The elevation of Kevin Rudd to the leadership of the Australian Federal Labor party is to be welcome on a number of fronts. First, it hopefully brings to a close the farce that has dogged this current Government for the last 3 years. Second, it begins to remove much of the uncertainty that has plagued the Australian corporate and consumer landscape over this period as well. Nothing is worse for share markets, or corporate and consumer confidence, than political uncertainty.
Last night’s developments bring forward the prospect of an earlier election, currently scheduled for 14th September. This means that voters can decide who will govern the country sooner. A new government can then more quickly assume the business of running the country rather than managing egos and directing soap operas.
It also raises the possibility that more corporate friendly policies, which would definitely come in under a Coalition government, could also be enacted under a re-elected Labor, as Rudd seeks middle ground on many issues. A reduction in or abolition of a carbon tax would remove one obstacle to international competitiveness for Australian corporates. More importantly, increased flexibility for corporates in managing employment and wages could improve productivity and margins significantly.
The Coalition under Tony Abbot still remains odds on to lead the country post the next election. This would appear the best outcome for the country. However, a more balanced and coherent political discourse, combined with greater certainty for corporates in future planning, can only be positive. Together with a falling dollar and lower interest rates, and sentiment and activity across the ditch could significantly improve over the next 6 months.