Malcolm Turnbull and the Coalition could be alienating major business donors with their stance on the “Ruddbank”, legislation for which is currently before the Senate.
The Coalition has vowed to oppose the the Australian Business Investment Partnership bill, citing concerns about risk to taxpayers and opposing government support for the commercial property sector. Malcolm Turnbull has criticised the proposal for “using taxpayers’ money, tens of billions of taxpayers’ money, to hold up commercial property prices.”
The problem with that stance is that the commercial property sector is a major donor to the Liberal Party. The Federal Party alone received over half a million dollars in 2007-08 from major property groups, property services groups and large construction firms like Multiplex, Australand, Transfield, Bilfinger Berger, Grollo Group, John Holland and Leighton. Frank Lowy’s Westfield alone gave $150,000.
Westfield stands to be one of the biggest beneficiaries of the ABIP, and has already been in discussions with the Government over its funding needs.
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The Coalition’s opposition to the proposal has mystified the major property companies — and Liberal donors — that Crikey spoke to. “I can understand it as purely political position,” said one executive of one of the country’s biggest development groups, “but it’s not a reasonable stance. The funding would only be used in limited circumstances and would take pressure off the sector.”
Another executive urged Turnbull to talk to the sector and get a better understanding of the problems it faced in rolling over credit for even strong investment opportunities. The Coalition continues to argue that there is little or no evidence of foreign banks withdrawing capital, but one firm told Crikey of having a major development with a guaranteed government tenant delayed because a foreign bank had been forced to seek approval from its London headquarters. Local banks are unwilling to proceed until that decision — a low priority for the bank — had been made, meaning the investment remains in limbo.
“We’ve made 30% of our staff redundant already,” an executive said, “and we don’t want to let any more go. We’re very keen for Ruddbank to get up and running.”
The tightening of risk profiling by local banks is also a problem. Banks are unwilling to lend even for projects with government tenants. The ABIP would, in the view of those in the sector, increase confidence and certainty. “The scheme will be short-term, it addresses pressures that weren’t there before, it will do something to address the lack of flexibility, jobs and liquidity in the sector,” said an executive. “We wonder if Malcolm understands what’s really going on.”
The Coalition needs to tread carefully with business, having angered many in the business community with its opposition to the second stimulus package. The leader of one major, traditionally Liberal-aligned, industry group is appalled and furious at the Coalition’s obstructionism in the Senate and its negative attitude and “gameplaying”. Other traditional Labor foes like ACCI also supported the stimulus package strongly.
The Party’s honorary Treasurer Michael Yabsley spoke recently about targeting small businesses like panel beaters and tradesmen whom the Liberal Party had traditionally ignored, to offset the ALP’s union-derived advantage in donations. The problem is that this is exactly the level of business likely to benefit from the Government’s focus on construction and retail in its stimulus packages.
The Coalition maintains it is doing the right but not popular thing by obstructing the Government’s response to the economic crisis. That unpopularity will become a serious problem if its natural constituency starts to think that Labor has a better understanding of its problems than the Liberals do. 2010 will be the Coalition’s best chance of returning to Government before the second half of next decade, and its current negativity risks ensuring it shows up to the next election underfunded and unloved by its strongest supporters.