As Treasurer Wayne Swan prepares to deliver his final budget – let’s be honest, Labor is finished in terms of the upcoming election – it’s becoming clear from the nation’s business commentators that it’s not going to be well received. Labor has simply stretched the patience of any reasonable onlooker for any dig at the Coalition as a counterargument to be completely ineffective.
The Australian Financial Review’s highly respected political columnist Laura Tingle previews the budget with a taste of what’s probably to come from Swan following Laurie Oakes’ dismissive interview of the treasurer yesterday.
“Swan is braced for more of the same this week. It wouldn’t matter except the issue of the past credibility of the forecasts – and the promises the government made on the back of them – makes it almost impossible for Labor to now really hammer home any new promise of economic responsibility for delivering a surplus in a couple of years’ time. Whether Labor can salvage any credibility in the circumstances is a problem for it. The problem for the rest of us is that, if no one is taking its budget restraint seriously, no one is going to be really pressing the Coalition about its own plans and promises either.”
Wise words. Meanwhile, The Australian Financial Review’s Jennifer Hewett has sat down with some key business leaders and they left her with a lasting impression: When Labor says they've caught the major moves in the Australian economy in the right way while it's been in office, it's 100 per cent wrong.
“The sense is of a government in chaos in terms of policy, in denial about its own spending, and incapable of understanding the importance of a healthy business community to a healthy economy. The willingness to give some leeway to an incoming Tony Abbott-led government inheriting a huge budget mess and so many contradictory and difficult pressures might not last too long after September. But for now it’s the massive gap in perceptions between Labor and business that’s become so stark and so public.”
The Australian’s economics editor David Uren says the budget will reflect the fact that there isn’t enough investment in the non-resource economy to make up for the end of the mining boom.
“Wayne Swan has already prepared the ground for the budget to show a deteriorating labour market, saying ‘there may be bumps along the way, including in the labour market as resources projects enter a less labour-intensive phase and the non-mining economy takes time to pick up’. Last week's rate cut by the Reserve Bank was intended to encourage demand beyond the resource sector, with the transition to growth fuelled by investment in the non-mining economy identified in the bank's quarterly economic statement as the biggest domestic risk. Both Treasury and the Reserve Bank see the peak still ahead, although fast approaching.”
The Australian’s John Durie recalls that Craig Emerson, the first of half a dozen ministers to be responsible for small business in the Labor government, had a simple philosophy of getting out of the industry’s way as the best way to manage it.
“For a sector that is seen as constantly crying out for special help it was a perfect response, but sadly, through no fault of his own, circumstances have conspired to produce the exact opposite. Over the life of this government the small business share of the private sector workforce has fallen from 51.3 per cent to 45.7 per cent, and employment has fallen by 243,000 people. Opposition small business spokesman Bruce Bilson has calculated that far from removing the red tape, from November 2007 to April this year this government has introduced 22,257 legislative amendments and repealed just 111.”
The Australian’s contributing editor Peter van Onselen brings word from incoming treasurer Joe Hockey about the challenges he will have when he has the job. They are vast.
What Hockey won’t be able to do, with incoming communications minister Malcolm Turnbull, is tear up the agreement with Telstra Corporation from the National Broadband Network. Fairfax’s Malcolm Maiden underlines this fact with some pretty solid comments from Telstra boss David Thodey.
Meanwhile, The Herald Sun’s Terry McCrann argues that there’s no hidden agenda to the Reserve Bank’s cut to interest rates. It’s inflation expectations have dropped in the last six months. Simple.
Speaking of rates, The Australian Financial Review’s Andrew Cornell says the reason behind ANZ Bank’s decision to pass on more than the entire cut from the Reserve Bank can be found in an average long-term funding cost graph from rival National Australia Bank’s profit report.
In other company news, Fairfax’s Peter Ker says BHP Billiton boss Andrew Mackenzie, who completed his first official day in charge on Friday, perhaps revealed some of his instincts about using corporate power to deliver social and environmental progress as far back as 2001.
And finally, Fairfax’s Michael Pascoe makes a brilliant point about the bearish obsession around the Australian dollar.
“It was particularly funny to see George Soros' hedge fund and friends trying to talk the Aussie down, and seemingly getting away with it without question. Do you think a highly professional hedge fund would accidentally leak that it had made a billion-dollar bet against the Aussie? Probably not.”
Well, it was hardly an accident, but you take his point.