A historic election has ushered in a new federal government and an expanded
crossbench. What does it mean for long-standing policy challenges? We asked
directors and commentators to dissect the pressing issues for boards.
The 2022 federal election in May ushered in a new government and brought the curtain down on the Liberal-National Coalition, which had been in power for nine years during three consecutive terms. The electorate delivered a resounding defeat for the Liberal party, which won its lowest share of seats in the House of Representatives since 1946.
While the Australian Labor Party (ALP) won an outright majority of seats in the House of Representatives, it fell well short of a landslide victory. Both major parties lost their overall share of the vote as independents and minor parties gained ground. In fact, records were broken in this respect: the combined major party vote was the lowest it has ever been at 68.5 per cent, while the minor party and independent vote was at its highest — 31.5 per cent.
According to economist and political commentator Saul Eslake, this new force in Australian politics may contribute to a more amenable environment for the private sector over the long term. He notes the so-called “teal independents” are pro-business and advocates of economic growth and reform. “They mostly represent electorates where people are employed in private enterprise and want to see economic progress,” he says. “The teal independents appear to be a combination of economic liberals and social progressives that had become much diminished among the ranks of the modern Liberal Party.”
The teals campaigned on more ambitious climate policies, creating a federal integrity commission and greater respect for women in all aspects of public life. Wendy McCarthy AO FAICDLife, a director of For Purpose Investment Partners, an NFP investment fund manager, is optimistic a new tone will be set that will spill across into the world of business. “My key aspiration is to see respectful discourse in boardrooms and legislatures around Australia,” says McCarthy. “We need to see an end to the shouting. I know there’ll be some, that’s part of the game, but there must be an end to the disgraceful behaviour in Parliament and down the corridors of power in the night. I hope that it also comes to an end in boardrooms where directors think they can get away with it.”
She also points to the fact that there are higher numbers of women in the ministerial line- up and in the party room than has previously been the case, and that Labor has committed to implementing the findings in the 2021 reports by Human Rights Commission Sex Discrimination Commissioner Kate Jenkins GAICD on sexual harassment in workplaces and Parliament.
“Most of us know that a 50/50 world of responsibility and opportunity is the best way to govern a nation, boardroom, school and so on,” says McCarthy, who is also the author of Don’t Be Too Polite, Girls: A memoir.
Alexi Boyd, CEO of the Council of Small Business Organisations Australia (COSBOA), says she feels a renewed sense of optimism about the future and expects that businesses will be able to plan ahead with greater certainty. “We’re hoping to be able to hit the ground running in terms of some of the major issues being addressed,” says Boyd. “In this new parliament, we hope small businesses will be consulted when policies are designed. We’re really pleased to hear the conversation is around collaborating and bringing all parties to the table to form a consensus.”
Frank Gullone FAICD, chair and non- executive director at Indue, says voters sent a clear message that they expect to see a significant change in tackling climate change and reducing the cost of living, as well as in other areas.
“We have effectively pressed the ‘reset button’ with the election of a new government,” he says. “Let’s not waste the opportunity and become too political in implementing change. We need certainty, more than anything else, and we need it as soon as possible.”
Eslake, however, believes only modest reforms will occur in the ALP’s first term of office, which will reflect the reform agenda it put to the public. “Labor has a longer list of things they’re not going to do than all the things they are going to do,” he says, adding that progress in tax reform as it relates to the corporate sector is unlikely to occur before the 2025 election (beyond the proposals in relation to taxation of multinational companies, which the ALP laid out during the campaign). Also off the table, for now, is short- or longer-term “budget repair” and improving Australia’s low labour productivity growth rate.
“The government doesn’t have a mandate for many of the reforms that business would like to see,” says Eslake. “It would be very politically risky for them to embark upon major changes they hadn’t told the Australian people they were contemplating. It’s a recipe for losing office.”
However, should the ALP win a second term, it could be an entirely different story. Eslake uses John Howard’s Coalition government as a case study in successfully achieving major taxation reform. Howard came to office in the 1996 federal election with only modest promises.
