Australia’s biggest employers have warned Anthony Albanese that the nation’s “mediocre” global competitiveness must be urgently reversed, amid growing unrest in Labor ranks over higher rents and as Jim Chalmers struggles to sell his big-taxing budget.
Ahead of the Prime Minister delivering his fifth keynote speech at the Business Council of Australia’s annual dinner on Tuesday night, BCA president Geoff Culbert raised concerns that government policies have real-world “consequences for business, investment, and all Australians”.
As the BCA ramped up pressure on the Albanese government’s economic reform agenda, Labor MPs told The Australian they were worried about the long tail of negativity following the May 12 broken election promises budget and are considering the need to legislate stronger national protections for renters.
A senior government MP, who conceded the ongoing debate over the budget was not ideal but said Labor had weathered successive crises over the past year, added that the Treasurer had emerged as the government’s “elephant in the room”.
With Labor MPs noticing that Dr Chalmers rarely appears with the Prime Minister at press conferences or rugby league matches, the senior government MP said it was unlikely he would resign at any stage in this term or the next.
Speaking on Tuesday night in front of Australia’s top 80 chief executives, cabinet ministers including Dr Chalmers, 13 senior commonwealth mandarins including Treasury secretary Jenny Wilkinson, and top diplomats from Japan, China and India, Mr Culbert explained why Australia was being outcompeted.
“If there is one thing that everyone in this room can agree on it’s this – ranking 21st out of 42 nations on the Competitiveness Index is a mediocre result, and Australia is not a mediocre country,” he said.
“There’s nothing new or revealing in the reasons why we rank middle of the pack. It’s the things we always talk about – our tax rates are uncompetitive, our planning systems are too slow, we are too heavily regulated and the IR system is out of balance.
“We need to rebalance the tax system, harmonise and cut regulation, reduce government spending and streamline planning systems.
“For every policy decision there will be a consequence for business, for investment, and for all Australians. Governments can choose policy but they can’t choose economics.”
BCA chief executive Bran Black, who spoke before Mr Culbert and Mr Albanese, said Australia “cannot tax, regulate or redistribute its way to higher living standards”.
Mr Albanese, who has had a rocky relationship with business leaders over his government’s union-influenced industrial relations laws and lack of appetite for more sweeping tax reforms, extended an olive branch to employers.
“Our national economic success and strongly performing national institutions will help us see off the populist challenge now on the march across the globe. Australia’s economy and democracy are in an excellent place. By working intelligently together, we will keep them there,” Mr Albanese said.
The Prime Minister added that business and Labor needed to work together to keep the economy and democracy strong amid the rise of populism. Without naming One Nation or its leader Pauline Hanson, Mr Albanese defended his property tax crackdown as key to fighting populism and ensuring prosperity.
“Division, declinism and negativity haven’t overtaken us, as unfortunately they have in so many parts of the world,” he said. “Now, in all of the debate, no one has argued that the existing housing system was working for what is, after all, its primary purpose … to give Australians access to a roof over their head for them and their family. When you can put a key in your own front door, you know our economy and our democracy are working for you.”
As the federal government seeks deals with state leaders and support from big business on housing, AI and data centre reforms, Mr Albanese and Dr Chalmers are managing concerns being raised in Labor’s caucus.
One Labor MP on Tuesday told The Australian that “rents are a problem … particularly in some areas where it used to be cheap to rent, that could become an issue”.
“Voters recognise there are levers we (the federal government) can pull,” they said.
Another MP said while contentious budget measures, including crackdowns on negative gearing, capital gains tax and trusts, weren’t responsible for increasing rents, a “broader conversation” was urgently needed to address how to shield under-pressure tenants.
“We definitely need to be having a broader conversation on rental protections,” the MP said.
Senior government sources said discussions around rental protections would require input from state and territory governments and would likely not occur until after the Victorian election in November.
Mr Albanese, who was accompanied at the BCA event by Dr Chalmers, Trade Minister Don Farrell, Industry Minister Tim Ayres and cabinet secretary Andrew Charlton, has sought to ease tensions with business leaders following his second election win.
Industry sources say they look to deal directly with Mr Albanese and senior ministers including Senator Ayres, Senator Farrell and others because there is a perception that Dr Chalmers lacks influence around the cabinet table.
Several Labor MPs on Tuesday told The Australian they were concerned that debate over Dr Chalmers’ budget remained divided 15 weeks after it had been handed down.
“The fact we’re still talking about those things is not a good sign,” a Labor MP said. “I think that’s a real problem for us that the discussion of the budget has continued on, rightly or wrongly, and there are still some contentious issues we haven’t delivered a definitive answer on like the carve-outs for start-ups.”
Amid confusion in government ranks over the credibility and accuracy of Treasury forecasts on the impacts of Labor’s tax overhauls across the property and rental markets, another Labor MP cited growing concerns about the modelling, which the government has refused to release in full.
“There’s definitely a bit of that, wondering about the advice that Treasury provided,” they said.
“Generally, Jim (Chalmers) gets a reasonable amount of leeway, but at the same time, you are, in the end, responsible for your own office and department.
“I think while the budget sell has gotten better, the damage has been done.”
A senior government MP said despite concerns about the budget, it felt “like there’s been crisis after crisis and as each one happens I think ‘Will this be the one to make the impact, to take real skin off?’ But nothing seems to be sticking.”
The senior MP said the Prime Minister had copped some damage over “character issues” related to the melons podcast comments and other incidents including refusing to acknowledge falling off a stage.
As One Nation’s popularity continues to rise, Labor MPs said the quality of candidates chosen by Pauline Hanson ahead of the next federal election would have a big impact on where votes flow.
Beyond immigration, MPs expressed concern over the government’s handling of aged care, veterans’ affairs and the NDIS, which they said would see “a fair bit of pain come our way”.
In his speech, Mr Culbert told Mr Albanese that the BCA would “work together with your government … to define the policies that will make Australia better”.
“The government and the business sector need to work together to explain why change is needed.
“We need to work together to explain why solving the challenges that are being so acutely felt – cost of living, housing affordability, falling real wages, inflation – require long-term solutions, not short-term panaceas.
“I think the Australian public is ready for this conversation. They get it. They want to see a long-term plan that will help them get ahead.”
While many Labor MPs would not be drawn on Dr Chalmers’ performance, most praised Mr Albanese rather than the Treasurer in terms of who had improved the initial budget sell.
Labor MPs who spoke to The Australian played down falls in house prices over recent months. They said they were not overly concerned about frustrations raised by property owners and investors, given the government’s tax changes were grandfathered.
“The fact house prices are going down, it’s swings and roundabouts; some people are happy about it that and some aren’t. But … we’re relatively calm about the fact house prices have dropped a bit,” a Labor MP said.
Some MPs said frustrations among voters was typical for the midway period of a second-term government, while others argued that anger over the budget changes had tempered as homeowners better “understand” the policies.
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