On election day, September 14, a vast number of Australian employees in the private sector will be voting to keep their jobs. And the opinion polls show the vulnerable employees are getting the message loud and clear.
Even if Reserve Bank governor Glenn Stevens today reduces interest rates by 1 per cent (and there is no chance he will) it would not make the slightest difference to business intentions or confidence.
Dun and Bradstreet’s national business expectations survey shows that business has gone on a capital and hiring strike. I believe that ANZ Bank chief executive Mike Smith is right (KGB: ANZ’s Mike Smith, May 2) in concluding that that chaos (he uses a more diplomatic word) in Canberra has destroyed business confidence. If, theoretically, the ALP were to go anywhere near winning the next election and therefore perpetuating the current Canberra mess for another three years in my view we would see a very sharp reaction by small and medium sized businesses. The capital and hiring strike would be turned into an orgy of retrenchment. And if you have any doubt about that look at the Dun and Bradstreet graph below which shows that business capital spending intentions have dropped to the lowest level since the depths of the global financial crisis.
Mike Smith understands what is happening because he can see the abysmal applications for credit at ANZ for the third quarter of 2013. The Dun and Bradstreet survey shows that only 3.9 per cent, yes, that’s right, 3.9 per cent, plan to seek credit in the election quarter.
The best part of Dunn and Bradstreet surveys is that they cover small and medium sized business. And it is this area of business that is white hot with anger over what is happening in Canberra.
I see this almost irrational emotion from business owners time and time again – that’s why I recently wrote that Julia Gillard’s complete disregard of the small business community was her first and worst sin (Seven deadly Gillard sins, April 30).
And smaller enterprises happen to be the biggest employer in the country, and they are already finding ways to make it clear to their employees that jobs will go on September 16 if Gillard is to win.
It is interesting that in some sectors the outlook for profits has picked up and 47 per cent of businesses in the transport, communications and utilities sectors expect increased profits next quarter, while only three per cent expect a decline in earnings.
After a disappointing end to 2012, retailers are also reporting higher sales and profit expectations in the third quarter. However, there are clearly problems with the Australian dollar in sectors like manufacturing. The only way enterprises can get around this problem is by investing to lift productivity but that is not happening.
And again I agree with Mike Smith that this is likely to take place once there is certainty in Canberra.
I know many talented people in the Gillard government are asking – ‘what did we do that was so wrong to cause the capital and employment strike by business?’
It is very simple really. First, you thought up regulation after regulation -thousands and thousands of them - that did not heed to the burden being placed on medium and smaller business. Then you introduced complex industrial relations legislation that was totally unsuitable for small and medium sized business because the legislation required a large department to manage. And finally the Gillard government lurched from one crisis to the next and caused business to lose all confidence in Canberra.