Abbott's 12-point plan to transform Australia

Not many Australians know what to expect from the Coalition... Some dramatic reforms are on the way that will include big shifts for the business community.

The 2013 election result will totally change the Australian nation. The Coalition plans one of the most dramatic transformations of the nation that we have seen for decades. And most of the changes will either not require legislation, or the minor parties will support the legislation.

Accordingly, Senate control is not vital in most areas, except for the 'double dissolution' issues of carbon tax and the end to the building industry cartel-style agreements. For what it is worth I can’t imagine that the ALP has an appetite for an election on the carbon tax and/or the building cartel-style agreements. Australians hate early elections and the ALP will almost certainly be even more savagely mauled than on September 7. But stranger things have happened.

I am going to list 12 fundamental changes that will take place in the wake of a Coalition victory – six will be covered today and six tomorrow. In many of the changes you will discover a surprising thrust: in the six years of opposition the Coalition has shifted from being a big business party to more of a small business party, because during those six years the large corporations turned their back on the Coalition and (unsuccessfully) wooed the ALP government. And so we are going to see a number of large organisations become critical of Tony Abbott and the new government.

But they are too late. They will need to adapt to this new style of government.

In Australia election campaigns are about politics; after the election comes the government. And so the 2013 election campaign was mainly confined to politics and few of the plans of the Coalition were debated.

Regular readers of my commentary will know that I have been describing some of the Coalition plans (The Coalition's business booster shotsAugust 14) but I have been stunned that there has been so little coverage of them in the wider media.

Last week I was yarning to the chief executive of one of our largest corporations, who had no idea of how the Coalition’s plans would affect his business and particularly his industrial relations.

He turned out to be very pleased. If that CEO didn’t understand the Coalition’s plans then I am sure that the vast majority of the population is in the same boat.

And so I will start the 2013 agenda for the 44th parliament with six ways the Coalition plans to transform the nation. Tomorrow there will be another six.

Change 1

This is a government that is about fostering small business, with the small business minister (and small business crusader) Bruce Billson in the inner cabinet. That’s where the proposed increased employment will be generated. And nothing illustrates that better than the fact that there will be a company tax reduction of 1.5 per cent to 28.5 cents in the dollar, but the largest 3200 tax payers will need to pay a levy equal to the tax cut. In other words they will receive no benefit at all from the tax reduction and indeed their shareholders will receive less franking credits than they did before. This sets the tone. There will be more actions like that.

Change 2

(Very little legislation required): The Coalition plans the biggest de-regulation exercise ever attempted in Australia. Many will believe the public service will snow the Coalition and the de-regulation will not take place. That is possible, but I simply don’t believe it. The Coalition shadow cabinet ministers have built themselves into a frenzy of de-regulation preparation. It stuns me that the previous government didn’t press Tony Abbott much harder to explain what regulations are going to be abandoned, because with each regulation there is a whole series of vested interests that will be very upset when they discover that their pet regulation has been abolished. And with every regulation comes a group if of public servants who will need to find other work.

There has been the most enormous rise in the cost of doing business in Australia in the last decade and in many areas regulation has been a bigger contributor than industrial relations. The final years of the Howard government, plus the six years of ALP government, contributed to this rise in regulation that is now going to be wound back – and wound back dramatically. All businesses that are being affected by regulation should be contacting the government at whatever level they have access – from local member up. While the first and second year’s deregulation is in place there is always room for more, especially if it saves government money.

Change 3

(The required legislation will be almost certainly supported by minor parties): A pivotal policy of the Abbott government is to extend the protection offered to consumers against unfair contracts to small business. Most large companies and organisations will need to completely rewrite the bulk of their contracts. Few have made preparation. Earlier this year I illustrated the sort deregulation and fair contract issues that will come up (Abbott shrugs off Labor’s small business squeezeJanuary 15). 

There will be an enormous lobby campaign to prevent the Coalition undertaking the ‘fair contract’ measure. Kevin Rudd had such action in his 2007 program but the lobbyists won and he abandoned it. The most vigorous opposition will come from shopping centres and franchise groups. Both are afraid that the way they contract with their tenants and franchisees simply won’t pass any fairness test. So expect a series of articles warning of the dangers of this action. Will the Coalition buckle? It has been a clear policy over the last six years – I don’t think so.

Change 4

The fringe benefits tax will give a huge boost to the motor industry and help those who work for charities, hospitals and public service but will not necessarily save the motor making industry, and in particular General Motors. Most of the FBT demand comes to Ford (which is closing its plant) and Toyota. A really smart thing for the government to do would be to link the FBT concession to cars made in Australia, but I am not sure the Coalition is going to do that. There certainly has been no announcement.

Change 5

Tony Abbott wants to be known as ‘Mr Infrastructure’, so you can expect infrastructure projects around the country. There are simply not enough spare taxpayer dollars to fund the level of infrastructure that the Coalition wants to push forward with (Road bumps ahead for Mr Infrastructure, August 29). It is going to be necessary to tap the superannuation movement for capital and issue securities that do not carry very high risks.

The problem is that many of the users of infrastructure, like car owners, health beneficiaries and those using public transport, will not take kindly to the ‘user pays’ principle which underlines the infrastructure securities that are set to be issued to superannuation funds. People have come to expect these services to be funded out of tax revenue and not superannuation revenue, which involves a charge for capital. We will have major debate about this, but Australia needs massive infrastructure investment to improve its productivity to offset the decline in mining investment. The government will need to tap the self-managed funds, which collectively have now become the largest players in superannuation (about 31 per cent of the funds under management), eclipsing industry funds and other providers.

Change 6

(Legislation required, which will be difficult): There will be a totally new approach to carbon management and companies will be invited to tender for government money to reduce their carbon. The plan is that the investment will be shared between the government and the corporations/organisations and those that offer the best tenders will be rewarded with a government aid package on the basis of their tender (The Coalition's carbon plan is worth a second lookSeptember 4). They don’t get the money until they reduce the carbon, although once they have achieved their objective there is an ironclad guarantee.

If it can be done, abolishing the carbon tax will be an enormous boost to many businesses. For example, the tax has cost Qantas over $100 million dollars. All around the world employment has become more important than the carbon. This will not always be the case but it is the way it is now, and that fact is underlined by our election result. The carbon community says that the government has not allowed enough money to make the Direct Action plan to work. They may be right, but it is much too early to say. It will, however, create a new carbon consensus in the community that makes far more sense than a carbon tax introduced at a time when the price of electricity was already going up dramatically.

Tomorrow’s six more changes including the new investment outlook, how Clive Palmer can help Australia and how the Coalition will revamp industrial relations and employment for all enterprises – but NOT by returning to WorkChoices.

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