Business leaders hit out at “debilitating” Labor leadership battle

Labor’s leadership battle could cripple the already-fragile state of business confidence, business groups warn, with concerns raised over how Kevin Rudd’s potential return would affect conditions.

A bitter leadership battle was sparked when Kevin Rudd resigned from his post as Foreign Affairs Minister last night, saying he had lost the confidence of Prime Minister Julia Gillard.

Gillard has since announced a formal leadership battle will take place on Monday morning, which could see Kevin Rudd reinstated as Prime Minister.

The news has sent the business sector into a tailspin, with various groups voicing their anger and concern over the controversy.

Peter Strong, executive director of the Council of Small Business of Australia, says the small business sector simply wants the Labor party to “get it over and done with”.

“There will be an impact on confidence because it hasn’t been resolved. Whichever way they go, [it is important] we can get on with whatever we’re supposed to do,” Strong says.

“It is debilitating for everybody, especially the small business community. We’ve had a 48% increase in bankruptcies, so I’d rather be concentrating on that.”

Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, agrees Labor’s infighting will undermine business sentiment.

“We don’t know how this will play out but we hope it leads to a stable government. Until the situation is stabilised, we will remain concerned,” he told The Australian Financial Review.

“Clearly, today’s development adds to the distraction and it is self-evident something still needs to be resolved.”

Meanwhile, Myer chief executive Bernie Brookes has labeled Labor’s leadership battle as “poor economic management”.

“All of our politicians have diverted their attention and energy in the past few weeks to a potential leadership challenge,” Brookes told The Sydney Morning Herald.

“I could not imagine a board or a business putting up with continual diversion from the economy, the consumer, raising taxes and running the country, to less important things.”

In his resignation speech, Rudd recognised the concerns of peak business groups.

“It is affecting the business community and I agree with recent statements by peak bodies to this effect,” he said.

“It is important that business confidence is maintained in Australia. The economy and jobs are core to what any responsible government is about.”

Business groups remain uncertain how Rudd’s potential return as Prime Minister would affect policies like the carbon tax, which is set to begin in July at a level far above international market prices.

Meanwhile, his approach to the mining tax is unclear given that it was Gillard who negotiated with the larger miners to get the tax through.

But the most wide-reaching policy appears to be industrial relations. The Fair Work Act, introduced in 2009 to replace Work Choices, is deeply unpopular within the business sector.

An independent panel is reviewing the Labor laws and business groups are campaigning to reduce union power.