Columnists Australia

Business/Robbery etc

Britain leads the way - but where?

11 April 2015

9:00 AM

11 April 2015

9:00 AM

The Poms can still teach us a thing or two (even if not about their own inventions like cricket and rugby), as shown by Britain’s responses to many of the same issues Australia faces. In London, what strikes me most on this score is the preparedness of business leaders to become involved in the political process by actively promoting their evident self-interest – which can be argued to be also in the national interest. With an election due next month, more than 100 chief executives of leading businesses in the UK showed they were no fools on April 1 by putting into screaming front page headlines in London’s Daily Telegraph their concerns that the election of a Labour government ‘would threaten jobs and deter investment’. Under the heading ‘Business chiefs: Labour threatens Britain’s recovery’, they say a change of direction from David Cameron and George Osborne ‘would send a negative message about Britain and put the recovery at risk… We believe this Conservative government has been good for business and has pursued policies which have supported investment and job creation’. This is not new. As the Telegraph reported, previous campaigns have been marked by interventions from business leaders and, under Tony Blair and Gordon Brown, Labour regularly received the backing of Britain’s biggest companies.What a bunch of wimps Australian corporate leaders are by comparison; the lack of stomach to stand up for their own best interests is in stark contrast to Australian unions’ enthusiastic (and financial) support for Labor. Unnerved by the prospect of political ‘get-squares’ by Labor if they are seen favouring the Libs, corporate leaders also appear terrorised by the threat of hostile union reaction despite the minuscule 15 per cent of private sector workers in unions. So while the unions throw money and resources into Labor election campaigns, there remains a deafening silence from employers. Where was the support for industrial relations reform and a strong economy in 2007 when John Howard was defeated by a chimera? One major employer group, AIG, even embraced Labor and was rewarded with its chief executive being elevated to the board of the Reserve Bank. It’s not just a matter of campaign contributions; endorsements like the 103 British chief executives are worth more than the relatively modest amounts now common and which are often accompanied by an offsetting donation to the union-financed Labor Party.

The Poms are also leading the way on the end of the supermarket boom – and Woolworths/Masters and Westfarmers/Coles/Bunnings should be very nervous indeed. Waitrose’s boss has raised doubts about ‘whether all Britain’s food retailers would survive the tumultuous shifts in shopping habits’, particularly in regional stores, while the former head of a hardware group warned that ‘20 per cent of the hypermarket game is probably gone given fundamental changes in shopping patterns’. So while our Woolworths adds serious problems with its Masters experiment to its turnover battle with Coles (and the pesky foreign-owned discounters and internetters), Britain is giving a glimpse of what’s to come with Tesco not only shutting 43 stores but also scrapping 49 proposed developments, Morrisons closing 34 (at a cost of 2,500 jobs) and Sainsbury mothballing 40 projects. In the home improvement market, where Woolworths’ Masters is a big loser (and like Bunnings will face import cost pressures from a falling $A), Britain’s B&Q is closing one in six of its 360 stores and Homebase is to close one in four. In Australia’s DIY’s, lower prices may be just the beginning of a problem.

And then there is 2014’s 23 per cent slashing of Britain’s exports of Scotch whisky to China as the combination of China’s austerity and anti-graft campaigns hit home. So Australian wine exporters beware; last year’s modest recovery from 2013’s 13 per cent cut in China sales has been based on the austerity-driven lower-priced segment, not the premium wines the industry places its hopes on. Then there’s dairy, with China’s softening demand for milk (along with the Russian embargo and the end of the EU’s milk quota) pushing UK milk prices down to multi-year lows; Australian dairy faces these problems, too. Iron ore and coal are not our only vulnerable exports to China.

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