The Distillery: Cheap talk

One jotter sees relative frugality in the major parties' election promises, while another eyes rising taxes for all regardless of who wins.

The election is less than a week away and talk of policy has gone south, from a base that was already pretty low. With this as a backdrop, business commentators are taking a fine tooth comb to both parties and finding more criticism than praise.

Fairfax’s Malcolm Maiden focuses on political game changers for Labor and finds little likely to change the shape of the election from an economic backdrop: not Coalition budget holes, not interest rates and almost certainly not growth.

“Labor would be open to attack if the growth number disappoints, and it might… A growth result that hits expectations would meanwhile still be growth that is below par. There is no political mileage in that for the government… Growth could surprise and beat the predictions, of course. But it would have to get back up to the 3 per cent trend to be a political game-changer, and that's unlikely.”

The Australian’s John Durie queries the lack of business engagement among our politicians, with a review by the Business Council of Australia seen as a good starting point for reviving policy debate.

“Big-business frustration with the Rudd government hit an all-time low before the last election, and has slipped further since, but then the Opposition Leader has not exactly ticked every box on the BCA's policy wishlist. Arguably he has almost done the opposite, which is why Tony Shepherd, among others, is hoping the post-election audit will free Abbott from any political shackles and allow him to lay down the long-term policy settings the BCA is hoping for. Then again, those who read the Senate report on the ADM bid for GrainCorp will understand the complications ahead for Abbott, with the likes of Bill Heffernan arguing "the ACCC did not have the necessary expertise to undertake a full and proper review of the bid".”

Fairfax’s Ross Gittins takes the microscope to the economic agendas of both sides of politics and the result is more taxes for all, regardless of who wins.

“According to the projections, if the government elected this Saturday sticks to Labor's strategy of limiting average real growth in spending to 2 per cent a year and not allowing tax collections to exceed 23.7 per cent of gross domestic product, the budget surplus will recover to 1 per cent of GDP by 2020-21. But, since spending is projected to grow at an underlying real rate of 3.5 per cent a year, this would require an unprecedented restraint. And, even so, it would still require tax collections to grow 1.5 percentage points faster than the economy – equivalent to an ultimate $26 billion a year in today's dollars – over the decade…Whoever wins this election, I'll be amazed if taxes do anything but keep rising.”

The Australian’s David Uren finds a different tact, highlighting the surprising frugality of the promises in Tony Abbott’s and Kevin Rudd’s campaign speeches.

“Kevin Rudd's new election promises in yesterday's policy launch carried a total cost of only $268.5 million over the next four years, setting a new benchmark for political frugality at an election campaign launch. Tony Abbott's launch last weekend was almost as modest, including election promises totalling $305 million. Combined, they are a tiny fraction of the $9.4 billion of promises in John Howard's final pitch for power in 2007. Media calculated that this represented $240 million for every one of the 40 minutes of Mr Howard's campaign address.”

Friday saw the release of Virgin’s latest results and while they weren’t pretty, it was a $90 million liquidity boost from three of its major backers – Air New Zealand, Etihad and Singapore Airlines – that drew the most attention. Business Spectator’s Stephen Bartholomeusz explains why the injection of funds is necessary, while The Australian’s Damon Kitney outlines why Virgin’s backers, competitors to Qantas and its JV partner Emirates, are so keen to come to the party.

And being the first week of the month, attention is slowly turning to rates. The AFR’s David Bassanese expects little to come of Tuesday’s meeting, because, as the start of The Distillery shows, all eyes are on the election. But don’t let that fool you, cuts are firmly on the table for the rest of the year.

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