Making sense of the election

AWU National Secretary Bill Shorten joined Westpac Economics General Manager Bill Evans and Aussie Home Loans Managing Director John Symond on the Nine Network's Business Sunday the morning after the 2004 Federal Election to discuss the result. Below is the transcript of the discussion.

ALI MOORE: Good Morning gentlemen. Bill Shorten, if I can start with you, in Melbourne, you weren't expecting a win but surely you didn't expect this result?

BILL SHORTEN, NATIONAL SECRETARY, AWU: I was very disappointed on the other hand I think it demonstrated that Australians weren't in the mood for a change and I think that the interest rate scare campaign bit, on the other hand we did get 47-and-a-half per cent of the two party preferred vote so I think that we've just got to regroup and look to the future.

ALI MOORE: But you're in for a very long three years aren't you, particularly if they get control of the Senate, if the Government gets control of the Senate?

BILL SHORTEN: It is interesting that when John Howard was offering the unprecedented billions of dollars of vote policies, the only group he didn't offer any money to was the trade unions, I think it's important for the Government not to behave with arrogance in the event they do gain control of the Senate, and I think that you judge the quality of leadership by the way they conduct themselves when they're in charge.

ALI MOORE: Bill Evans, how will the market take this, particularly the prospect of having a Government controlled Senate?

BILL EVANS, SENIOR ECONOMIST, WESTPAC: I think that was a big surprise, the market was expecting the Government to win the election; the Aussie dollar in fact went over 73 cents on Friday night but I don't think they were expecting the likelihood of a Senate control and when we look at the big, big difference between the two parties, which was industrial relations reform, a Labor victory would have seen re-regulation of the labour market. The Government's victory in the Senate as well will see significant further deregulation of the labour market, and that has to be a big positive particularly from the perspective of keeping interest rates low and keeping inflation low at a time when the economy is very strong.

ALI MOORE: So you'd say, up, up, up and away?

BILL EVANS: Well, I'm saying that it's an unexpected positive, the market was expecting a government victory but they weren't expecting a victory in the Senate.

ALI MOORE: And just briefly, because it's such a key issue in the campaign, interest rates, does it make any difference?

BILL EVANS: Well, I think that, as I said, industrial relations was a big difference between the two parties. We've now had 13 months in a row where the unemployment rate has been below 6 per cent, and we haven't seen any real wage pressure. So in the 1980s when we had a similar situation, wage pressures were quite significant, so I think the freeing up of the labour market has been an absolutely critical factor behind a lack of wage pressures and therefore, the lack of need for the Reserve Bank to react on interest rates. And so the differences between the two parties on those factors was very important.

ALI MOORE: So, what do we get, steady interest rates for the time being?

BILL EVANS: I think the short term we will see another interest rate increase, probably early next year, but that will about see things out because I think next year we will start to see the economy slowing, consumer spending will be moderating given that we won't see any further sharp increases in house prices and the construction cycle looks to have peaked out.

ALI MOORE: John Symond, do you agree with that?

JOHN SYMOND, MANAGING DIRECTOR, AUSSIE HOME LOANS: Yes, I do agree with that. I think interest rates especially, I think, are looking pretty good going forward.

ALI MOORE: If the Government does get control of the Senate, they've always had to cut a deal, if they don't have to, what will business be expecting?

JOHN SYMOND: Well certainly, particularly small business, and I've always been a believer that small business is the backbone of this Australian economy and the industrial relations, in terms of termination of employment, for small business, I'm not talking about big business here. I think to get those reforms through will boost small business, give them the confidence to employ and invest in their companies because I know a lot of small businesses, and I think there's 800,000 of them, who are worried about investing in them involved in expensive court disputes, about employment.

ALI MOORE: Bill Shorten, from your perspective, from the union perspective, are you in for a very difficult time?

BILL SHORTEN: I know this is a polite business forum but I'm a bit staggered by those previous comments. To begin with let's deconstruct the code for industrial relations deregulation. The majority of new jobs created in the Howard era have been casual jobs and people receive under $26,000 a year. What we're going to see is the creation of a two-tier economy where if you've got a full time job you probably can get a good home loan from John's organisation. The problem is though, what if you're one of the many casual workers - or on a regular employment - as for this complete and utter fairytale about unfair dismissal, and that all of a sudden if Labor had got in people weren't going to be able to discipline their workforce, or they were going to be immediately run by trade union central.

I think the real problem is that with a Howard Government for the next three years it's going to be a lot easier to sack people. I think a lot of the new jobs will be low paying jobs, not the sort of jobs which people want their kids to have in the future.

ALI MOORE: How do you maintain your relevance in this environment?

BILL SHORTEN: Unions have been around for - my own union the Australian Workers Union's been around since 1886. Trade unions are a good idea. The idea that people by banding together achieve better outcomes is still a good idea. The concept that a fair go should be more than just a theoretical right in the workplace, it's trade unions which breaths a fair go, breaths life into the fair go.

I've also got to say that we've seen the rise of the religious right, get fewer - that's the Family First Party, where they seem to have done better than expected in the Senate. I think that more people than ever don't go to church, does that mean God doesn't exist. More people than ever don't support the monarchy, does that change John Howard's view on not becoming a republic?

ALI MOORE: Thank you - you're still in there, absolutely. John Symond let me ask you, you talk about industrial relations reform, but if you look at this entire campaign, certainly from the Government's side there was no third term reform agenda. Is there a risk that the Government will have run out puff?

JOHN SYMOND: Well, I don't think so, I think that the Government will be freed up now, in the Senate, and that's the surprising result of this election is, the Government may well have an inside run to get reform through and I don't think this economy has performed fantastically and that's got to provide some stability going forward because we are still surrounded by concerns globally in a number of directions, so I think steady as she goes.

ALI MOORE: Bill Evans, do you think there's a complacency issue?

BILL EVANS: Oh, I don't think so, I think that we're going to see quite a lot of additional change going forward but we have to bear in mind that this economy is very strong at the moment. The Westpac Consumer Sentiment Index is the second highest it's been for 30 years and so the optimism in the economy at the moment is quite extraordinary and that is a good platform for further reform.

ALI MOORE: So, key changes that business would want, you would say industrial relations, what about tax reform, what about all the other issues, that business was saying there's still more room to move?

JOHN SYMOND: Well, I think tax reform is needed. Our tax system is still too complicated, too expensive and I don't know what the solution is there but it is a mess and it is damn expensive.

ALI MOORE: Bill Shorten, if I can ask you, for the Labor movement, do you think there's a long road ahead and do you think Mark Latham is safe and secure?

BILL SHORTEN: I think for the next three years it is a long road ahead for trade unions but we've seen worse times and come through them. In terms of Mark Latham I think he ran a very good campaign and he enjoys the pretty much widespread support I'm sure, of most trade unionists.

ALI MOORE: All right, gentlemen if I can ask you here, I mean, do you think from a market point of view particularly, Bill Evans, is this a really historic opportunity for the Government - I mean we haven't seen it since the early '80s if they do get control of the Senate?

BILL EVANS: Well I think it is. I think it does change the landscape. The last time we saw that situation was with the Fraser Government 25 years ago and it will provide - the market will be starting to think what other changes can we now see to see coming through.

ALI MOORE: And if you don't get the reform that everyone's now anticipating what will businesses reaction be in three years time?

JOHN SYMOND: I think businesses will want to see changes and hopefully with freeing up the Senate, there may well give the Coalition the opportunity to get some change but they've got to be the right changes and I think tax reform is still a huge issue.

ALI MOORE: Gentlemen, thank you very much for joining us this morning.

Transcript from the Nine Television Network.