“He then gained the trust of the Australian people by governing competently and, with all the authority that being Prime Minister confers, laid out the case for introducing the GST and other tax reforms at the 1998 election,” says Eslake. “The GST was introduced in 2000.”
He predicts that, strategically, the ALP may commission a series of inquiries into some of the challenges facing the Australian economy, from which it could seek to build a platform for more far-reaching reforms. And they could take these to the 2025 election.
Boosting the care economy
Dr Angela Jackson, lead economist at Impact Economics and Policy, agrees that substantial change is unlikely to occur before a possible second term of office. “The reform agenda for the ALP’s first term is relatively modest,” she says. “It’s really about the work they do in setting up for a second term. While lowering the costs of childcare will make some difference for many families and will drive broader economic growth, the big-ticket item is the review by the Productivity Commission to look at the provision of universal childcare. That would be a complete game changer.”
Jo-Anne Bloch FAICD, a director of Colonial First State and a member of the Novigi and Striver advisory boards, hopes that the government fulfils its promise to increase the minimum wage for aged care workers, but notes that it is an inherently difficult process to manage.
“It’s going to increase costs for employers, and there’s going to be a battle ahead,” she says. “It might lead to further inflationary pressure and will create all sorts of other effects. That said, it is positive if it means that there will be more people working in the sector and better standards of care.”
Acute worker shortages are a major concern to businesses across virtually every sector, says Boyd. She worries that the small business economy will contract unless relief is swiftly given. Many businesses cannot maintain the hours of the goods and services they have in place because they simply don’t have the workforce to sustain them. This impedes their ability to function, grow and innovate.
“There need to be some policies in the immediate term to remove any barriers to employment,” says Boyd, citing the need for Australia’s migration program to be urgently restored following the end of COVID-19 travel bans. “Business owners know the pain of employing their first worker and the maze of things to try to understand. Many small businesses don’t have the capacity to hire a HR lawyer or consultant to support them through that process. We need to make the process simpler.”
She also hopes to see policies created with specific industries in mind, and to see a tripartisan approach that includes employer groups, trade unions and the government. Resisting the ability of special interest groups to dominate will be key to developing workable policies that stimulate economic growth.
“Businesses are very different,” says Boyd. “They are structured differently and they behave differently. Long gone are the days of just saying that there are big business and small business employers. It is important that policy is tailored and fit for the purpose of a given industry.”
Nicolle Jenkins MAICD, managing director of The Hub Marketing Communications, president of the Chamber of Commerce and Industry WA, and a director of the Australian Chamber of Commerce and Industry, says skills shortages in regional areas are even more severe, so the ALP should prioritise boosting fundamental services to attract skilled workers and families to live there. “Aside from skill shortages, there’s a lack of housing and essential services like childcare, which makes it difficult to attract workers and families,” says Jenkins. “There’s also a perception of ‘career in the city, retire in the country’ that we need to change.”
She cites the West Australian town of Augusta, which lacks even a single childcare facility. The reasoning is that it doesn’t have the current demographic to attract a childcare business — but without a childcare facility, young families do not wish to move there in the first place. She hopes that incentives can be created so that childcare businesses have the confidence to establish a presence in places like Augusta.
Reshaping climate change policies
The Coalition’s lack of progress in developing more ambitious carbon-reduction goals had long been a source of frustration to an increasingly vocal public. For business, it has meant a lack of certainty to aid investments in renewable energy technologies. Eslake believes the ALP must establish a framework to set out how targets are going to be achieved, along with a firm timeline. “Australia has been chronically unable to develop a set of policies designed to achieve the transition to a zero-emissions economy,” says Eslake. “The most important thing that needs to be done is to end the climate wars that have bedevilled Australian politics since Tony Abbott AC became Liberal leader in 2009.”
McCarthy says she remains pessimistic about finding the right solutions to address climate change, as it has become so politicised in Australia. “It’s going to be a huge battle. We’re a long way behind other countries. Many people are still obfuscating and saying things like, ‘We’re tiny, so what we do won’t make any difference’. Of course, if we all say that, nothing will change. We need to realise that even if we’re small, we’re [still] exporting fossil fuels.”
