PP McGuinness said last week that:

There is a fair chance that even an incompetent Government might be rescued by the direction that Labor is taking. Perhaps now the business community might start thinking seriously where its interests lie. There is an old saying, sometimes attributed to Lenin, that capitalists will be prepared to sell you the rope with which to hang them.

Will the business community — with which 85% of the workforce has more in common than with the cynical and power-mongering apparatchiks and bullies of the unions — stand aside and simply watch?

It seems Australia’s so called “leading businessmen” have listened: “Labor’s workplace reforms have provoked an unprecedented corporate backlash with some of Australia’s largest companies preparing a concerted campaign against Kevin Rudd’s industrial agenda.”

The political debate has moved to the question of who is most wedded to black and white television and the comfortable remembrance of times past.

The Oz’s Paul Kelly has no doubt:

Rudd’s new industrial policy is a giant step into the past. Indeed, so sweeping is Labor’s embrace of the principles of collective power and re-regulation that it must be wondered whether Rudd fully comprehends what he has done.

Phillip Cory reports Howard’s response for The SMH:

Mr Howard said: “When I came to the prime ministership in 1996 I’d been treasurer, I’d been opposition leader for a long time, I’d been kicked out as opposition leader, I’d suffered the swings and roundabouts … of politics as well as some of the successes. I’d been battle-hardened.” He paraphrased Ronald Reagan’s line to Walter Mondale in the 1984 US presidential election. “If you don’t talk about my age I won’t talk about your inexperience.”

The practical battleground is industrial relations, plus the vastly more difficult area of climate change (and nuclear power as the best interim solution — interim until solar, wind and tidal power plants are economically viable and/or until “clean coal” technologies are mastered).

If we stick to the economics of IR reform vs. rollback, there is an elephant in the room. David Uren puts the question:

It is back to the drawing board for the economists at the Reserve Bank as they try to work out what is happening to the Australian economy. The theory on which they have been working for the past two years does not explain the results being achieved … The idea that the economy has hit the limits of its capacity, which the Reserve Bank has used to justify its interest rate rises, is no longer a credible explanation for the inflation surge in the middle of last year.

Henry believes it is the Government’s IR reforms that explain the “results being achieved”. This will be spelt out more explicitly in tomorrow’s advice for the board of the Reserve Bank.

Read more at Henry Thornton.