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Nassim covers the accounting and tax rounds for BRW, as well as general business news. She previously worked for The Age newspaper covering general news, state politics and economics.

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Rudd’s back and wooing business, but can he really win small business voters?

Published 03 July 2013 08:22, Updated 03 July 2013 09:13

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Rudd’s back and wooing business, but can he really win small business voters?

Prime Minister Kevin Rudd: “Let me say this to Australian business. We want to work closely with you. I’ve worked with you closely in the past, particularly during the GFC, and there were some white knuckle moments there . . . But we came through because we worked together and I’m saying it loud and clear to businesses large and small across the country, that in partnership we can do great things for the country’s future.” Photo: Andrew Meares

Prime Minister Kevin Rudd knows it’s going to be a dirty fight in the coming weeks. Battle-scarred after a three-year stoush with Julia Gillard, he’s ready to fight Tony Abbott for the prime ministership. As Labor cabinet minister Jason Clare (who switched his vote from Gillard to Rudd at last Wednesday’s leadership ballot) has pointed out, the Coalition faces a tougher federal election campaign now.

“The Liberal party has been very cocky for three years; they weren’t cocky [after the change of leader last week],’’ he said. “They know now that the fight is on and there’s a real competition at the next election.’’

Labor was heading to a massive defeat under Gillard’s leadership. Some polls are now showing Rudd as the preferred leader over Abbott, although the Coalition remains ahead on a two-party preferred basis.

Rudd’s first step, after last week’s ballot win, has been to appeal to young voters, and business. Both he and his new Treasurer, Chris Bowen, have been doing the rounds – talking to business lobbies, and making public promises that he will renew the relationship. “Let me say this to Australian business,” Rudd declared after winning the Labor leadership. “We want to work closely with you. I’ve worked with you closely in the past, particularly during the GFC, and there were some white knuckle moments there as some of the heads of the major banks will remember. But we came through because we worked together and I’m saying it loud and clear to businesses large and small across the country, that in partnership we can do great things for the country’s future.

It’s an understatement to say Rudd has his work cut out trying to win back business support. Not only does he need to reverse a perception that Labor has a philosophical dislike of the core values big business and wealthy Australians stand for, he also has to show that the party is prepared to back its words with actions.

Less pro-union

If Labor wants to claw back business votes, it’s best chance is to go for the small-business vote. Peter Strong, chief executive of the Council of Small Business Organisations of Australia (COSBOA), says the big issues for small business are penalty rates, competition policy, and unfair contracts. He argues that at the moment the ACTU controls work-place relations, Coles and Woolworths control competition policy, and the big landlords control contract law. But that may change.

“What I’m hoping a Rudd-Bowen return means we won’t have the unions controlling too many things any more,” Strong says. “The ACTU became the default policy manager of workplace relations in Australia under the previous crew. The new crew are not connected to the union movement in the same way; they haven’t come out of the union movement. In fact Rudd’s quite independent.”

Despite the long-held view that Labor is pro-union and the Coalition is pro-business, Rudd is from the right of the Labor party and has had a fragile relationship with unions in the past.

At Labor’s 2011 national conference, Kevin Rudd called for an overhaul of the party’s structures – something he may look at again. Of course, reducing union influence and fighting entrenched factionalism is easier said than done. And the unions remain Labor’s core supporters this election.

The ACTU, on behalf of its two million members, urged Labor MPs to unite behind Kevin Rudd in the lead-up to the election and “ensure that Tony Abbott is not elected on his stated policies of bringing back individual contracts, changing Fair Work Australia in the interests of business, abolishing the increase to superannuation, and his lack of support for Australian jobs”.

Strong says despite that, he believes Rudd’s approach will be different. It will not be “what the union wants, the union gets. Business should have the capacity to grow and unions shouldn’t impede that.”

That’s why when it comes to penalty rates COSBOA is looking for changes to double-time rates on weekends. “So many country towns used to have shops open on a Sunday, but now they can’t afford to have them open,” Strong says.