Gullone is hoping for concrete action to be taken, as opposed to a “round robin of commissions, inquiries and reviews”. “We just need to get on with it, to be honest,” he says. “I consult with people in a number of different industries and everyone’s raring to go. Everyone buys the need to move closer towards renewable energy. Leading fossil fuel-type companies have been working on it for years. The ALP is in a honeymoon period and should use this to its advantage to implement significant change.”
Bloch believes that the speed of change is about to pick up pace, and that boards should be prepared to act on their own sustainability targets. “The new Labor government has put a stake in the ground and said, ‘We’re going to go faster’. For boards, if you were in any doubt in the past, you now need to just get on with it.”
Eslake notes that the Greens will play a significant role in the Senate, even if they fall short of holding the balance of power in their own right. He hopes that the past will not repeat itself. “If the Greens choose to be obstructionist — which they were to the Rudd government on climate change policy because they let ‘the perfect (in their eyes) be the enemy of the good’ — then it could create problems,” he says. “This is especially so if the Liberal Party also decides to be obstructionist on this issue.”
Boyd hopes that small businesses will be considered at the co-design phase of sustainability policies to ensure that new processes are not overly onerous or require any additional reporting.
Seeking flexibility over cost pressures
Jenkins hopes to see industrial and workplace relations reform, which was difficult for the Coalition to achieve during its tenure because it lacked a clear majority. Businesses don’t need further cost pressures, she says. “With changes to the labour market and new business models, we need more employment flexibility so that we don’t go backwards in global competitiveness. SMEs are confronted with extraordinarily complex awards. When they try to instead negotiate an enterprise agreement (EA), they are confronted by an unworkable ‘better off overall’ test.”
In particular, the current test requires employers to prove that workers would be better off in all situations, including a wide variety of hypothetical situations.
“That makes the current EA system unworkable,” concludes Jenkins. “As such, workplace relations reform must be a priority.”
Jenkins would also like greater clarity on the insolvency safe harbour provisions that were introduced during the pandemic.
“The government provided more flexibility on what directors can do if they were facing challenging circumstances,” she says. “More than anything, it gave boards time to potentially trade out of a situation rather than going straight into receivership. It means that jobs can be saved, which creates better long-term outcomes for the economy. We need plain English explanations and practical guidance for greater clarity from the incoming government.”
Getting on with the neighbours
Even with the best intentions, there will be much beyond the control of the new government. The current economic climate is inherently challenging and international relations are fraught in many places. The US may enter a recession and the Chinese economy is stalling. There is only so much the new government can do to improve bilateral relations with China, which has taken a more confrontational approach to international relations in recent years.
“If China is serious about seeking to improve bilateral relations, it needs to walk back some of the trade sanctions imposed over the past two years or so, as Prime Minister Albanese has said,” says Eslake. “Then maybe Australia can make some appropriate gestures, as well.”
Gullone believes repairing relationships with Australia’s neighbours in the region could provide significant benefits for those in exports — but it won’t be straightforward to achieve. “The government has a huge opportunity to change the situation, but it will be a challenge to fix what’s happened in the past,” he says.
Jenkins says boards and management need to be prepared to face the economic headwinds on the horizon. A multitude of pressures include increasing costs of doing business, supply chain constraints and tightening margins.
“We’re looking at choppy waters from the economy, which probably would’ve happened irrespective of who got elected,” says Bloch. “We have rising inflation and mortgage rates. Low unemployment should be a good thing. However, I don’t know many organisations that are finding it easy to retain and attract employees.”
Jackson is cautiously optimistic about the next few years, noting there are macroeconomic challenges along with everything else, not least of which is the game of politics itself. “Australia recovered exceptionally well from the pandemic and the bounce-back has been phenomenal,” she says. “But managing high inflation is going to be incredibly difficult, particularly if the US has a recession. These are very difficult economic times and it will be a bumpy ride.”
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