Big business calls for bigger cuts

By Pip Hinman Big business is salivating at the prospect of appropriating an even greater share of the country's wealth under a Coalition government. But given that John Howard says he intends to honour his $6.4 billion election promises despite a likely 1996-97 budget deficit of $6-8 billion, the ruling class is anxious that its reward may not come fast enough. The merchant bank Macquarie Equities in its newsletter indicates that while it is, on the whole, happy with the Coalition win, it wants further spending and tax cuts. In a statement issued after the election, it indicated which companies can expect to gain from Coalition policy. The deregulation of the maritime industry — which includes the privatisation of the ports, ANL and the abandonment of cabotage (which prohibits foreign vessels from engaging in coastal shipping) — will benefit all shipping companies, in particular the biggest such as Brambles and TNT, and resource companies including CRA, BHP, MIM and CSR. Similarly, Macquarie estimates that all companies will benefit from the replacement of enterprise agreements with Australian workplace agreements which will "exclude uninvited union participation". The bank expects that award rates will be kept to a minimum. Macquarie Equities estimates that ERA, CRA, BHP and others will benefit from the Coalition's open slather uranium policy, and that "all resource and agricultural companies" will gain from the move to further weaken the Native Title Act. The deregulation of the banking sector will benefit the four biggest banks — National Australia Bank, Commonwealth Bank of Australia, Westpac Banking Corporation and ANZ. The establishment of a national rail track owner-operator corporation and the introduction of competition on the interstate rail network will benefit the big carriers, including TNT. The relaxation of foreign ownership limits on television and a review of the cross media rules will have a direct beneficial impact on the profit levels of Fairfax and News Corporation, among others. While Macquarie Equities welcomes these policy changes, it also warns the Coalition to curb its promised spending. It earmarks payments to the states, defence, child-care, maternity allowance, tertiary education and labour market programs as areas that "will for almost inevitably come under further scrutiny". It is almost certain that the Coalition will argue that to maintain high rates of growth and wind back unemployment, some of its pre-election promises will have to go. Either that or it will have to cut public expenditure more deeply. So it should not come as a surprise if instead of slashing public service expenditure by 2% over three years — $432 million and 2500 jobs — the Coalition's cuts go much deeper.