On competition policy and contract law, Strong says Rudd and Bowen are economic rationalists. While they will not directly attack Coles and Woolworths, he believes they will look for ways of “creating fairness”.

He says when Bowen was small business minister he tried to push a bill through Parliament to create fairness in contracts. “We thought we’d won that battle and then Chris Bowen was moved out to another portfolio.”

Historically sour

Bank of America Merrill Lynch Australia chief economist Saul Eslake says the relationship between Rudd and business “wasn’t great when he left as PM...In fact the relationship with the mining sector was very poor,” Eslake says.

And already Rudd has got off to a rocky start. “The decision to proceed with the changes to 457 visas requirements initiated by the Gillard government hasn’t gone down well,” he says. “It doesn’t represent a good start. But it remains to be seen what other steps – both rhetorical and actual – the new Prime Minister will take between now and the election.”

Eslake says the one change that has been welcomed by business is Rudd’s decision to change the carbon tax. But Rudd still has a long way to go in getting the small-business vote.

“That will be a difficult ask given that small business is ordinarily a fairly natural constituency for the Coalition,” he says. “The change to the carbon tax arrangements may be seen positively but it remains to see whether they’re enough or whether the position, for Labor, is irretrievable.

“Chris Bowen is an unknown quantity as far as business is concerned – that’s neither a positive or negative judgment. [Anthony] Albanese and Kim Carr are notionally of the left. Although Kim Carr in the past was well regarded by the manufacturing sector as sympathetic to their concerns, he wasn’t protectionist in the old fashioned way. But he was willing to a) listen to their concerns, and b) be supportive of research and investment and innovation in manufacturing. That included putting money behind them.”

Big business wants action

The Business Council of Australia’s president, Tony Shepherd, who has been a vocal critic of Gillard and former Treasurer Wayne Swan, says: “Kevin Rudd must act to restore shaky business and consumer confidence by immediately marking out an agenda focused squarely on jobs, investment, competitiveness and growth”.

In a statement after the ballot he welcomed Rudd’s commitment to re-engage with business and maintain “respectful dialogue”.

But he also called for Rudd to lower the carbon price, withdraw the 457 visa bill and the amendments to the Fair Work Act, commit to an audit of government spending, and “repeal the recent flurry of anti-business and anti-growth legislation”.

Similar noises were made by Australian Industry Group chief executive Innes Willox, who said the lobby group is “looking for new directions on a number of fronts particularly around workplace relations, carbon, immigration, skills, infrastructure and research and development. “A big priority for any government should be to boost our productivity and reduce costs and regulation for business.”

Big business also wants the election date set. Rudd could plan to go earlier than September 14, but at the time of print, the date had not yet been confirmed.

Watching the polls

Abbott’s consistent message over the past week has been to warn voters that Labor is an “inexperienced and unstable government”. After Labor got a boost in the polls, Abbott said on radio: “It was always pretty obvious that there’d be a sugar hit if the Labor Party changed its leadership. I think there was always the sympathy factor for Kevin Rudd over the way he was turfed out of the leadership.”

Abbott went on to point out (somewhat ironically) that the policy debate will ultimately be what matters to voters, especially business.

“In the end it’s what policies does he have? How is he going to scrap the carbon tax given that he’s always told us that an emissions trading scheme carbon tax was the great moral issue of our time? How is he going to get Government spending under control when he unleashed the biggest spendathon in Australia’s history? He’s got to give us answers.”

The election will be closer now that Rudd is back in, but Strong believes the most likely outcome is still for a Coalition win. He says that would still leave an important role for Rudd and Bowen as the party that keeps Abbott and Joe Hockey in check.

“They will have to keep Tony Abbott and a Coalition government to their word,” Strong says. “And they will have to prove they won’t just fight for the workers, but also for the small business community. That’s what Labor hasn’t done previously in opposition.”

Australian Chamber of Commerce and Industry chief executive Peter Anderson says he’s looking forward to seeing further policy details from both sides in the weeks leading up to the election.

“I want a bidding war between the Labor party and the Coalition on who can best grow and strengthen the Australian economy,” Anderson says.

“And that does require an economic plan.”