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Is Labor’s ‘poor relationship with business’ such a bad thing?

One of the more effective tools of public debate is to establish a straw man so thoroughly in the public mind that it becomes accepted as a legitimate aspect of any discussion. It’s one of the hallmarks of this government that it is not merely incapable of preventing its opponents from putting straw men such as the budget deficit right in the middle of political discourse, but that it seems to go out of its way to help build them.

A nice example is the claim that the government has poor relations with business.

You may think, given the government has created a carbon pricing package that almost entirely neuters the pricing impact on trade-exposed industries by handing out billions in compensation to business, and a mining tax that was basically drafted by three foreign multinationals, given that it is handing out hundreds of millions of dollars to the steel industry, bending over backwards to find ways to shore up the manufacturing sector and offering a cut in the corporate tax rate, that business is getting a fair shake from Labor at the expense of taxpayers. You might also think, given a booming economy, low unemployment and low inflation, the government was managing the economy effectively in the interests of business.

But, apparently, the fact that it has poor relations with business is a black mark against it.

This claim has been around for a while. It’s long been an article of faith at The Australian. Back in April, the push for uniform OH&S laws — which one would foolishly assume business would support — was said to be going to “further strain Labor’s relations with business”, which were already poor. In July, Alan Kohler suggested “relations between the federal government and business are as bad as they’ve been for 40 years, and it’s not just because of the proposed carbon tax”. The prime minister’s speech to the Business Council in November was interpreted as her committing to “repair” her relationship with business.

As we all know, however, “relationships” mean different things to different people. Yesterday The Australian Financial Review reported that Treasury has begun consultations with business over how to consult better with business. That may sound Kafkaesque, but it follows a couple of incidents where changes to regulations or tax laws have had to be amended after unintended consequences emerged, despite consultation with affected sectors.

Consultation with key stakeholders over regulatory impacts is part and parcel of how the bureaucracy works, and continues regardless of the temperature of relations between politicians and business. Many sector lobbyists and representatives would meet more often with bureaucrats than ministers when it comes to regulatory changes. That’s not to say that ministers themselves aren’t occasionally cack-handed in how they approach relations with business. It’s unlikely the mining industry would ever have come around to supporting the Rudd government’s RSPT, but the “Sunday surprise” aspect of the announcement was extraordinarily clumsy from both a political and a policy point of view.

But laments about the government’s poor relations with business appear to revolve around the idea that “consultation” should mean business getting what it wants, and therefore the failure of the government to give business exactly what it wants is a failure of “consultation” and reflective of a poor relationship. In fact this government has much stronger formal consultation processes than the Howard government, which abandoned the traditional green paper-white paper policy development process in favour of more limited, behind-closed-doors consultation with key players. The Rudd government re-adopted the more traditional system, and in addition to that launched so many reviews calling for so much input that business privately complained of “submission fatigue”.

Voters also have a different take on the state of the government’s relations with business. If anything, voters think the government is too close to business. In July, Essential Research found that 33% of voters thought the government was more concerned about the interests of big business than voters. Only 22% thought it was more interested in the interests of voters than business, and only 23% thought the government balanced the interests of both. Forty per cent of voters thought business had too much influence on policy, 33% thought they had the right amount, and only 5% reflected the corollary of laments about the government’s relationship with business, that it should have more influence (incidentally, 12% thought unions should have more influence on government).

And in September, Essential found that business groups ranked second last — ahead of religious organisations — in terms of voters’ trust. They were only fractionally behind trade unions, but a long way behind environmental groups and even federal parliament.

As far as voters are concerned, business isn’t to be trusted and has too much influence on public policy already. If Labor indeed has such a terrible relationship with captains of industry, it might be well advised to keep it that way until business earns more respect from the community.

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    James Guest
    Posted Friday, 9 December 2011 at 1:04 am | Permalink

    Bernard Keane, you say

    It’s one of the hallmarks of this government that it is not merely incapable of preventing its opponents from putting straw men such as the budget deficit right in the middle of political discourse, but that it seems to go out of its way to help build them.”

    I wish to respond to you and other sophisticates who have pointed out that
    restoringa budget surplus, and, presumably paying down debt, is an
    unwarranted fetish.

    My response is to point to Europe and the consequences of a relaxed attitude
    to government debt. Nearly all countries in Europe would have benefited
    from their populations being obsessed by old-fashioned frugality extended
    to government. 99 per cent of people are not going to be able to give a
    good coherent and nuanced argument about the pros and cons and qual-
    ifications so it is best that fiscal conservatism be entrenched even if for
    less that perfect reasons. That Australia’s excessive private debt (much
    larger than the excessive but, by international standards, not very large
    government debt which the later and uncontrolled stimulus packages
    produced) is being wound back by a substantial rise in household sav-
    ing suggests that Australians instincts are sound and should be heeded
    by government.

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