Having moved to Australia to join McCullough Robertson six months ago, John Kettle assesses what the weekend's election results mean for the country going forward.
Six months after arriving into Australia, a new sense of change and vibrancy is in the air Down Under. After what felt like the longest and most destabilising general election campaign ever and lasting since last January, Australia finally went to the polls on Saturday. Uniform swings across the continent elected the centre right Liberal Party-led coalition under the leadership of Tony Abbott as its new government in something approaching a landslide victory.
International business should take note
Is this relevant for international business? The answer to that is a big yes if the first words of Tony Abbott, the new Prime Minister, on Saturday night are anything to go by. ‘Australia is under new management and open for business,’ he declared. In the last 6 years, Australia has faced rising costs, increased resource taxation and a high dollar which has ultimately assisted in creating the current hiatus in the growth of the resources and non-resources sectors of the incoming Abbott Government.
The real positives about the weekend’s result are that the incoming Liberal Party-led administration has already flagged that it will over the course of its term unwind the carbon tax, render the Australian resources industry tax competitive, take cost out of the economy, and all of this within an environment where the Australian dollar has lost almost 20% of its value over the last three months.
This is not the new emigré’s cheerleading from the sidelines but what I have perceived in my short time here as the necessary changes which need to be wrought on the Australian economic and political landscape to promote the investment that it will continue to need over the coming decades. This will lead to legal change too, the type of change that should cut approval times for new resource projects and provide the investor certainty that had been dissipating of late in the rather rudderless late Labor administration.
Regardless of political view, this sort of political and policy certainty coming back into the Australian business environment can only be a plus. This is a country where I have noticed that the political and business spheres are very closely entwined, to a degree not experienced in jurisdictions like the US, the UK or Canada. If sentiment is negative in one sphere, it becomes a drag on the other, hence business stopped since the election was called back in January impacts on the other.
In particular, I have come to realise how important this new stability will be in a country which will inevitably continue to be significantly resources-driven. I had the impression before I arrived in Australia that there was- what I called - an arc of resource countries, like a boomerang starting in South Africa, having its fulcrum in Australia and moving north to Canada, with a spur down the spine of the US into Texas and the Gulf. I have been pleasantly surprised to find that this ‘Resources Boomerang’ really does exist, and that the degree of work and activity that goes on between the four countries is even more than I had anticipated.
With the fresh start this week in Australia, I predict that this is only the beginning as boomerangs, if thrown correctly, always return.