Firms want stable Aussie politics
THE well-oiled revolving door of Australian politics, which has cycled through five leaders in as many years, is earning the nation a reputation for instability which, according to at least one government lawmaker, is starting to resemble Italy.
The comparison is made tongue-in-cheek because Canberra is still much kinder to prime ministers than Rome over the longer term, but Australia's business community is not laughing.
"In terms of business confidence, what we do need is stability," James Fazzino, chief executive of fertiliser and industrial explosives maker Incitec Pivot, said yesterday, after the nation awoke to yet another prime minister.
Australia's new leader, Malcolm Turnbull, ousted first-term prime minister Tony Abbott on Monday night after months of dismal poll numbers for the government and a string of troubling economic indicators.
Mr Turnbull, a former investment banker, corporate lawyer and tech entrepreneur, is popular with the business community, but persistent leadership turmoil raises the risk that fortune will finally desert the so-called Lucky Country.
The economy has notched up 24 straight years of growth, a record bettered only by the Dutch among developed nations.
Australia has not suffered a recession since 1991, but growth has slowed well below potential. A once-in-a-lifetime mining investment boom has ended and other industries have been unwilling to pick up the slack.
"We are mindful that the global economy has faced numerous challenges during this period but we have long argued that confidence is structurally weaker due to the lack of strong national leadership, little focus on much-needed reform to boost long-run growth, and the lack of a clear economic narrative," said Su-Lin Ong, a senior economist at RBC Capital Markets.
Investment bank Goldman Sachs sees a one-in-three chance of a recession over the coming year, citing a contraction in some key indicators such as real net national disposable income.
Said Annette Beacher, chief Asia-Pacific macro strategist at TD Securities: "We're not seeing businesses commit to five and 10-year expenditure plans and not knowing who is running the country is really not helping."