The election is on, creating some sense of uncertainty for business, but also the faintest hint of hope for a debate about our economy. This morning Australia’s business commentators set the scene for a gruelling campaign of almost eight months that will have the economy and the budget front and centre.
Firstly, the political forces that have brought this election call to a head have been analysed almost uniformly by a not-so-small handful of commentators. Here’s The Australian Financial Review’s Jennifer Hewett with her version.
"The risk is it gives Tony Abbott a claim to semi-equal footing as alternative prime minister for much longer as well as making voters even more tired of political brawling. But in an election year, this unofficial permanent campaign was always likely anyway. Gillard has opted for the surprise tactic to demonstrate that she is firmly in charge of the agenda and that she as prime minister has a clear plan and framework of achievements for the year. Kevin who?"
The Australian Financial Review’s Chanticleer columnist Tony Boyd writes that business wants both sides of politics to take inspiration from the Hawke and Howard governments that pursued genuine economic reform.
"Howard and Hawke did it with the assistance of strong treasurers in Peter Costello and Paul Keating. However, few in business will admit to being inspired by either the incumbent Treasurer, Wayne Swan, or treasurer-in-waiting Joe Hockey. At the same time there is a blunt admission by several acerbic critics of the current government that business has been lacking in leadership in relation to the big policy debates.”
The Australian’s economics editor, David Uren, reminds readers that election campaigns are in some way the antithesis of good governing.
"In principle, the government should go to the polls setting out the key things it wants to achieve during the next term, while pointing to its record. The opposition should identify the most important changes it believes are needed while critiquing the government's record. But, in practice, there are 30 frontbenchers on either side, each of whom requires some ‘announceables’. When the Coalition policy review, led by its finance spokesman Andrew Robb, went through the portfolios it came up with 49 separate policy areas, each of which has multiple new initiatives prepared for the election. Each side has already defined the blockbuster promises it hopes will swing the poll result.”
While most business writers have tended to hit the Labor government for its lack of economic chops over the years, The Australian Financial Review’s economics editor, Alan Mitchell, makes the valid point that the opposition leader leaves a lot to be desired.
"As for Abbott, he too is full of fine words like 'government should do for people what they can’t do for themselves and no more'. But it seems they don’t apply to the wealthy private schools or the residents of the Murray-Darling Basin or to any other circumstance in which the choice is between principle and vote maximisation.”
Business Spectator’s Stephen Bartholomeusz is the only commentator this morning who smells some hint of a productive economic debate brought on by the naming of polling day.
"Given that neither the government nor the Reserve Bank has the levers or capacity to shift the dollar and that the working assumption has to be that the dollar will remain persistently strong the government, as the prime minister acknowledged, has to have a plan that can respond to a continuing strong dollar. Whether it’s the ‘five pillars’ she described – increasing skills, building a culture of innovation, rolling out the national broadband network, improving regulation and leveraging our proximity to Asia – or some variations on those themes the obvious bottom line, as economists and others have been saying for quite some time, is an urgent focus by government and business on improving productivity.”
Meanwhile, The Australian’s John Durie makes the solid point that Reserve Bank of Australia Governor Glenn Stevens should have his position renewed for another term as soon as possible.
"Given that the government has condemned the country to an eight-month campaign, the least it could do is provide some certainty at the helm of the Reserve Bank. Ideally Stevens should be re-appointed for a short term of, say, three years instead of the standard seven as was the case with his predecessor, Ian Macfarlane.”
Speaking of the Reserve Bank, the Herald Sun’s Terry McCrann argues that the Reserve Bank won’t cut interest rates at its first meeting of the New Year, but it’s not entirely an unlikely scenario.
"In rewriting its monetary policy software in the closing months of last year, the RBA went to Christmas with the broad expectation that it would most probably cut its official interest rate by 50 basis points or so in the opening half of the year. That the issue would not be a matter so much of the cuts but their timing. Although having said that, and at the risk of confusing, timing could feed back into the basic decision itself – as in, if the timing was delayed, it could end up meaning there were no cuts. That wriggle aside, if it's ‘only’ a matter of timing, the second factor could come into play. Reserve Bank governor Glenn Stevens could leave it to the board to in effect decide the timing.”
There was some other big news out of yesterday’s business media cycle, specifically the latest results from Wesfarmers. Fairfax’s Elizabeth Knight explains that it’s the conglomerates coal division that’s causing the company the most trouble… Coles is fine and dandy.
Meanwhile, Fairfax’s Michael Pascoe suggests that the group of activist investors that took on Qantas Airways will face a test of credibility when they pick their next target. The speculation is currently centring on Fairfax Media. In a separate piece, Pascoe quickly debunks the myth spread by politicians that Australians are battling increasing cost of living pressures.
Elsewhere, The Australian’s Bernard Salt goes over the last few batches of census data and finds the greatest expansion in a single job category is aged or disabled care. That tells you something now, doesn’t it?
And finally, The Australian’s Rowan Callick echoes the words of Alex Thursby, ANZ Bank international and institutional chief executive officer, who says Indonesia should be number one of the Australian Hot Six set out in the white paper. The other five are China, Japan, the US, South Korea and India.