IPA Today

The Old Alliance Of Liberals And Business Has Turned Uneasy

Written by:
21 July 2017
The Old Alliance Of Liberals And Business Has Turned Uneasy - Featured image
Originally Appeared In
The Australian Financial Review

On Wednesday, this newspaper’s chief political correspondent Phillip Coorey reported that at a private dinner in Sydney on Monday evening Prime Minister Malcolm Turnbull urged the leaders of big business to donate money to the Liberal Party and to do more to promote the government’s policy agenda.

Apparently a number of chief executives responded by questioning the PM as to precisely which parts of the government’s plans for higher taxes and more regulation he thought business should support.

Both sides have a point.

Chief executives have forgotten that, by and large, Coalition governments are better for their business, their shareholders, and their customers than Labor governments.

The amount of time CEOs spend complaining about the lack of political leadership in this country is inversely proportional to the effort they devote to being involved in the public policy debate. And when bosses do speak out, it is more likely to be on something they care about personally, like gay marriage, rather than the need to cut red tape. Over the past decade the voice of big business in much of the public policy debate has diminished, to the point where it is at risk of becoming non-existent. The number of big business leaders in Australia who are actually “leaders” and who are not simply corporate bureaucrats who have got to the top after decades of being good at playing office politics can be counted on the fingers of one hand.

Liberals are right to complain about the unwillingness of corporate Australia to get their hands dirty by entering the policy and political fray. The Prime Minister said Australians “can’t hide under the doona and hope the big changes in the economy will stop or go away”. He’s right. When it comes to industrial relations reform in particular, too many CEOs have been more than happy to hide under the doona.

But Liberals should also realise that as government and government regulators get bigger and more powerful, the consequences for business leaders stepping beyond the bounds of consensus opinion increase exponentially.

For example, Treasurer Scott Morrison’s proposed “Banking Executive Accountability Regime” (quaintly called by the Treasury Department BEAR) gives the Australian Prudential Regulation Authority draconian powers to police corporate behaviour and intervene in internal management decisions.

The supposed justification for BEAR is that banks must conform “with community expectations”. One can speculate what might happen at some time in the future if ever APRA decided that the policy or political activity of a bank did not meet “community expectations”. In the years ahead it will be easier and simpler for bank bosses to not get involved in politics.

The imposition of new regulations like BEAR highlight the point the business bosses were making to the PM. At the moment, there’s not a great deal of the Turnbull government’s policy agenda that’s worthy of the support of big business – even if big business were inclined to give that support.

On the one hand the PM says he wants business to speak out, but when the banks ventured to say the Coalition’s bank tax was a bad idea the response was from the Treasurer was “cry me a river”.

The truth is that “multinational corporations” are no less a convenient whipping boy for Liberals as for Labor. The Turnbull government recently decided that it was appropriate use of taxpayer funds to insert in household letterboxes around Australia a brochure advertising its new Diverted Profits Tax and Multinational Anti-Avoidance Law. The brochure was headed “‘If a multinational corporation makes money in Australia, it’s only fair it pays tax in Australia”. The unstated assumption of the brochure is that multinationals don’t pay their fair share of tax, which is demonstrably false. The relevance of the law to most Australian households is zero. The only purpose of such taxpayer-funded advertising from a Coalition government is to reinforce the left-wing stereotype of multinational companies as selfish and greedy who don’t pay their taxes.

Yet on Monday night it was the bosses of these very same multinational companies from whom Malcolm Turnbull was seeking donations. So it should be no surprise that discussion over dinner between the PM and the CEO’s was described as “robust”.

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John Roskam

John Roskam

John Roskam is a Senior Fellow at the Institute of Public Affairs