Business fears over long campaign
BUSINESS leaders have warned that a dragged-out eight-month election campaign could hurt the economy, with big-ticket spending decisions by companies to be put on hold given the political uncertainty in Canberra.
Indeed, the appointment of the next Reserve Bank governor or reappointment of current head Glenn Stevens is set to become a political football with his current term set to expire just three days after the September 14 election.
Business leaders were anxious about the impact of an extended election campaign on consumer confidence, with shoppers traditionally freezing spending decisions leading up to election day. But the one consolation expressed by many chief executives, such as Myer boss Bernie Brookes, was that an election would hopefully deliver a clear mandate to one of the major parties and put an end to the instability of the government's precarious relationship with the minor parties and independents that keep it in power.
"We welcome the announcement of an early election to deliver leadership certainty and stability," Mr Brookes told BusinessDay. "Business and consumers want and need certainty in this current climate of global and domestic economic and political uncertainty."
Mr Brookes also made an early play for a future government to review industrial relations policy and tackle the issue of the $1000 GST-free loophole exploited by overseas online retailers.
"We want to see the next elected government deliver reforms that drive productivity improvements, fair treatment of domestic retailers now operating in a global marketplace, and harmonisation of legislation where retailers are hampered by differing state-based regulation."
The focus for many remains the effect on purchasing and investment decisions.
‘‘However, in the short term, Australia nowfaces an eight-month election campaign which will mean that some significant investment decisions by business may be put on hold,’’ Australian Industry Group chief executive Innes Willox said.
Wesfarmers boss Richard Goyder said campaigns traditionally put a lid on consumer expenditure.
‘‘There is typically a bit of a lull in what consumers do in the lead-up to an election, which is usually in the four to six weeks before an election.
‘‘I hope not – time will tell – in some ways it seems to me there has been an election campaign going on for the last two years in this country.
‘‘It’s going to be a long campaign,’’ Mr Goyder said of the prospect of an eight-month political battle.
Harold Mitchell, executive chairman of Aegis Media Pacific, labelled the election decision ‘‘mindboggling’’.
‘‘Of course, we will see eight months of government media spending now, which will increase as we approach the poll date, but history shows us that various parts of the economy slow as people wait to see what happens.
‘‘Peoplewait to buy a car or renovate the house. We will have to wait and see if that happens on this occasion, with such a long campaign time.
‘‘One must ask whether this is the best thing for the economy, given that it has been slow in parts.’’ GPT chief executive Michael Cameron urged both sides of politics to resist resorting to the ‘‘negative politics that has been so prevalent in recent political discourse’’.
‘‘That negativity impacts business and consumer confidence and has flow-on effects across the economy,’’ Mr Cameron said.
Australian National Retailers Association boss Margy Osmond said election campaigns typically slowed consumer spending, but there were some exceptions.
Turning to the policy battle lines, Bank of America Merrill Lynch chief economist Saul Eslake said the government would refer to its record of steering through the financial crisis without a recession – ‘‘which is a significant achievement, even though it’s receding into history.
‘‘For the Coalition’s part, I expect they will promise ‘any surplus you can build, I can build quicker’, and they’ll reiterate their commitments to abolish the carbon tax and mining tax.’’ HSBC Australia chief economist Paul Bloxham said the election could influence the reappointment, or appointment, of the governor of the Reserve Bank. Mr Stevens’ term expires on September 17.
‘‘Since it’s so close to the election the current government is likely to be making that appointment,’’ Mr Bloxham said.
Treasurer Wayne Swan on Wednesday night declined to be drawn into the issue.
‘‘I’ve got the highest regard for the governor of the Reserve Bank. He is held in high regard not just here in Australia but around the world.
‘‘I will talk to him about his future and what he desires to do,’’ he told ABC television.
‘‘When it comes to such an important appointment, of course I’ll take other matters into account.
But I don’t want to start speculation about the future of the governor of the Reserve Bank, that’s got a long time to come.’’