The two big stories of the past couple of weeks – Leighton and the debt ceiling – continue to garner plenty of attention but, as a new Opposition leader is ushered in, two scribes turn the focus to the viability as Labor’s choice. Meanwhile, as Bill Shorten readies for a short honeymoon period, Tony Abbott’s may be over, with two jotters asking the tough questions: Is his government pro-market or pro-business? And has he formed an agenda yet?
Offshore, one commentator pinpoints where we should look for the next Lehman moment – and it’s not the imminent risk of a US default.
First to the selection of new ALP leader Bill Shorten, who has a trust rebuilding exercise ahead of him, particularly with business, according to The Australian’s Peter Van Onselen.
“On the campaign trail, Shorten was keen to point out that he didn't resile from the mistakes of the Rudd and Gillard eras, but details as to how he might reshape Labor remained sketchy. Rather, in an attempt to appeal to sections of the membership base that were perhaps naturally more likely to support Albanese, Shorten used set speeches to argue in favour of debate to widen quotas into areas of race and sexual orientation, for example… These are hardly mainstream issues for most voters. And, if Labor's goal is to improve relations with the business community, intervention of the order Shorten canvassed is unlikely to help things.”
The Australian Financial Review’s Jennifer Hewett agrees that economic issues will be at the forefront of a necessary Labor makeover, with Shorten’s consensus approach likely to prove useful.
“He immediately cited science, research, innovation and higher education as a priority and the need to back small business… To be credible on any of this, though, Shorten also has to start to restore the reputation on economic issues overall. Certainly Shorten used to be known for his ability to understand the needs of business as well as unions. He’s more of a consensus politician, a natural deal-maker. But his time as Julia Gillard’s industrial relations minister badly dented his reputation with business given the additional powers ceded to the trade union movement.”
The country’s leader, Tony Abbott, also has business ideas that are yet to be formed, according to The Sydney Morning Herald’s economics editor Ross Gittins. The prime minister needs to quickly decide if he is pro-business or pro-market. Gittins suggests the latter is the more worthy pursuit and to do so will require a newfound strength in the face of rampant lobby groups.
“If Abbott has any sense, he'll get the business lobbies back in their box from the start, telling them the era of rent-seeking is over. He'll stand up to big business the way Labor never could because, unlike it, he need have no fear of losing business's support.”
The AFR’s Phillip Coorey adds that the guarded approach of the Abbott government is eerily similar to that of the first Howard government. In time, however, Abbott will likely need a policy that rouses the party faithful. After all, tearing down the Labor legacy is not a full-time, three-year job.
“That (cautious approach) only lasted for so long before Howard seized on a big and risky idea - the GST, which he took to the electorate in 1998. It nearly cost the election but it also saved Howard by giving him something to fight for and galvanise the base. Time will tell whether Abbott will need to be so bold.”
Moving to the US, the events in Washington have Terry McCrann, in The Australian, pondering the conflicted position of the RBA. On the one hand, it wants a strong US economy and easy monetary policy assists with that. On the other, the stickiness of the Australian dollar at a level above 90 cents is worrying and tighter US monetary policy would help. Win some, lose some.
While McCrann sees the current debt ceiling impasse leading to the former – easy monetary policy – the AFR’s economics editor Alan Mitchell gazes out beyond the current issue spooking markets and instead looks at the next big problem: a slowdown amongst the big emerging economies.
Not to be outdone, The Australian’s David Uren also highlights a major worry beyond Washington’s stalemate: highly leveraged US property trusts. Could they represent the next Lehman?
Back home, McCrann, this time writing for the Herald Sun, revisits this week’s jobs numbers and isolates the movements in the Australian dollar as the key to turn the labour market around, while the AFR’s David Bassanese wonders whether the reduction in the labour force participation rate is structural or cyclical.