Labor must stop this rot

When Kevin Rudd resigned as foreign minister last evening, he cited the impact of the battle for the Labor leadership on business confidence as a key reason.

Given this was a purely political move by Rudd, not an act of selfless sacrifice, it’s hard to believe he really cares about business confidence. Certainly Labor’s steady bashing of the business sector during debates about industrial relations, the mining tax and the carbon tax suggest business confidence is generally the last thing on the party’s mind.

Nevertheless, Rudd is right:  this leadership stoush is adding to the fragility of business and consumer confidence.

Yesterday I was at a lunch with the Bulky Goods Retail Association. While members were trying to put a brave face on conditions, they described them as a rollercoaster, where sales could be flat one week, up 10% the next, down 20% the next. It suggests an economy that is extraordinarily difficult to read, where consumers are spooked by the slightest bit of bad news from at home or abroad.

The Labor leadership battle only adds fuel to the fire. While consumers don’t decide to spend or not to spend depending on who is prime minister, they are affected by instability. They hate bad news. And a paralysed government is bad news.

The fallout from Rudd’s political manoeuvring has only been made worse by the reactions of other ministers in the Gillard camp, which has reinforced the idea Labor is tearing itself apart.

Wayne Swan’s vitriolic attack on Rudd – “The party has given Kevin Rudd all the opportunities in the world and he wasted them with his dysfunctional decision-making and his deeply demeaning attitude” – reads like the sort of angry email that office etiquette says you should wait 24 hours before sending.

Such a public attack on Rudd – the man who made Swan treasurer, no less – showed a distinct lack of judgement and, frankly, a lack of class. I am sure the business community would have been much happier to see the man in charge of the Australian economy remaining restrained and dignified last night. Swan was neither.

There is no doubt that Rudd’s decision to play the “they’re-picking-on-me” card is smart politics. He’s now bought himself plenty of time to move to the backbench and plot.

He doesn’t have to win the leadership ballot that will be held on Monday. A good showing will be enough for him to demonstrate to his parliamentary colleagues that he really is a credible option. Then he can wait and watch the opinion polls. The weaker Gillard’s position becomes, the stronger Rudd’s case for a return is – particularly if his own “preferred prime minister” ratings go up.

That’s the best scenario for Rudd, but it’s the worst scenario for business. It would mean this leadership battle would run on and on, perhaps for as much as a year.

Rudd realises this and just as he’s trying to get the public behind him by deriding the “faceless men” of the Labor party, he’s also making an attempt to get business behind him.

This morning he even said he would look specifically at ways of getting small businesses to “invest in their future”.

Will that actually get small businesses behind him? I doubt they’ll care too much – entrepreneurs have heard this all before.

What SMEs want is for the government to get back to the business of governing. Quickly.