Challenging Political Times for Business, by Jody Fassina
For business, the political environment has never been so volatile, where uncertainty is the new certainty.
Political and policy outcomes are less certain than ever, yet can have a major impact on business on consumers – just look at the energy debate!!
Federally, political risk is at an all-time high and not likely to subside anytime soon.
Just ask the big banks what they think of political risk at the moment. Having been hit with a $6 billion tax federally, followed up by a proposed $380 million tax hit curtesy of the South Australian Government.
For the big banks in particular, they are essentially friendless, politically speaking. To be blunt, no politician is going to lose votes by bashing or in this case, taxing the banks.
What has happened to the big banks is a lesson for all business to consider. In the current political environment, all large institutions are effectively under continuing and mounting public scrutiny.
In the broader community, business is lacking in support. In an Edelman, global trust survey released in October 2016, only 39% of people in Australia trusted CEOs to do the right thing, meaning 61% don’t. The survey also found that Australians rated foreign CEOs at only 30% on this measure.
Given politicians react to the views of those that put them there, the voters, it means business need to be managing their political risk exposure just as they manage their other business risks. For many businesses managing political risk exposure is often an afterthought when it should be just as important as managing other risks.
In some ways, the term ‘big business’ in and off itself has become a term of derision and will automatically ensure community and in many cases political attention and often this attention will not be welcome.
Corporate Tax Cuts – A Case Example
The failure of the Turnbull Government to be able to legislate its company tax cut for big business in many ways encapsulates the standing of business in the community.
Despite the economic arguments put forward by the Government and the business community, the policy never gained wide community support and Labor campaigned against it relentlessly by simply linking the corporate tax cut to how much money the big banks would get.
The lesson for business, is that in these very challenging and fluid political environment, business and big business in particular cannot take anything for granted.
All business is effectively ‘on notice’ with the community, and that means business needs to be actively managing its political risk profile.
People are Angry and Politics is Volatile
This means for business, they need to be constantly listening and engaging with their customers who are also voters. It also means business needs to be regularly engaging with Canberra on all sides of the aisle.
With politics so volatile, business needs to begin factoring into their political and public affairs engagement strategies the potential for a change in Federal Government.
There has been some recent public commentary around the prospect of a Federal election being held as early as August or September 2018, with the latest a Federal election can be held for both the House of Representatives and Senate being May 2019.
Either way a change in Federal Government is a real possibility and with the Turnbull Government trailing Labor in the last 15 Newspolls, business need to begin considering the prospect of a Federal Labor Government and what that might mean for their business.
The banks for example, will be getting a Royal Commission. The only issue to be debated is what will be in the terms of reference.
In the energy sector, an incoming Federal Labor Government will have a strong commitment to renewable energy so, their proposed policies will be watched with much interest.
Between now and the next election both the Government and Opposition will be articulating their policy positions, so business will need to pay close attention to this and what a change in Government might well mean for them.
Jody Fassina is Managing Director of Insight Strategy and a public affairs consultant with 25 years’ experience