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Australia's Leadership Tussle Frustrates Business Leaders

The leadership tussle between Australia’s Prime Minister Julia Gillard and former Foreign Minister Kevin Rudd is frustrating business leaders who see the current political deadlock coming in the way of key economic reforms.

Australian Prime Minister Julia Gillard and former Foreign Minister Kevin Rudd.
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Australian Prime Minister Julia Gillard and former Foreign Minister Kevin Rudd.

"The business community is indeed frustrated by the leadership instability," Peter Anderson, Chief Executive, Australian Chamber of Commerce & Industry, told CNBC on Friday.

"The primary reason is because we are mid-term in the life of the government... where it’s vitally important for both the private and public sector to be working closely to deal with some of the economic restructuring that's occurring in our economy," Anderson said.

He adds that the leadership contest seems more about personality and governing styles rather than about policies.

"We really don't know what the respective candidates would do any differently from what the governing Labor Party says is its policy approach," Anderson said.

Party member Julia Gillard ousted Kevin Rudd as prime minister in 2010. She then won an election to form a minority government and has since come under fire for introducing mining and carbon taxes.

"The Labor Party has suffered big losses since coming in to government on things it said was key, the whole climate change issue, refugees, the mining tax, super profits tax — those and other big items haven't worked out like Labor hopes were," Geoffrey Hawker, Professor at Macquarie University, said.

Australia's mining industry will be taking a big hit starting this July with the introduction of carbon and mining taxes. The mining tax alone is expected to raise $7.8 billion in its first two years.

Advantage Abbott

Several large firms have said these taxes reduce their international competitiveness. In turn, opposition Liberal Party leader Tony Abbott has promised to scrap both taxes if he wins the next election.

Owen Hegarty, Vice Chairman at mining holding firm G-Resources, says it’s evident that Abbott is a popular choice among the business community.

"No question the Abbott policies are much more favorable to business," Hegarty said.

He adds that Australia’s competitive advantage comes from its mining industry and instead of taxing it the government must encourage it.

“You want to be internationally competitive, you want to be business attractive. When you've got that competitive advantage, you should nurture it [mining sector], grow it and support it as opposed to taxing it out of existence, or discouraging it," he said.