Westpac chief executive Peter King says election result sends powerful message to Labor

Westpac chief executive Peter King says business is looking for a clear timeline, an integrated plan between the states and the federal government. Picture: Jane Dempster

Westpac chief executive Peter King believes Saturday’s election result sends a powerful message to the incoming Labor government.

Deliver a plan on energy and climate that will bring on investment to tackle climate change.

“We will have a House of Representatives where not just for the government but the cross bench as well, there is a very big focus on climate as a priority over other agenda items,” he says.

“We hope for clear policy — a long-term plan on how we want to adopt this. That is important because it gives investment certainty and helps people make these very long-term decisions on both the green energy transition and the wind-down of the fossil fuel powered energy.”

King says business is looking for a clear timeline, an integrated plan between the states and the federal government and alignment between the Reps and the Senate. Given the sea of red, state and federal the chances are higher for collaboration, but Australia’s track record is one of political carnage on climate.

The new Labor government knows if it is to build a better future for Australians, its relationship with business is critical. In the months leading up to the election Labor has been talking much more to business than in previous times, when big companies were dismissed as fat cats.

“The better we work together the better for the economy and the community,” says King, who chairs the Australian Banking Association. Like many in business he is relieved that the risk of an unworkable minority government has been ruled out.

Through two years of pandemic, the vital relationship the Coalition government had in business was with the big four banks. People stayed connected to their jobs and loans were deferred, delivering a 3.9 per cent unemployment low for the incoming Labor government.

King is right that it is not just the banks but all of business that Anthony Albanese and his Treasurer elect Dr Jim Chalmers will need to engage, as the country faces rising inflation and rising interest rates.

“We have these supply side challenges and a lot of them are global and there is no quick fix. Interest rates will go up to reduce demand and so it is a tricky period for the incoming government. The Labor Party have been increasing their interactions with business and they will only go up from here,” he says.

Australian Banking Association chief executive Anna Bligh. Picture: AAP Image/Bianca De Marchi

For months now Jim Chalmers has been getting to know the big bank chiefs. Anna Bligh, a fellow Queenslander and a former Labor Premier runs the ABA and no doubt played a part in opening doors. Good on her for doing so.

Speaking at the ABA inaugural conference in March, Chalmers clearly signalled to bankers that Labor did not want to be seen as anti-business.

“I want to convey my gratitude to you – for all the deferrals, fee waivers, restructuring and refunds you provided Australians and their small businesses – during the pandemic, the fires and now the floods,” he said. “And on a personal note, for the way the leaders of this industry have engaged with me directly, frequently, informally, generously, candidly.”

In the lead-up to the election Labor’s economic team paid a visit to Westpac’s offices, and it wasn’t the first. “From the interactions I’ve had they certainly understand the issues and we are constructively working with them,” King says.

Asked if he was concerned that higher spending under a Labor government would fuel inflation, King says he will wait to see more detailed policies and costings.

“My sense is the Labor Party understands it is important to be well managed from a fiscal perspective. It is also important that we do not overheat the economy. That demand side will be managed through interest rates and we will just have to see on the policy front,” he says.

The chief banker offers an unflappable willingness to engage but there is also a sense of watch and wait.

Take Anthony Albanese’s call for a 5.1 per cent rise in the minimum wage to match inflation in the last week of the campaign.

“That’s the statement the now leader of the government said, but it is up to the Fair Work Commission to decide and it does need to go up. We have had a bit of inflation.”

The chief banker sees bigger issues for the government in moving goods in and out of the country and trying to encourage more people into the workforce at a time when demand is so high from business to get people to work.

“Policies around women in the workforce, encouraging people to stay in the workforce for longer, they are the things that are important in managing where we are at the moment,” he says.

With the world markets competing for talent at the moment King says business and government has to demonstrate why it is better to come to Australia.

And on the bread and butter of housing, Westpac welcomes Labor’s shared equity policy to help first home buyers but King says it will do little to change the bigger trend in the market.

“The macro here is that interest rates will go up and we expect housing prices to reduce. And that is probably a reduction following the massive increase in housing prices in the last couple of years. Hopefully people will still be up but it’s a bit of a reversal of that process,” he says.