Holding pattern

The results of this election should be taken only as a holding pattern for our domestic business environment over the next three years.

Neither side is planning to do much until their next term (if we are to continue the volatility caused by elector’s dishing out one term to get it right opportunities) by responding to marginal seat anxieties. There is every reason to believe that there will be a rash of “oncers” in more than 20 seats across the nation and an even bigger volatility as electors throw incumbents off the not-so merry go round.

The next fortnight will provide a clearer indication of the extent that wallets will be put back into the hip pocket with massive cuts to government stimulus programs along the lines of the UK Conservative/Liberal alliance or the use of quantitative easing in Europe to stave off a further double dip recession.

In the US watch the job numbers to see if Obama is going to have to pump money into the pre-November economy as the auto and energy industries stutter into positive territory. The Australian nation appears to be divided between those that wanted to throw Rudd out themselves and those that want to give Julia a go without making any major changes.

Gary Morgan points out that: “In terms of this month’s Federal Election on August 21, 2010, although Consumer Confidence remains well above its long-term (1973 — 2010) average of 108.0, it is worth remembering that high Consumer Confidence did not stop John Howard losing office in November 2007 (124.9) nor Paul Keating in March 1996 (123.7). Consumer confidence is virtually unchanged at 124.2 on the weekend before the RBA decided to leave interest rates unchanged at 4.5%.

Julia Gillard has not only cut the robotic responses recommended by escapees from Sussex Street but begun to get out a message that its about jobs and not boats, about health and not hospital beds and about stability rather than stabbing the leader. Her message will be that Australia is now waiting for a recovery in Northern hemisphere imports that have to continue to fuel the Chinese exports that are boosting our own economy.

Meanwhile, Bob Brown is preparing to create a massive surge in community uncertainty about rising electricity prices, increased business taxation on smaller miners and the prospect of transitions to a greener economy. And somebody seems to have muzzled Barnaby so that Warren Truss can look like a National leader.

Tony Abbott appears to have the better access to quantitative research into the mind of the market when he says that small business leaders have adjusted to better management practices to avoid unfair dismissal costs, but are perturbed about uncertainties that flow from constant changes to industrial relations laws.

Real improvement in business prospects will only come when all political parties learn that getting more people into jobs is the business of small business. We need a change from big business and big government big-ticket policies to a focus on cutting the red tape, dropping payroll tax disincentives to small business expansion and rewards for innovation, creativity and entrepreneurship.

To break out of a desultory holding pattern, smart companies will need to offer superior service and improved customer relations’ management and ensure that their costs of doing business continue to drive their plans for the next 18 months.

As we near the beginning of the critical earnings season and the end of the Federal election beat-up about our national debt and deficit problems, the need to turn back the boats and sink the rate of population growth, smart companies will be aware that this is all encouraging customers to continue to zip up their purses. It’s time to consider the electoral cycle as a consumer referendum against more change and a demand for better services at lower cost.

There is no doubt that the election results will be determined by the success of efforts to manage marginal seat fears and deliver the Howard comfort factor in electorates that are worried about cost of living increases and a rash of RBA rate rises flowing from the mining sector.

Next week’s Roy Morgan Consumer Confidence Rating will closely measure consumer reaction to all of these factors and a rise may well confirm a Gillard government and a big fall will suggest an Abbott administration.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099