Monthly Archives: December 2013

Government-business relations and the Abbott government

Insider status

In Chapter 11 of the textbook you will find an explanation of the relationships that develop between ‘insider’ groups and government.  Insider groups, including representative business organisations and major companies, provide  a source of advice to government and are consulted on a regular basis on policy issues, including through membership of government advisory bodies (p. 378).  In the early days of the Abbott government, for example, business groups indicated that ‘progress was being made in private meetings with Mr Abbott, ministers and advisers’, including consultation by ministers ‘how election commitments could be turned into government policy’. This process is to be facilitated by a business advisory council (Osborne P. 2013, 2013, http://news.smh.com.au/breaking-news-national/abbott-assures-nation-hes-hard-at-work-2013090926-2ugcy.html). The Prime Minister’s Business Advisory Council includes ’12 prominent Australian and global business leaders and experts to help restore a strong working relationship between business and govenment’ (for details see Abbott, t. 2013, ‘Prime Ministers’ Business Advisory Council’ media release, 4 December, http://www.pm.gov.au/media//2013-12-04/prime-ministers-business-advisory-council). 

The potential for significant insider status and influence on the government’s agenda by a business group can also be seen with the Abbott government’s establishment of the National Commission of Audit to ‘assess the role and scope of government, as well as ensuring taxpayers’ money is spent wisely and in an efficient manner’ (Hockey, J. 2013, ‘Coalition commences National Commission of Audit’, media release, 22 October, http://jbh.ministers.treasury.gov.au/media-release/009-2013).  The Commission is chaired by Tony Shepherd, President of the Business Council of Australia (BCA) and the secretariat is headed up by Peter Crone, Chief Economist and Director of Policy at the Business Council.  Prior to the 2013 election the Business Council released an Action Plan for Enduring Prosperity which called for an ‘independent, whole-of-government audit’ that ‘must come to terms with the appropriate size of government’ (Grattan, M. 2013, ‘The Conversation’, 25 October,www.theconversation.com/grattan-on-friday-should-a-lobby-group-chair-the-audit-commission-19523). This synergy between the agenda of the Business Council and that of the Abbott government caused comment that the Commission ‘is there to provide a cover the government can use to justify its own rhetoric’ and brought into sharp focus the ‘old political adage that says never set up an inquiry unless you already know the result’ (MacCallum, M. 20134, ’28 October, ABC The Drum, http://www.abc.net.au/news/2013-10-28/mungo-commission-of-audit/5049416).

Insider status – limitations on influencing government policy

Even though business groups and representatives of large companies achieve insider status (p. 379) this is no guarantee they will be successful in getting what they want from government.  The Business Advisory Council, for example, has no representation from business organisations and the fact that it will meet only three times a year limits its capacity to respond to and give advice on economic issues as they arise.  There is some resonance here with the Economic Planning Advisory Council established by the Hawke government which was often used to endorse the government’s policy agenda (Singleton, G. 1985, ‘The Economic Planning Advisory Council: the Realities of Consensus’, Politics, Vol. 20, No. 1, pp. 12-26).

Because a government’s political agenda is usually focused on maximising its electoral support or founded in its ideological preferences, this will over-ride the interests and lobbying of an insider business group or large company. This has already occurred in the short time since the Abbott government took office. Electoral and party considerations associated with strong opposition from the government’s Coalition partner, the Nationals, and rural interests and communities, resulted in a proposal by a US company to buy Australia’s largest grain handler Graincorp being rejected by Treasurer Joe Hockey on 7 December 2013.  His action was seen as ‘precisely the sort of thing that the BCA opposed’ and contrary to what it ‘had advised’ (Hartcher, P. 2013, 7 December, http://www.smh.com.au/federal-politics/political-opinion/any-way-the-wind-blows-tony-abbotts-conflicting-messages-to-business-20131`206-2ywpb.html).

Four days later, by contrast, Hockey approved the removal of ‘certain foreign investment conditions placed on Yanzhou Coal Mining Company, a Chinese state owned enterprise restricting its ownership of Yancol Australia Limited’.  The reasons given were ‘slowing demand, declining coal prices and a number of mine closures’ and an undertaking by Yanzhou ‘to support Yancoal’s ongoing operations’ and maintain ‘its position as a major regional employer’ (Hockey, J. 2013, ‘Foreign investment decision’, 11 December 2013, http://jbh.ministers.treasury.gov.au/media-release/0-33-2013). The underlying reasons  for this decision were economic in wanting to support and maintain the coal industry in Australia and electoral given the employment the mining industry supports.

A decision not to provide additional financial assistance to Australian motor vehicle manufacturers even though several thousand jobs at Holdenand its local suppliers were in jeopardy have to be seen in the context of the Abbott government’s political agenda and philosophical leaning in favour of market forces rather than government intervention.  Abbott stated his government’s policy was ‘to try and make it easier for all businesses to compete and flourish’ by trying to reduce taxes and regulation, ‘not chase them down the road waving a blank cheque at them’.  He said Toyota would not get any additional government money to encourage  it to continue manufacturing cars in Australia and Toyota’s future ‘was a matter for Toyota’ (Packham, B. & Ackerman, P. 2013, 12 December, http://www.theaustralian.com.au/national-affairs/tony-abbott-defends-holden-stance-rules-out-more-money-for-toyota/story-fn59niix-1226781280825). Abbott also indicated his government would not subsidise Qantas even though the company was facing financial difficulties.  His argument was that ‘in the end businesses have to operate profitably’ and could not expect government to do anything other than create the conditions under which they operate’ (Abbott, T. 2013, Interview with Neil Mitchell, Radio 3AW, 6 December, http://www.pm.gov.au/media/2013-12-06/interview-neil-mitchell-radio-3aw). According to Josh Frydenberg, Parliamentary Secretary to the Prime Minister, ‘Liberals understand the best outcomes for society and the economy are not always the unique provenance of government’ (Frydenberg, J. 2013, ‘The Abbott Government’s Deregulation Agenda: Priorities and Strategies, 28 October, speech, http://www.joshfrydenberg.com.au/guest/SpeechesDetails.aspx?id=225). Holden has announced its intention to cease manufacturing cars in Australia at the end of 2017 and Qantas intends to lay off 1000 workers. 

 Labor’s approach, on the other hand, influenced by its long association with the union movement. is to increase financial support for the Australian automotive industry  (Swan, J. 2013, 9 December, http://www.smh.com.au/federal-politics/less-than-150m-more-a-year-to-keep-holden-says-kim-carr-20131208-2yze8.html). According to Labor leader, Bill Shorten, ‘every other first world country who makes cars, including Germany and the United States, subsidise their car industries to a far greater extent than anyone’s talking about in Australia.  Holden workers deserve to have a government who will fight for Australian jobs, rather than give up and wave goodbye to the car industry in Australia’ (Shorten, Bill, 2013, Press conference, 13 December, http://www.billshorten.com.au/category/transcripts).

Conclusion

It is evident that  business representative organisations such as the Business Council of Australia and representatives of large companies do achieve insider status whereby they have the opportunity to have an input into government deliberations on policy issues.  However, it is also clear that this does not necessarily translate into influence over policy if the government’s political agenda is determined by other factors including its own policy agenda focused on philosphical and electoral considerations.

 

Gwyn Singleton

30 December 2013