household consumption.

Reserve Bank of Australia Governor Philip Lowe said the main reason for a downward shift in economic momentum – growth braked to an annualized 0.8% in the December quarter – was a slowdown in household consumption.

“Stronger growth in income will help, but the more important factor is some tax relief,” Lowe said in a speech calling on the new government to play its part in boosting household incomes.

The Liberal National coalition put tax rebates to about 10 million middle- and low-income earners – worth up to A$1,080 ($746.28) per person – at the heart of its campaign.

After a surprise victory on Saturday, Prime Minister Scott Morrison said counting and checking of votes was unlikely to be finished in time for parliament to convene before the end of the financial year on June 30, when rebates were set to be issued once Australians filed their tax returns.

As a result, the coalition said it was looking for alternatives to help an economy that probably grew in the March quarter by less than 2% on an annual basis, the lowest growth since the global financial crisis.

Frydenberg said the tax rebates would be delivered before July 1, 2020, but he declined to be more specific on the timing.

OUTRIGHT MAJORITY

The central bank would have welcomed the fillip to consumer demand as it wrestles with whether to cut interest rates from already record lows.

The first-quarter growth numbers will be released on June 5, a day after the RBA holds its next policy meeting where a cut to interest rates is a live possibility. The RBA has left its benchmark rate at a record low 1.50% since August 2016.

If the tax breaks are delayed, maybe for months or even a full year, it would pile pressure on the government already facing criticism for possibly breaking an election promise.

Economists had estimated the tax breaks would inject about A$7.5 billion ($5.18 billion) into the economy over 2019/20, lessening the need for a reduction in interest rates.

While delivering the tax rebates is a headache for Morrison, an outright majority will be a boost for his legislative agenda.

Morrison entered the election at the head of a minority government after a series of defections, but secured an outright majority win on Saturday.

The Australian Electoral Commission said on Tuesday that Morrison’s coalition was ahead in three seats where counting was too close to call. Should the coalition keep its lead, it will control 78 seats.

While coalition supporters celebrated, some Australians were exploring their options for leaving the country.

New Zealand’s Immigration Minister Greg Forsythe said 512 Australians on Sunday registered interest in obtaining a Kiwi visa, a jump of 2,560% from May 12.

Reporting by Colin Packham and Wayne Cole in Sydney; Additional reporting by Charlotte Greenfield in Wellington; Editing by Michael Perry and Darren SchuettlerOur Standards:The Thomson Reuters Trust Principles.

Australian deputy PM re-elected after conservative coalition holds power

SYDNEY (Reuters) – Australian Deputy Prime Minister Michael McCormack was on Thursday re-elected leader of the junior partner in the coalition government after a strong party showing in last week’s election dispelled internal discontent about his performance.

McCormack was elected leader of the rural-based National Party in February 2018 but he was left struggling to hold onto his position after voters abandoned the party in a state election this year.

McCormack’s position improved dramatically on Saturday though when the party fared better than expected in a general election that saw Prime Minister Scott Morrison retain power in an upset result.

The result undercut internal criticism and McCormack was unopposed when he elected in a vote of party lawmakers in Canberra.

Under the terms of the coalition deal with Morrison’s conservative Liberal Party, the leader of the Nationals automatically becomes deputy prime minister.

Bridget McKenzie was also re-elected as deputy leader of the Nationals.

“This is a team whose heart is in the regions and who remain determined to deliver on the faith placed in us by regional Australia,” McCormack said in an emailed statement.

The opposition Labor party is also seeking a new leader after Bill Shorten resigned on Saturday following the party’s defeat at the hands of Morrison’s coalition.

Reporting by Colin Packham; Editing by Robert BirselOur Standards:The Thomson Reuters Trust Principles.

In coal we trust: Australian voters back PM Morrison’s faith in fossil fuel

MELBOURNE (Reuters) – Australia’s re-elected Prime Minister Scott Morrison once brandished a lump of coal in parliament, crying, “This is coal – don’t be afraid!” His surprise win in what some dubbed the ‘climate election’ may have stunned the country, but voters should know what comes next in energy policy – big coal.FILE PHOTO: A reclaimer places coal in stockpiles at the coal port in Newcastle, Australia, June 6, 2012. REUTERS/Daniel Munoz/File Photo

Battered by extended droughts, damaging floods, and more bushfires, Australian voters had been expected to hand a mandate to the Labor party to pursue its ambitious targets for renewable energy and carbon emissions cuts.

Instead, they rejected the opposition’s plans for tax reform and climate action, re-electing a Liberal-led center-right coalition headed by Morrison, a devout Pentecostal churchgoer who thanked fellow worshippers for his win at a Sydney church early on Sunday.

The same coalition government last year scrapped a bipartisan national energy plan and dumped then-prime minister Malcolm Turnbull because he was viewed as anti-coal.

Power companies and big energy users, who last year rallied behind the national energy plan to end a decade of policy flip-flops, said on Sunday they wanted to work with the coalition anew to find ways to cut energy bills and boost power and gas supply.

“We just need this chaotic environment to stop and give us some real direction,” said Andrew Richards, chief executive of the Energy Users Association of Australia, which represents many of the country’s largest industrial energy users.

The country’s power producers – led by AGL Energy, Origin Energy and EnergyAustralia, owned by Hong Kong’s CLP Holdings – want the government to set long-term goals to give them the confidence to invest an estimated A$25 billion ($17 billion) needed for new power supply.

“Customers are looking to energy companies and the government to get bills down and secure our energy supplies,” said EnergyAustralia Managing Director Catherine Tanna.

“We have an opportunity now to reset our relationships and recommit to working toward a clear, stable and long-term energy policy,” she said in comments emailed to Reuters after Saturday’s election.

