At a Glance
Post budget, the desired ‘bounce in the polls’ seems to have eluded the Turnbull Government.
In my 25 years-experience it’s rare to see a budget, even one that was generally well received, turn around a Governments electoral fortunes immediately. The political success or otherwise of the budget, will be clearer in 6 months and not just 4 weeks after it was handed down.
One would imagine a continuing concern for the Government would be that their primary vote continues to languish around 36%. Malcolm Turnbull cannot be re-elected on a primary vote this low.
At the July 2016 Federal election, the Government scrapped over the line with a one seat majority with 42% of the vote. in the 17/18 budget, there was one proposal designed to capture votes – the $6 billion bank levy.
A Liberal Government is always seen as a natural ally of big business, but this one measure in itself led by the Prime Minister, a former banker, shows that for big business in particular, all bets are off when it comes to natural allies in Canberra.
Low Hanging Fruit
The announcement of the bank levy, while taking the banks by surprise has certainly been strongly welcomed by the community.
In his post speech, the Treasurer warned the banks not to pass the levy onto consumers in saying, “They really don’t like you”, in referring to ‘they’ , he was speaking on behalf of the community.
The imposition of the bank levy offers several lessons for business to heed more generally.
Firstly, if the Government can impose a $6 billion tax on the banks then it can similarly act at will in regard to any other industry that has lost both community and political support.
The banks were completely blind-sided, there was no consultation with them by the Government. If there ever was a single demonstration of what political risk looks like, this was it.
Secondly, while banks have never been popular, after years of numerous inquiries, consumer complaints, warnings from politicians, regulators and consumer bodies, banks have learnt what ignoring those warnings now costs – $6 billion and a near permanent stain on their reputation.
With the Coalition, more than willing to throw what would have been considered a natural business ally under the bus, it would be foolish for other industries to sit back and say ‘this couldn’t happen to us’.
Any large industry, with a major consumer presence, has to be alert to the concerns of its customers, the community and politicians. It about managing and constantly improving their social licence to operate.
It’s clear that politicians, regardless of their political persuasion are not going to go into bat for big business. Quite simply, there are no votes in doing so.
Politically, the banks have managed to effectively unite both major parties against them – that in itself is quite a feat.
In this environment, big business is facing heightened political risk and needs to be actively managing their political risk profile in their engagement with Canberra. Not to do so puts them at risk of being the next piece of low hanging fruit that the Government may choose to target in their desire for votes.
Start Planning for the Next Federal Election
If you cast your mind back to October last year Insight Strategy predicted that the next Federal election was most likely to be held in the latter half of 2018.
Essentially, there are three key reasons for this:
- The Senate
- The Victorian State election
- The NSW State election
Last year’s double dissolution election meant that half the Senate was elected for three year terms, which expire on 30 June 2019.
As a consequence, the latest a simultaneous House and Senate election can be held is the 18th May 2019, in order to meet both constitutional and electoral law requirements.
The Victorian state election is fixed at the end of November 2018, as is the NSW state election at the end of March 2019. This gives the Turnbull Government a limited window in which to hold a federal election.
The Prime Minister needs to be able to engage the electorate in which to articulate his policies and vision for the nation’s future and this requires time.
Remember as well, a minimum 33 days is required to pass from the calling of the election to holding the election.
Hypothetically, if the Prime Minister wanted to call the Federal election after the NSW election, it would mean calling the election around mid-April 2019. This would also overlap with both Easter and Anzac Day limiting their campaign opportunities.
Most Governments want a minimum of 6 months without other events (such as state elections) interfering with their campaign strategy in which to ‘sell its message’ and persuade the electorate.
For these reasons, Insight Strategy is predicting the next federal poll will be in August/September 2018.
Business needs to be factoring this into their forward planning and also begin considering what a change in Government might mean for their business objectives given the current state of the polls.
2018 will be a busy election year all round. State elections are due in Tasmania, South Australia and Queensland in early 2018, and the Victorian election in late November.
It’s going to be a challenging year for business, as they to prepare for 5 elections in one year. Businesses need to build this into their forward strategic planning and their approach to political risk management and Government engagement strategies.
Let the $6 billion bank levy serve as warning to all businesses of what the implications can be if they don’t listen to consumer, customer and political concerns.
It is unprecedented for one industry sector to be hit with a $6 billion levy and not be part of the dialogue. A good conversation with Canberra, requires business to be an equally good listener. There is no point going to Canberra just to broadcast your message, if you also don’t plan on addressing concerns political stakeholders have raised.
In the current political environment being ‘big’ is almost synonymous with being ‘bad’. The community will automatically look to any ‘big’ business with a degree of cynicism and suspicion.
Any business that falls into this category needs to make sure they are carefully managing their message with Canberra and consumers.
As the banks have discovered, these are interesting political times . The question is who could be next, as both parties seek votes in time for the 2018 election?
For more information, in regards to this or any other public affairs issue you may require assistance with please don’t hesitate to contact me or visit the Insight Strategy website at www.insightstrategy.com.au
Image credit: Financial Review