Business leaders warn of difficult relationship with Gillard government

Business leaders have slammed the Gillard government's handling of the economy, with corporate captains saying relations are the worst in recent memory with a government that is not on top of major issues.

Speaking at The Australian-Deutsche Bank Business Leaders Forum in Melbourne today, Transurban and incoming Westpac chairman Lindsay Maxsted said issues of both illegitimacy and execution were affecting the government's performance.

"It's probably the most difficult relationship I've seen between business and a federal government," Mr Maxsted said. He said everything the government was planning seemed to be about short-term gain, as opposed to what was in the long-term interests of the country.

Qantas chairman Leigh Clifford said the government did not have a good grasp of the major issues facing the economy, which he said were industrial relations, infrastructure, carbon and mining taxes and skills shortages.

"I'm not sure, on all of those counts that the government is on top of what needs to be addressed," Mr Clifford said. Santos chief executive David Knox said business was craving certainty to invest.

Former Telstra chief Ziggy Switkowski, who is the chancellor of RMIT University, said there was a "whiff of illegitimacy" about the Labor government, in part due to how the carbon tax has been introduced, following an election campaign pledge by Prime Minister Julia Gillard that no such tax would be imposed.

The carbon tax is a prime reason the mistrust between government and business is high.

That the government is involved in structural economic reform in the form of a carbon tax while there is a looming economic crisis in the US and Europe has dismayed many business leaders.

Many chief executives, rather than sharing the Gillard government's stated belief that Australia's two-speed economy is all about managing a boom, are saying the country may instead have to manage a bust.

Mr Maxsted said he did not believe there was enough basis for the Reserve Bank of Australia to raise interest rates, but on the other hand there were not enough signals to cut them.

Deutsche Bank Australia and New Zealand executive chairman John Macfarlane said markets were factoring in just a 25 per cent chance of a rate cut but were betting if it did happen, it would be a relatively large one.


Author | Source | Matt Chambers | The Australian