Federal election 2016: business leaders dismayed by poll result

Top corporate figures have reacted with dismay to the possibility of a hung parliament or thin Coalition majority.

Australian Prime Minister Malcolm Turnbull at the Sofitel Wentworth Hotel

Australia’s top corporate figures have reacted with dismay to the possibility of a hung parliament or wafer-thin Coalition majority, warning economic reform could be paralysed for years.

As business anxiously waits on the counting of postal votes that won’t start until tomorrow, Seven Group Holdings executive chairman Kerry Stokes described the uncertainty of the weekend’s result as “disastrous” and said the current landscape in Canberra was “bad for investment and business”.

Mr Stokes was joined by other business leaders, who told The Australian that key planks of the Coalition’s reform agenda — including company tax cuts and the re-establishment of the construction industry watchdog — will be hostage to a precarious lower house majority and obstructive new Senate crossbench. Economists have also warned of an increased risk of a credit downgrade for Australia, based on the likely difficulty of passing unpopular budget repair measures.

“I think it’s disastrous,” Mr Stokes said late yesterday.

“There has been uncertainty for eight weeks.”

Now, he said, “the facts are it’s more uncertain”.

“So that’s a disaster, whichever way you want to look at it. I don’t know any way of dealing with that now to gain stability.”

The sharemarket is expected to trade lower today, with AMP head of investment strategy and chief economist Shane Oliver saying the result was likely to knock between 0.5 per cent and 1 per cent off the benchmark. At the same time 10-year commonwealth government bonds are expected to be sold off, pushing yields higher. Trading in the Australian dollar is expected to remain volatile, particularly ahead of tomorrow’s monthly Reserve Bank board meeting.

Former chairman of BlueScope Steel and Brambles and a former director of the Reserve Bank, Graham Kraehe, described the election result as a bad outcome for the nation.

“I think that it’s a disaster on all counts really,” Mr Kraehe said.

“That’s not a partisan political comment. It’s just almost a situation in which we have a high potential to be ungovernable.”

Mr Kraehe said he thought the election campaign was “pretty poor”, with “not a lot of leadership” when that was “what people need”.

“I think that really bodes very poorly for investor confidence, which is already relatively low given the instability in global markets and many other parts of the world,” he said.

He noted that a possible hung parliament came on top of the ­turmoil in financial markets in the wake of the Brexit vote.

“None of that adds to business confidence, none of that attracts overseas investment, and I guess when you add all of that to the massive anti-business message given by the Labor Party in the campaign, that bodes very, very poorly for international investment into Australia.”

Steel industry doyen and Toll Holdings chairman Ray Horsburgh said he thought the situation would turn into an “absolute mess” and hit investment.

“People will hold off on capital expenditure, investment, mergers, takeovers,” he said.

Mr Kraehe’s concerns about leadership were echoed by Commonwealth Bank, Bellamy’s and Super Retail Group director Launa Inman. “I am naturally disappointed that it looks like a hung parliament, which is not what Australia needs at this time,” she said. “We need clear, decisive leadership going forward.”

Flight Centre chief executive Graham Turner noted that consumer confidence was already “pretty average”, while Bendigo and Adelaide Bank managing director Mike Hirst said it was hard to see how the political situation would engender confidence in the short term.

Australian Institute of Company Directors chief executive John Brogden urged a “quick and certain” outcome from any talks that Malcolm Turnbull and Bill Shorten would have with crossbench MPs. “Back in 2010 this took weeks. This has to take days,” Mr Brogden said. “We can’t let this drift — it will damage Australia internationally and in the economy domestically.”

As well as warning that the election deadlock will weigh on the economy, business leaders raised alarm bells that crucial economic reforms could be stymied for years by newly elected Senate.

Mr Brodgen said the Senate looked “to be a train wreck” that would make negotiating legislation difficult. Consequently, “any attempt at serious long-term policymaking could go out the window”.

Other business leaders who warned that a hamstrung government would be damaging included Woodside Petroleum and Wesfarmers chairman Michael Chaney, Primary Healthcare chief executive Peter Gregg, former Origin Energy chairman Kevin McCann and company director Arlene Tansey.

Stockland director Carol Schwartz said: “It would appear that unfortunately the Australian electorate has produced the worst possible result for this 2016 election. I fear that the many initiatives that need to be introduced by whichever party leads government, will be negotiated into oblivion.”

Industry Super Australia chairman and a former NSW treasurer in Nick Greiner’s Liberal government, Peter Collins, said that a Coalition government could face a bigger struggle with the new Senate.

The crossbench could include two members of Pauline Hanson’s One Nation, shock jock Derryn Hinch, three senators from Nick Xenophon Team and a returned Tasmanian representative in Jacqui Lambie.

“These people are going to come with far sharper policy views and more confidence than the previous preference-whispered senators of the last parliament. They were essentially getting on-the-job training.

“The new bunch are going to be more uppity from day one.’’

Although Malcolm Turnbull called the double dissolution to get the legislation to re-establish the Australian Building and Construction Commission, this now hangs under a cloud.

Mr Chaney said that not re-­establishing the watchdog body would be a “real shame because it’s so important for the health of the construction industry”.

Well-regarded company director Diane Smith-Gander said it was “so hard to see a positive path forward to the real reform that we need”.

On the ABCC, she said “if we now don’t have any dialogue and movement on reshaping our industrial relations landscape for three years, we are going to really regret it in the short to medium term.”

Additional reporting: Andrew White