Politicians must dial down the volume of big business

The Abbott government's push to repeal the carbon and mining taxes underscores the great influence large corporates wield in public policy – sadly, to the detriment of the broader community.

Should businesses be involved in the public policy debate? Of course. Should they be as involved? That depends on the business. Corporate influence remains an issue in Australia -- one that continues to plague decision making and often does not reflect the public interest.

The B20 Australia meeting dedicated one of its sessions yesterday to whether there is a role for business in shaping public policy. The session featured lively discussion from Rupert Murdoch, executive chairman of News Corp; Ben van Beurden, chief executive of Royal Dutch Shell; and Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs.

At times, business and government share an uneasy relationship. The business sector may drive economic growth and employment but it does so under the conditions and regulations created by the public sector. Without each other, neither segment could operate effectively.

Government regulation imposes costs and restrictions on business activity; public projects create opportunities; while red-tape can construct barriers to entry or create market power. The business sector provides income (to both the government and individuals) which allows the government to pursue its goals.

From the outset it should be obvious that the business sector has an important role to play in the formation of effective and fair public policy. Politicians don’t necessarily have any special insight into the business sector -- particularly in Australia, where many politicians are either former lawyers or union members.

But the opposite is also true, and suggests that business involvement in the political process should not be open slather.

We cannot simply assume that because someone is successful at operating a business that they have anything to add to the public debate. For every Bill Gates, there are countless business leaders who have little understanding of the economic or political sensitivities of public office.

The members of the roundtable discussion – and indeed the B20 – highlight another issue with business involvement in public policy: it is almost entirely reserved for large corporations. Small businesses are rarely consulted on public issues and when they are their views tend to be overshadowed by their larger peers.

A report by Oxfam earlier this year highlighted the influence of powerful special interests. They describe a rising “elite” society with the financial clout to dominate and capture government decision making, often to the detriment of everyone else.

Australia is no exception to this growing trend, and recent (and not so recent) public policy decisions and reports provide a laundry list of examples where special interests have triumphed over the public interest.

Ever wondered why Australian housing policies benefit homeowners and investors at the expense of affordability? How about superannuation concessions which accrue to those who don’t need them?

What about the removal of the carbon tax? Its repeal was cloaked in populist ‘cost of living’ rhetoric, but the main beneficiaries are big business and our mining sector, at the expense of our environment.

Yesterday’s repeal marked a great victory for intergenerational inequality; a victory for short-term shareholder value at the expense of sustainable growth. It’s a difficult decision to understand unless you’re in the pocket of large corporations.

The mining tax will be the next to go. It’s unpopular, and the current tax arrangements have worked poorly, but its repeal will reward narrow self-interest and ultimately usher in greater taxes or spending cuts for households and smaller businesses.

Earlier this year the Commission of Audit made a series of recommendations for the federal budget. The commission was led by Tony Shepherd, former head of the Business Council of Australia, and corporate influence was clear throughout the document.

It remains unclear why Tony Shepherd was chosen to lead the audit; successful businessman that he is, he does not appear to have any particularly expertise in budget matters. It came as little surprise that he delivered a partisan document that angered a range of groups that were either not consulted or ignored during its creation.

Both political parties have failed to get it right; the Coalition ignores the interests of anyone who isn’t a big corporate ally, while the Labor Party had a notoriously poor relationship with the business sector during the Rudd-Gillard years. There is a valuable middle ground that would inevitably result in legislation that better meets the needs of the electorate.

The Coalition must ensure that due consideration is given to the views of not just large corporations but also small business, which continues to be given the cold shoulder in Australia. We also cannot ignore the importance of consumer and environmental advocacy groups, unions and a multitude of other organisations that need a public voice.

The business sector should remain at the table as it has an important role to play in policy formation, but shouldn’t have unfettered access to the halls of power. Campaign finance has given big business (and unions) far too much power over the political debate, resulting in policies that aren’t aligned with the public interest.

News Corp Australia is publisher of Business Spectator.