THE DISTILLERY: Dead King, dancing queen

Succession is always tough, and as we have seen in Canberra these past 17 days it's always tougher when others think they have a claim to the role, or if the incumbent is hard to shift. And so it has proved in another situation at Leighton Holdings, the massive contractor and civil engineer where 23 years at the top gave CEO Wal King a feeling of entitlement. Rather than follow that other long-term leader, Sir Bob Menzies, who went at a time of his choosing, King has shown every indication of being levered out of his role with a bulldozer, backhoe and crane. But according to media reports this morning, all good things must come to an end one day and today is the day for King.

A report in the Sydney Morning Herald says: "After months of boardroom tensions and rifts over succession planning, Leighton Holdings is set to announce David Stewart as the new chief executive as early as today. Mr Stewart's appointment will defuse tensions as he has a good relationship with the group's major shareholder, Hochtief, and the rest of the board. His appointment will send a strong signal of unification in the company, which has been split in recent months over succession issues relating to its long-serving boss, Wal King, who has been in the top job 23 years." That makes two entrenched CEO's that chairman David Mortimer has removed, the other was at TNT when Mortimer, the company's CFO, took on and pushed out another long term boss in Sir Peter Abeles.

The Australian Financial Review says: "Leighton Holdings' board is about to announce the company's next chief executive amidst a possible rift with long-standing chief executive Wal King, who is on an extended trip out of the country." And a double header of Damon Kitney and John Durie wrote in The Australian this morning: "Leighton Holdings chief operating officer David Stewart is set to be formally appointed as the new chief executive of the company. And an announcement on the departure of long-serving chief executive Wal King is expected as early as next week." Truly, the King is dead, long live the king. 

Naturally, there was a lurch to analyse the meaning of life (it was 76 for Julia Gillard, not 42) in Canberra after yesterday's events. Fairfax's Liz Knight wrote this morning: "We have a victor in Australian politics, but it is neither certainty nor stability. We will operate for an unknown period with a Labor government that can deliver supply – but that is about all. The government's policy positions carry no guarantees of success, and the markets will continue to sweat on the outcomes of many issues that will affect their direction. The biggest of these will be tax reform. Mining tax has been the highly publicised element of this debate, but there is now a sense from the independent MP Rob Oakeshott that he has agreement from the government to revisit Treasury's larger tax reform agenda."

And Malcolm Maiden said: "It is trite but true to say that the markets dislike uncertainty, and the market's minimalist move after Tony Windsor and Rob Oakeshott sided with Labor yesterday suggests that some see more certainty now that the poll is ''decided''. But it has been decided in a way that is inherently unstable."

The AFR says: "Resources and banking stocks are likely to remain under pressure under the newly elected Labor government, maintaining the uncertainty that has made foreign investors wary of Australia for the past four months." And the paper's Chanticleer couldn't help himself by chasing the political in today's column: "Australian business faces an uncertain future working within a new political paradigm that includes putting sectional interests ahead of rational analysis, less-disciplined fiscal policy and the prospect of significant changes to the taxation system." And what is so different about what we have now compared to the past 50 years of pork barrelling and feeding sectional interests? (After all, what are the National Party, The Greens and the DLP all about but to further their members' interests?). A dam anyone?

In The Australian it was open slather as seemingly everyone had a view and was allowed to express it this morning. But a double-header report pointed out that tax is going dominate: "Tax reform will dominate Labor's second term of government after the independents forced a tax summit to revisit the Henry Tax Review. Radical proposals for overhauling personal income tax, state taxes and social welfare payments will be canvassed, with the opposition under pressure to play a constructive role. Labor's agreement with the independents included a commitment to convene a public forum of tax experts to discuss the Henry tax review before June 30 next year."

And that is no bad thing. John Durie in The Australian pointed out: "NBN boss Mike Quigley will meet Communications Minister Stephen Conroy today to work on matters held up by the election and its aftermath. Suffice to say Quigley was relieved Labor finally won the endorsement of independents Tony Windsor and Rob Oakeshott to proceed with his plans. The certainty, with the election finally settled, should also boost Telstra's stock price because while the company is struggling to boost sales and lift its service levels, NBN comes complete with $11 billion in payments over the next 20 to 30 years, plus a line in the sand that chief executive David Thodey can use to try to change its corporate culture."

And Jennifer Hewitt at the same paper wrote: "And it should greatly reduce all those protracted brawls with the government and the regulator over Telstra's wholesale pricing, because the telco will be a retailer only, making it much harder for competitors to complain. Communications Minister Stephen Conroy calls this one of the great economic reforms of the past 20 years. We will see." And there was more, lot's more, from the various opiners on The Australian.

And finally, if anyone missed it, we didn't get an interest rate rise yesterday from the Reserve Bank, but one is lurking, as The Australian's David Uren explains: "The RBA has prepared for rate rises in coming months, with growing strength of private sector demand and the expected surge of investment in mining. Governor Glenn Stevens indicated yesterday that the biggest factor restraining the bank from lifting rates at the board meeting earlier in the day had been the uncertain global outlook. 'The board judged this setting of monetary policy to be appropriate for the time being,' he said." 

In his daylight comment yesterday, Fairfax's Malcolm Maiden said the Reserve Bank's decision reflected: "The local conditions that it describes almost qualify for Goldilocks status – an economy that is neither too hot, not too cold, and therefore not in need of central bank intervention in either direction."

And Business Spectator's Stephen Bartholomeusz says the big banks are not overjoyed at the rate decision: "The Reserve Bank may have again sat on its hands in relation to official interest rates, but with today's theatrical events in Canberra out of the way, the four big banks will be looking at each other wondering which one is going to blink first and raise mortgages rates regardless of the RBA's inaction." 

Macquarie shares fell again yesterday and The Australian's John Durie said in his daylight comment:"Macquarie has stepped up the staff cuts already, with market chatter suggesting redundancies started last night after the profit downgrade... fund managers reported several people had been shown the door today. No-one likes this sort of talk because ultimately the people walking out the door are not the ones who made the decisions to bulk up numbers, yet they are the ones who are suffering now."

And Tim Boreham, also from the Oz, said in his daytime commentary: "Your're dreamin', fellers... that's the resounding message from Macquarie watchers this morning. Why? They simply don't believe the investment bank can meet its downgraded full-year earnings guidance. And unless Macquarie's markets recover, there'll be more downgrades. Having said that, the broking fraternity are a loyal lot and we're yet to spy any ratings downgrades from the brokers, with eight of the top ten maintaining "buy'' or "outperform" calls." Do they have to wait to be told?

And finally in Shakespeare's Henry VI there's a line about 'killing all the lawyers'. Financial Times columnist (and historian) Gideon Rachman doesn't want to go that far, but wouldn't mind economists being knocked down a peg or four: "The vanity of economists needs to be challenged. Above all, their claim to scientific rigour – buttressed by models and equations – must be treated much more sceptically... maybe it is time for an alternative to the brash certainties, peddled by those pseudo-scientists, otherwise known as economists. "We might be changing that to politicians and those independents, if things don't work out in coming years, or we might not even notice."