Labor laying the groundwork for a 2016 tilt?

A pre-election flurry of legislation from Labor will protect the key interests of Labor supporters, particularly the unions. The new rules would make life difficult for a Coalition government.

In the government leadership wrangle the big left-wing unions are the elephants in the room. In the current crisis they are essential to the ALP. While Julia Gillard may be unpopular in the opinion polls she is a union hero because in the final weeks of the parliament she is delivering for the unions close to their ultimate wish list. The government's final actions suggest its agenda is to pass legislation aimed at making life so tough for Tony Abbott that (unless the coalition wins Senate control) he will fail, so engineering a big swing against the Coalition in the 2016 election — what ever the outcome of the 2013 election.

The unions know that if Kevin Rudd were to become prime minister this week or next he might moderate the extreme pro-union bills going through the parliament. The big unions are essential to the ALP not only for funding. The party also needs the unions to man the polling booths on September 14 because Labor's branch network is not strong enough to carry out the task alone. Given what Gillard is doing for the unions every polling booth will be manned from the opening of the polls to the close. Whether that would be the case if she was knifed is a clear unknown and a big risk.

Julia Gillard is looking after the unions by giving them greater enterprise management power, particularly over rosters. They will have the right to enter lunchrooms and the new bullying rules can be used very effectively against managers or workers who are proving "difficult". And those enterprises, particularly smaller enterprises without large legal departments, wanting to dismiss workers will simply have to pay extra money to sacked workers. The question of "fairness" will not come into it except in very extreme cases.

All this means that there will be lower productivity under Abbott and almost certainly much less hiring, particularly in full time jobs. In the next two years Australia faces a big fall in mining employment as the mining construction boom comes to an end. Australia needs the non-mining sector to hire workers to avoid a sharp rise in unemployment. The Coalition is forecasting 500,000 new jobs, mostly from small enterprises. The new Gillard rules are designed to make that target almost impossible.

Abbott can see huge savings in rationalising state and federal activities. To stop such an action in environmental areas, the federal government is passing legislation that prevents Canberra delegating environmental issues to the states. And it will make it tougher to extract coal seam gas so making sure gas prices rise. At a time when there is clearly going to be big shortfalls in taxation revenue, given the tough times ahead in resources, huge sums are being allocated to education which can't be funded by the next government unless there are big deficits or enormous cuts are made in other areas — another 2016 carefully-set trap for Abbott.

But sometimes strategies to trap an incoming government can backfire. Tomorrow I will look at some surprising potential developments in the pipeline that could change the nation.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles