Monday, July 4, 2016

Business edgy on election deadlock amid AAA rating concerns

Business groups are warning the election deadlock is likely to create of an extended period of uncertainty with critical decisions set to be put on hold in the absence of a clear outcome.

The looming prospect of a hung parliament or a minority government also puts doubt over budget repair, raising concerns that Australia's prized AAA credit rating could be in jeopardy.

Listen to my interview with Business Council chief executive Jennifer Westacott broadcast on The World Today

Australian Industry Group chief executive Innes Willox says there are concerns that the Turnbull government's  reform agenda could be derailed or compromised.

"What's the tax regime that they're going to have to deal with? What incentives are there around investment? What are the issues around hiring a new apprentice or a new trainee or hiring new staff?

"We may go into a period of some weeks of those sort of decisions being deferred or delayed unfortunately."

Australian Chamber of Commerce & Industry chief executive James Pearson also worries about the uncertainty but is urging compromises amid the political chaos.

"We'll be calling on the minor party MPs and the senators to move beyond the narrow agendas and make new decisions in the new parliament in the national interest," Mr Pearson told AM.

"It's important that whatever major party forms government they build a constructive relationship with the cross bench because they need to get things done.

"We can't afford three years of policy gridlock."

Innes Willox warns international investors could become more wary about stability in Australia and that the election deadlock rekindles memories of leadership coups under both Coalition and Labor governments.

"We already have a reputation that Australia is a very difficult place to do business and political risk certainly came on to the agenda during 2010 to 2013 because of unstable or minority government," Mr Willox said.

"Those sort of things that were around are likely to return."

Mr Willox says whoever forms government must ensure the necessary budget repair is undertaken to ensure Australia's AAA credit rating is preserved.

"The last thing that any government that is elected as a result needs to do is to rack up further debt in a way that does impact on our credit rating."

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