Speak to the business community and it’s quickly apparent it’s starting to get a little twitchy. Despite the Coalition holding on to power in New South Wales, making Gladys Berejiklian the first woman to be elected Premier, what I am hearing as I walk up and down Collins Street is that Labor is poised to win the election when the people go to the polls on Saturday.
It’s a thought sending a shiver down the collective spine of business. Uncertainty leads to lower investment and consumer spending. Whether business looks to Labor’s promises on wages, taxes, or its vacillating attitude to free trade agreements, it is drawing cold comfort from the likelihood that Bill Shorten will occupy the lodge after the election, especially as his time in opposition has been characterised by populist rhetoric about “fat cats” and the “big end of town”.
Adding to business’ concerns is the fact the economy is starting to slow, with the national accounts showing the December quarter barely ticking over into positive territory at 0.2% growth. For the 2018 calendar year, the economy did grow 2.7%, allowing Treasurer Josh Frydenberg to claim that Australia continues to grow faster than all the G7 nations except the US. Yet for all his optimism, the markets were awash with rumours about a rate cut before the Reserve Bank board meeting last week — hardly a sign of a booming economy.
In my discussions with business people, they have been less than enamoured with the Coalition. The leadership struggles and the failure to implement an energy policy stand out. But let me assure you that doesn’t translate into support for Labor. A slowing economy, when coupled with some Labor policies, means they very much want to stick with the devil they know.
I can sympathise with their concerns. To take one example, Labor talking about sizeable increases in the minimum wage without any mention of productivity is a recipe for disaster — and not just for business.
But I’ve always been a glass-half-full person. So, I’m seeing some straws in the wind to suggest Labor in office would take a more responsible approach to the economy (and business) than Shorten’s rhetoric to date suggests. To begin with, a slowing economy should hopefully put the brakes on any grandiose wage gestures. So, too, with excessive government spending.
As the polls continue to suggest Shorten will win, it’s also significant his rhetoric is starting to soften. While he cannot cut his ties to the unions, he has been at pains to stress he will not be beholden to the party’s industrial wing once in office. He’s smart enough to know the unions need him in power far more than he needs them.
A Labor win could bring a more cohesive energy policy, something that has eluded the Coalition. Although business might not be enamoured with Labor’s policy, if it brings greater certainty, then it must be an improvement on what has happened over the past decade.
Finally, and this is of particular interest to me, history tells us Labor traditionally outspends the Coalition. Businesses in health, education and government services industries will benefit from Labor being on the Treasury benches, and this will be attractive for mergers and acquisitions in these sectors.
In addition, many large-scale infrastructure projects are underway in most Australian cities and are likely to continue for the next five to 10 years. Businesses in these sectors should thrive, especially if they are not exposed to unions. Finally, a slowing world economy will weaken the dollar, and that will prove a boon for our primary producers.
There is a downside, of course. Businesses exposed to consumers, as well as those in housing, banking and other financial services, are likely to find growth and improved margins difficult to achieve in the short-to-medium term.
Business’ most recent memories of Labor in power is the Rudd-Gillard-Rudd government — and for good reasons, they are not fond ones. I remember the internal discord, a disastrous attempt to introduce a mining tax, and ballooning public spending. But cast your minds to its Labor predecessor, the Hawke and Keating governments (1983-96). They delivered economic reform, budget surpluses, and, for the most part, political cohesion. Let’s hope Shorten takes his cue from those two administrations.