Rudd's slow decision-making is creating uncertainty

THE second anniversary of the government is looming, but vital policies are still undecided.

AT the beginning of this week in parliament, the Prime Minister used a Dorothy Dixer to take a light-hearted gibe at the opposition's continued delaying tactics of the emissions trading scheme.

He referred to the "minor matter of business certainty" as a reason to get on and pass the legislation.

Of course, Kevin Rudd knows business certainty is no minor matter, or does he? He has been using the need to give businesses certainty on climate change for months now in a bid to try to cajole the opposition into passing his legislation. When the likes of Australian Industry Group chief executive Heather Ridout line up next to Rudd to make the same point, it places enormous pressure on the Liberals, the so-called party of small business.

All of this belies one simple fact that there is nothing certain about the shape an ETS will take, even if it becomes law in the coming week, because the regulations (which guide the way the scheme will be administered) haven't yet been set. The government is more concerned with playing politics with the parliamentary debate about whether the ETS becomes law, as well as exposing divisions inside the Coalition on this issue.

So there can't be "business certainty" as far as the ETS is concerned - other than the certainty that once it is law it will impose a cost on business. The debatable point is whether it is a necessary cost to help save the planet. The science overwhelmingly supports the need to do something, but whether an ETS is the right something to do is a discussion that we haven't really had.

The blame for that is Malcolm Turnbull's, not just Rudd's. As environment minister in the Howard government he insisted on an ETS as policy at the last election without a national debate about the various models on offer. Alternatives such as a carbon tax (which looks pretty good right now) were quickly dismissed. Turnbull felt the government needed to muscle up to the opposition on environmental issues, especially given he was fighting for his life in his urbane seat of Wentworth.

But the uncertainty surrounding the impact an ETS is going to have is only one area of uncertainty for the business community. In other policy areas, the list of uncertain reviews under way in the first two years of the Rudd government is a pressing toll on business. Reviews and inquiries - something Rudd as a one-time public servant has a predilection for - might be appealing to someone who has spent his life outside of business.

But for those in the community driven by the market (the evil neo-liberal conspiracy, as Rudd regards it) ongoing reviews get to a point where they erode confidence in the government's ability to get on with the job of setting the terms for business functionality.

As we approach the two-year anniversary of Labor's time in office, the list of uncertain policy areas is a long one.

Plans regarding the break-up of Telstra, the takeover of public hospitals, any implementation of Productivity Commission recommendations into addressing problem gambling, Award modernisation, changes to franchising, amendments to employee share schemes, Foreign Investment Review Board rules governing foreign investment and energy security, given the government has ruled out the nuclear option, are all important policy areas up in the air. And which way the government jumps on each will have a profound effect on doing business in this country.

Take, for example, any move by the commonwealth to take over private hospitals. If it goes ahead (as was promised) the impact on private health providers would be significant. But they can't plan for it because the government has rhetorically retreated from the commitment incrementally ever since the day it was elected. The issue of business franchising might not be a mainstream political one. But the government's inaction on this front goes to the heart of its preference for committees and reviews. More than 300 days ago a bipartisan parliamentary committee recommended changes in his important policy areas. But the minister has sat on his hands and we are no closer to knowing what the government will do than we were the day the report was finalised.

The above areas of policy, which are giving business a feeling of uncertainty, while important, do not include perhaps the biggest looming area of business uncertainty: what will happen when the Henry review into the tax system is finalised? The report is due out soon and it will no doubt be far-reaching in its recommendations.

But the track record of slow-moving decision-making by the government means that businesses will have to wait - in a climate of uncertainty - while the government polls, tests focus groups and ponders which reforms it will pursue and which it will ignore.

That will create real business uncertainty.