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The Rudd Government’s effect on business

We gathered a panel of industry leaders and business experts to give us their view on what the Rudd Government’s effect on business will be. As you’d expect, there were plenty of contentious ideas being thrown around about how businesses will be affected.

The panel:
Richard Evans, CEO Australian Retailers Association
Sheryle Moon, CEO, AIIA
Peter Gahan, Associate Professor, and director, Work and Employment Rights Research Centre, Department of Management, Monash University
Matthew Hourn, partner Clinch Neville Long Letherbarrow
Kevin Macdonald, CEO NSW Business Chamber
Phil Ruthven, CEO IBISWorld
John Edwards, chief economist HSBC

Will businesses be worse off under the new Government?
Richard Evans: From a retail perspective, it seems consumer sentiment will not be immediately affected by the change. Retailing is the barometer of the economy so when consumers stop spending, giving notice of a recession, then retailing will be the first indicator. Influences that will affect spending include interest rate rises and petrol pricing. It is too early to determine how the Government will affect the economy with major reform of the workplace to take effect late next year. Other issues, like business tax reform and other industry specific reforms, are not on the agenda. So, unless consumers lose confidence in poor decisions made by the Government there is no reason to suspect an immediate impact.

Sheryle Moon: The new Labor Government recognises the importance of the ICT industry as both an industry in its own right, contributing around six percent of GDP.

The commitment by the Innovation Minister Senator Kim Carr to review the R&D Tax Concession scheme is a positive step to attracting greater R&D opportunities from multinational ICT companies as well as local organisations. The acknowledgement of a ‘digital economy’ in the portfolio of Senator Stephen Conroy is also important in raising the awareness of all Australians of the changing nature of global economies and the importance of the ICT sector in economic prosperity.

It is early days yet and we need to understand the role of national government policies and state government policies in the global economy, where trade and investment flows have an equal impact in the success of the ICT industry.

Peter Gahan: The Rudd Government will be business-friendly. It will be extremely conscious of proving its credentials as a Labor government capable of producing outcomes supportive of business. In some ways it may turn out to be friendlier to business than the latter years of the Howard Government, which became increasingly susceptible to pork barrel politics and chequebook regulation. While this approach was good for some sectors of the economy, it proved to be an uneven hand. Under Rudd, there is likely to be a new focus on regulatory efficiency, ensuring that it doesn’t undermine business success across the board. Moreover, to the extent that the Rudd Government is planning to respond to under-investment in infrastructure, skill shortages and the like, it will be dealing with growing problems for business that failed to gain traction under Howard.

Matthew Hourn: The two big issues here are industrial relations and consumer confidence. In the IR area, the Government has to be careful that their measures are not too stringent for the small business sector, which is more susceptible than big business to cost factors arising from workplace reform.
Secondly, if the Reserve Bank continues to tighten interest rates as a brake on spending, the decrease in cash could put a dent in business profits. Australians have put great reliance on credit to support lifestyle, but the party may be over as far that’s concerned.

Kevin MacDonald: I’m an optimist. I hope the Government seizes the historic opportunity it has been given in the same way the Hawke Government did when it was elected in 1983. There is before Australia an historic alignment of the political planets with the same party holding office in Canberra and every state and territory, and also the fact that 2008 marks only the third year since federation that no elections will be held. So we are entering a “politics free” zone for a while and I hope that opportunity is seized. We believe the greatest challenge facing Australia is that of improving federal/state relations.

Phil Ruthven:Traditionally Labor have not been good economic managers. Even more so, investment in business under Labor government is usually growing at half the pace as it does under the coalition. That said, I think Rudd and Swan, as Treasurer, are both well aware of their horrible historical record for economic management, and I think they are trying to prove, among many things, that they will be good economical managers. And that’s a good sign.

John Edwards: The Rudd governmentt is very pro business. It was pro business in opposition and I haven’t seen anything it’s done in the last couple of months of office that even begins to suggest it’s unsympathetic to business.

The Government has indicated that a key part of its focus will be on workplace relations, climate change and education. What other areas do you identify as being problems?
RE: The biggest problem for retailers is the issue of staff and the availability of skilled staff. There is no policy articulated that will alleviate that problem and it seems no government has seriously addressed the issue for some time. Skilled staff is a little more than technical training, it is more to do with career choice and workplace advantages, and although industry associations advise governments about the needs of the workplace it seems these requests are ignored.

Issues such as broadband access for small business, compliance management, education for new business operators, are issues that small business operators worry about. And yet, governments tend not to be concerned. So when the Government legislates its climate change reforms, it should consider the burden of small business who will be required to manage most of the change.

PG: No doubt these three issues are going to be the signature issues of the Rudd Government’s first term. I would also nominate infrastructure investment, public health and, possibly, an attempt to re-establish a workable framework for state-federal government relations, which should facilitate more harmonious regulatory arrangements.

MH: I’d target the economy, health care, and national security. Interest rate rises, rising inflation, and the effects of the US sub-prime market are major concerns. Middle Australia is now super sensitive to higher mortgage payments. The Government needs to win business confidence, but business is suspicious of Labor’s workplace reforms.

The Government is already addressing state funding for health, amid concerns about whether enough money is being pumped in.

As for national security, the Government needs to strike a balance between legitimate threats and scare mongering. Cases such as David Hicks and Dr Mohamed Haneef have left many Australians concerned about erosion of freedoms.

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