James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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Gillard’s biggest certainty will be going after the wealthy

Published 31 January 2013 11:22, Updated 01 February 2013 13:09

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It’s the day after the longest election campaign in Australian history kicked off and like many people, I’m not sure whether to laugh or cry at the prospect of more than 220 days of campaigning.

While Prime Minister Julia Gillard says she has given business certainty, whether you agree with that is going to depend on your perspective.

I don’t think that having an election date will help many businesses plan (unless expanding into polling station sausage sizzles was a key expansion initiative for 2013) but I do agree with Gillard’s point that business will welcome the ability to weigh up the fully formed business policies of Labor and the Coalition.

But this benefit could be outweighed by a few negatives.

The uncertainty of not knowing who will be in power and what major changes could be in place this time next year is a factor that could also delay some investment decisions.

Businesses will also be nervous about the impact of an eight-month election campaign on consumer and business confidence. Gillard’s vision of a fair, polite, policy-focused campaign sounds lovely, but it’s likely to be full of negativity based on the last five years of federal politics. As the campaign drags – and boy will it drag, probably by late March – there is a danger of the good news of economic recovery is drowned out by Gillard, Tony Abbott and the whole circus.

Business owners will also be very concerned about Gillard’s talk about “substantial new structural savings that will maintain the sustainability of the Budget and make room for key Labor priorities” that will be announced in the May budget.

Gillard pointed proudly to Labor cuts to initiatives like “the dependent spouse tax offset, the tax breaks for golden handshakes, tax concessions on super for high-income earners, the millionaires’ dental scheme and fringe benefits loopholes for executives living away from home”.

There is a clear sense from this that Labor will be targeting what she sees as the fat cats to support Labor’s famous “working families” who hold those famous “Labor values”.

As a political strategy, it’s quite logical. But could also prove to be divisive and risky, particularly if Labor goes after one of the things Australians have been trained to hold dear – superannuation.

Reports this morning that Labor could look at ending the tax-free status of super withdrawals for the wealthy will have the SMSF sector particularly angry.

We’ll have to wait and see what the Budget brings, but it’s worth remembering that the reason Gillard will be forced to go after the “fat cats” is that she needs to find ways to fund election promises.

How Abbott is going to pay for his promises remains a mystery that business hopes will be resolved well before September 14.

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