The victory of the Liberal-National party (LNP) in last weekend’s Australian federal election is most welcome. After 6 years of often chaotic, parochial and unpredictable leadership under Labor, it is to be hoped that a stable LNP will provide both certainty and a return of confidence by business and consumers in the political process.
Business confidence under Labor was severely damaged. The fact that Abbott in his election speech declared the country “open for business” highlights the importance the LNP place on a healthy business sector to help drive the economy. Under the new government, business confidence should improve for several reasons.
First, the promise of tax reform and less regulation should make it easier for corporates to get on with doing business. The impending abolition of the carbon tax and mining tax, as well as a reduction in the corporate tax rate, should improve corporate profitability and competitiveness.
Related to this will be the LNP’s drive to improve productivity and labour flexibility, to meet the needs of a modern economy. While one must be most respectful of workers’ rights and conditions, it can be argued that trade union dominated policy under Labor tipped the balance too far. Equilibrium needs to be restored, and if so, the propensity of small and medium size business in particular to hire could increase.
A renewed focus on vital infrastructure spending will also be important.
Realisation of these ambitions will be crucial in making sure the Australian economy is strong and competitive far into the future. If the LNP can get this right, then better business conditions and accommodative monetary policy could see a real and sustainable increase in business and consumer activity. That would be a legacy for any government to be proud of.