How Gillard is sticking to her guns on key business issues: Gottliebsen

Some sections of the business community are very hostile to the Gillard government and many expect it to fall over any day. I believe the Gillard government will go close to its full term and some encouraging signs are emerging. Some of the best government in our history has taken place when the parties are close. They currently could not be closer.

On three or four fronts I am seeing a strong resolve in the government. Julia Gillard is standing up to the combination of the Greens and sections of the union movement – no easy task for an ALP government

And remember, unlike Kevin Rudd, Julia Gillard knows how to run a cabinet, which was the talent that made the early years of the Hawke and Howard ministries so good.

The Gillard government was under enormous pressure from the building and other unions to change Australia’s private contracting legislation despite some of the early comments from new Assistant Treasurer Bill Shorten that indicated he would cave in.

But Shorten has stood up to the pressure and has told Business Spectator that he will not be changing the so-called Personal Services Income (PSI) tax rules that determine whether a person is an employee or an independent contractor. He warns that the rules will be enforced and there may be a campaign using those rules that will uncover sham contractors. That’s exactly what should happen. It will be important for Shorten to repeat this statement in Parliament so as to lock it in. I have no doubt that he will do that.

The pressure from unions for the federal government to change its proposed nationally harmonised work safety laws and adopt the NSW system is immense. The NSW system declares employers guilty and they have to prove their innocence. It may not be constitutional. NSW Premier Kristina Keneally, who had agreed to go with Gillard on this prior to the election, was simply not a strong enough leader and has caved in. You will remember the mess created by the NSW occupational health and safety rules is one of the key contributors to the NSW malaise. It’s a national tragedy that the NSW Premier has turned out to be so weak.

But for Australia the good news is that the Gillard government is not showing any signs whatsoever of caving in. Hopefully the current NSW government will be thrown out at the election and the current opposition will then honour the original deal.

The next issue to test Gillard will be the Australian Building and Construction Commission. Leighton CEO Wal King has warned Australia that if the ABCC is abandoned he fears that the cost of the National Broadband Network and other infrastructure investment will sky rocket.

You will remember that the building unions have been very aggressive towards the ABCC. This will be an important new test for the Gillard government, but all the indications are that the ABCC will remain. It may have less power, but it will be there and that means that if the building unions get rough Gillard can re-instate harsher measures.

Finally I have been highly critical of Wayne Swan over the original mining tax. It was well deserved and I do not recant. But in the case of the banks, again all the indications are that Wayne Swan will not give in to the popularism being advocated by the shadow treasurer Joe Hockey. If we take punitive monetary action against the banks, there may be cheering in the streets for a short time, but there is substantial risk of nasty reactions from overseas lenders to our banks, which would push up interest rates further.

This article first appeared on Business Spectator.