Sydney - With Australia’s election just days away, business leaders want one thing for certain – certainty.
Give us political certainty, they cry, and we’ll be happy to abandon caution and spend like drunken sailors.
Australian business and consumers have been on a three-year roller-coaster ride of minority government with changes of leadership, epic legislative struggles and policy reversals culminating in what has amounted to a seven-month-long election campaign.
The return of some political stability is a tempting thought since a long bonanza in mining investment is rolling over and the rest of industry needs to pick up the slack if Australia is not to face tough times ahead.
Typically, elections have only a fleeting impact on business, largely because the major parties’ economic policies are centrist, with all committed to budget surpluses over time and to an independent central bank. But the mood has become so sombre that a decisive outcome could provide real relief.
“This election could be different,” said Paul Bloxham, HSBC’s chief economist for Australia. “It’s clear that uncertainty over tax and regulations has been a hindrance to investment. The thought of some certainty should lift business confidence and give a timely boost to the economy.”
Figures from Deloitte Access Economics showed there were A$452 billion (R4.2 trillion) of investment projects under way or committed at the end of March, but with A$477bn more in the air.
Such is the desire for stability that opposition leader Tony Abbott felt he could win votes by promising his government would be one of “no surprises”.
Needless to say, business favours the conservative Liberal-National Coalition led by Abbott, which according to the opinion polls, is likely to win a clear majority on September 7.
The ruling left-of-centre Labour Party won kudos for its management of the global financial crisis, but has since been criticised, fairly or not, for making policy on the run.
The implementation of a carbon tax and a new mining resources tax went badly, while constant changes to regulation had business leaders tearing their hair out.
It is a tight network for upper management in a nation of only 23 million and the gloom became pervasive over time. The Australian Industry Group’s suite of business surveys, for instance, are bleak by any measure.
Its performance of manufacturing index, known as the PMI, is the lowest of any developed country. Bizarrely, it is even below that for Greece, an economy that has shrunk almost a quarter in the past five years.
Australia has not suffered a recession for 22 years and was the only developed nation to dodge a slump during the global financial crisis.
“Whether it’s a Labour or Liberal win, a decisive election result is likely to be positive for business confidence,” the bank’s senior economist, Spiros Papadopoulos, said.
However, he said survey results for the past 15 years did not show a lasting boost following elections. – Reuters