Federal Election 2019: Scott Morrison’s win was the boost that business needed

JOHN DURIE
MAY 20, 2019
The Australian

Scott Morrison’s stunning election victory is a welcome boost to business providing stability and certainty and negating the fear of increased union power under any Labor victory.

The unexpected victory both confirms Morrison’s authority within the Coalition and along the way nullifies past sources of instability like Tony Abbott.

The weakening Australian economy is an early challenge with the Reserve Bank seemingly poised for interest rate cuts to help boost the economy amid geopolitical concerns like the US-China trade war.

Even through the final shape of the new Parliament is yet to be determined the fact the Coalition has emerged victorious in one form or another itself should boost confidence because it removes a key uncertainty hanging over business.

The lack of policy ideas from Morrison also means business can expect the status quo which with some exceptions it accepts.

Morrison’s self-proclaimed miracle victory gives him a firm hand on policy and the shape of the new Government way beyond the status enjoyed by his predecessors and this boost also removes a key uncertainty hanging over past administrations.

The big test is just how he uses this authority and BCA boss Jennifer Westacott among others have urged the Prime Minister to lay down a clear path to sustainable growth outside the coming tax cuts.

This means detailed work on productivity improvements where Treasury Secretary Phil Gaetjens is well placed to lead the reform dating back to his time in the Prime Minister and Cabinet micro-economic reform unit.

Morrison as Federal Treasurer talked up the reform options from the Productivity Commission’s 2017 Shifting the Dial report but so far has done little about it and Australia’s productivity has essentially gone backwards in the past six years.

Just how much Morrison can do will depend firstly on whether he eventually wins a majority of seats in the lower house and his ability to bring the State Governments with him on the reform agenda.

Business was looking to the election to provide a clear mandate to the winner which while uncertainty remains on the final breakdown of seats was clearly given to Morrison.

The issue is a mandate for what because his election campaign was short on big ticket reform ideas.

While big and small business endorsed the Labor’s investment policy support there were real fears about the role of the ACTU in an ALP Government.

This was centred on ALP policy against growing use of labour hire firms by the big miners among others to avoid paying penalty and other benefits.

Energy policy remains a divisive issue with the vote in Queensland suggesting strong support for the Adani coal mine while Zali Steggall’s victory against Abbott shows meaningful action on climate change is necessary.

Treasurer Josh Frydenberg signalled on Sunday there would be no dramatic changes in Government policy with the focus firmly on stability and lower prices rather than lower emissions.

Angus Taylor is likely to remain in the Energy portfolio which the means the pressure on the big three suppliers will remain to cut prices.

Last week’s ASIC annual policy forum underlined the reality business is already way ahead of the Government on climate policy with most placing a price on carbon in their policy decision and now required to incorporate climate risks in their financial accounts.

The Government is yet to get to step one on this program.

The banks will received a reprieve from the planned onerous review mechanisms planned by Labor with six monthly Parliamentary hearings but Morrison is no friend of the big banks as shown by his declaration “cry me a river for the big banks” on imposing sector specific bank levies two years ago.

Treasurer Josh Frydenberg has however given mortgage brokers a reprieve on Royal Commission recommendations to ban commissions paid by the big banks.

Continued geopolitical risks, division over climate policy and a slower domestic economy provide plenty of work for the new Government but the goods is the election over and Scott Morrison has emerged as a strengthened leader by popular support.

JOHN DURIE