'Haughty' PM's authority within party is hugely diminished.

The Australian election result won't be known for a few days, but whatever happens, it is bad for business.

The two things business wants above all others are stability and strong leadership. But Prime Minister Malcolm Turnbull won't be in a position to provide either.

He is at risk of emerging as a lame duck leader, with reduced authority within his party and in Parliament, and potentially unable to make any of the difficult economic reforms business wants.

On the latest numbers, it doesn't look as if Labor will be able to form a government. That is a big relief to business, because Labor leader Bill Shorten is an opportunist and a populist who would have pursued an antagonistic relationship with business had he won government.

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But it doesn't look as if Turnbull will be able to give business what it wants either.

Turnbull wrested the Prime Ministership from Tony Abbott nine months ago with the promise of restoring the Coalition's electoral fortunes, and he hasn't delivered. Instead, the Liberal and National parties will hang on to government by a thread.

Turnbull will win about 75 of the 150 seats in the lower house of Parliament, the House of Representatives. Three or four Independents and a Green will also win seats, with Bill Shorten's Labor picking up the rest.

It is a recipe for instability.

With only 75 seats, Turnbull will have to turn to an Independent to take the Speaker's chair.

If he ends up with 74 or fewer seats he will have to rely on one or more independents to form government, with all the ensuing deal making and compromises.

Even if he wins 76 or more seats, which would give him a majority after appointing a speaker, he still won't be able to achieve much.

Whatever the final numbers, Turnbull's authority within the party is hugely diminished.

Abbott supporters will be emboldened and the risk is that one or more will break ranks and vote against legislation they don't like. And if Turnbull has to rely on one or more independents to pass legislation, the problem will be many times worse.

Since MMP was introduced two decades ago, New Zealand Prime Ministers have managed to navigate their way through minority governments. This is a relatively new phenomenon in Australia, and it's unclear how well the haughty Turnbull will perform in an environment where he will have to negotiate so much.

Turnbull will have to satisfy many different MPs and their interests if he wants to pass legislation and retain the confidence of the parliament.

For legislation to become law in Australia, it n has to be passed by the lower houseand by the Senate. Governments rarely command a majority in the Senate, but Turnbull looks as if he will have a motley bunch of Senators to negotiate with, including some Greens and anti-immigration campaigner Pauline Hanson.

In this environment, business leaders won't get the two things they most wanted from the Government.

The first is budget repair. Australian governments have been spending more than they take in taxation for several years, and the problem is structural or ongoing, not just due to a couple of bad years.

Any government wanting to fix this will need to make brave decisions about spending cuts, which will inevitably upset many sections of the community. Turnbull simply will not have the electoral standing or the standing with many of his MPs who will be concerned about losing their seats due to unpopular cuts.

The second is tax reform. Turnbull promised to cut the company tax rate from 30 per cent to 25 per cent and while there's broad support among the Coalition for the policy, we have to now ask how he'll be able to find the A$50 billion to pay for it.

In the longer term, business would like to see Australia's GST raised from 10 per cent to 12.5 or 15 per cent, bringing it closer to the OECD average of around 18 per cent. It is a more efficient way of collecting tax and, as an impost on consumption rather than production, is seen as supporting economic growth.

Only a brave, powerful and popular leader could carry it off. If Turnbull had any ambitions for tax reform coming into his second term, they are surely now on the backburner.

With the government hanging by a thread, business won't get the stability and certainty it was hoping for. It will damage confidence and businesses will stop taking risks and will curb their investing for growth. Ultimately, that is bad for the economy.