At Origin Energy, Chief Executive Officer Frank Calabria said in emailed comments he would be looking for appropriate policy that would allow the company to invest in a pumped hydro project and gas exploration in the Northern Territory.

DIVISIVE DEBATE

Australia has endured years of divisive debate on energy policy, with attacks by the Liberal-led coalition on Labor’s “carbon tax” policy helping to bring down the government of then-leader Julia Gillard in 2013.

Despite top companies, from global miner BHP Group to Australia’s biggest independent gas producer Woodside Petroleum, calling for the country to put a price on carbon emissions, the Liberal-led coalition killed the carbon price mechanism in 2014.

Its own attempts to fashion a bipartisan national energy policy foundered amid fierce opposition from coal supporters and climate skeptics on its right-wing.

Its policy now is focused on driving down power prices and beefing up power supply. For the moment that includes underwriting a new coal-fired power plant and providing A$1.38 billion toward a A$4 billion energy storage expansion at state-owned hydropower scheme Snowy Hydro, designed to back up wind and solar power..

While the coalition stuck to an official target to cut carbon emissions by 26-28% from 2005 levels by 2030, the United Nations warned last year Australia was unlikely to meet this goal.Slideshow (4 Images)

The opposition Labor party campaigned on more aggressive targets, aiming to cut carbon emissions by 45 percent by 2030 and reach 50 percent renewable power by 2030. The re-elected Liberal-led coalition has no renewable energy target beyond 2020.

ADANI JOBS = VOTES FOR COALITION

In the election, stopping a coal mine in the northern state of Queensland proposed by Indian conglomerate Adani Enterprises was the catchword for inner city voters in the south pressing for tough action on climate change.

Labor, torn between its traditional union base and its urban environmentally conscious supporters, made no commitments on the Adani mine. The move backfired in the mining heartland of Queensland, where voters with jobs in mind handed the Liberal-led coalition crucial seats in the election.

Adani Mining Chief Executive Lucas Dow said the state Labor government, which has repeatedly extended environmental reviews of Adani’s Carmichael mine, should learn from Labor’s defeat in Queensland, listen to its own voters and let the mine go ahead.

“As evidenced by this weekend’s election results, Queenslanders have no tolerance for political actions that are unjust and put people’s livelihoods at risk,” Dow said in a statement.

A spokesman for Queensland’s Department of Environment and Science said departmental representatives had met with Adani on Monday and “negotiations are continuing” on the company’s plans.

Energy users and the power industry, however, see the transition to cleaner energy as inevitable, with states pushing ambitious targets out of line with the national government.

At the same time, Australia, the world’s second-largest exporter of coal for power, faces falling demand for coal as its biggest customers – Japan, South Korea, China, Taiwan and India – are shifting towards cleaner energy, said Tim Buckley, a director at the Institute for Energy Economics and Financial Analysis.

“I would expect the coalition to fight a rearguard action that will slow the transition, but they can’t stall it,” he said.

Reporting by Sonali Paul; Editing by Richard Pullin and Kenneth MaxwellOur Standards:The Thomson Reuters Trust Principles.

Australia PM in Solomon Islands to build ties with eye on China

SYDNEY (Reuters) – Prime Minister Scott Morrison arrived in the Solomon Islands on Sunday, the first visit by an Australian leader in more than a decade as Western nations seek to rein in China’s influence in the Pacific.FILE PHOTO: Prime Minister Scott Morrison speaks to the media as he arrives at the Horizon Church in Sutherland in Sydney, Australia, May 19, 2019. AAP Image/Joel Carrett/via REUTERS

The trip comes as the United States and its regional allies try to ensure that Pacific nations with diplomatic links to Taiwan do not severe those in favor of ties with Beijing.

The Solomon Islands is one of six Pacific countries to recognize Taiwan, a policy now in question after recent elections. China views Taiwan as a renegade province with no right to state-to-state ties.

Morrison flew into the capital Honiara on Sunday on his first overseas trip since winning re-election last month. He did not make any public comments on arrival, but has said the visit will show Australia’s commitment to the region.

“The Pacific is front and center of Australia’s strategic outlook,” he said in a statement last week.

Morrison’s trip comes just a few days before a visit to the Solomon Islands by New Zealand deputy prime minister Winston Peters, who will also travel to Vanuatu this week.

Australia has historic ties with the Pacific, but China has raised its influence in the region in recent years.

Keen to undercut China’s Belt and Road Initiative, which seeks to recreate the old Silk Road to link China with Asia and Europe through big infrastructure projects, Australia has directed ever larger amounts of its foreign aid to the Pacific.

Australia has offered Pacific countries up to A$3 billion in grants and loans to build infrastructure, as Morrison declared the region was “our patch”.

Canberra said last year it would spend $139 million to develop undersea internet cable links to Papua New Guinea and the Solomon Islands, amid national security concerns about Chinese telecoms company Huawei Technologies Co Ltd

Australia became the first country to ban the world’s largest maker of telecom network gear from its nascent broadband network, a step the United States followed this year by effectively banning U.S. firms from doing business with Huawei.

President Xi Jinping said last month China has offered to help developing nations and is not seeking a sphere of influence in Pacific Ocean island states.

The issue of climate change, which has at times strained Australia’s relationship with its Pacific neighbors, will probably feature prominently during the visit, Australian broadcaster SBS News said on Sunday.

Peter Kenilorea Jr, a Solomon Islands legislator, said he wanted Australia to show “stronger leadership” on climate change, SBS News journalist Pablo Viñales said in a tweet on Sunday.

Last month, Fiji’s prime minister hit back at remarks by an Australian politician that Fijians should seek higher ground in response to higher seas.

Reporting by Colin Packham and Will Ziebell; editing by Darren SchuettlerOur Standards:The Thomson Reuters Trust Principles.