Interpac Business and Migration Solutions Melbourne Australia

(August 25, 2010)

A HUNG parliament would threaten the nation's ability to capitalise on China-led demand for commodities.

And it may lead to a renewed campaign against a proposed mining tax, business leaders and lawyers warn.

Deputy Westpac chairman and chairman of Allianz Australia John Curtis said inconsistent policymaking under a minority government would present problems for the mining and associated industries.

"Here we are at one of the most prosperous times in Australian history in terms of the commodity boom -- this is when we should be having strong government to make the most of the situation," Mr Curtis told The Australian.

Analysts yesterday reported that, following a market briefing by Rio Tinto chief Tom Albanese, any reversal of the agreement Labor had negotiated with miners on the mineral resources rent tax would probably trigger a renewed campaign by the industry. The ongoing political uncertainty is also beginning to create concerns among foreign investors, who wonder how long the current regime will continue.

Freehills partner Simon Reed said the political uncertainty was likely to prompt bidders to include more "conditionality clauses" -- which allow bidders to withdraw in the event of legislative change -- in future takeovers..

Mallesons special counsel Malcolm Brennan said foreign investment laws were likely to be altered if the Coalition won, which business would appreciate after Labor's "somewhat chaotic" approach.

"If the federal election results in a change of government to the Coalition, there will be a change to the application of Australia's foreign investment regime," he said, adding there would most likely be a return to a more consistent approach to foreign investment. "Chinese investment in the resources sector has suffered particularly from the uncertain policy approach."

Australian Industry Group chief executive Heather Ridout weighed into the immigration debate, which has been a concern in resource-rich states facing skills shortages. She called for an independent mediator to be appointed to work on a bipartisan approach on immigration.

Meanwhile, Caltex Australia chief executive Julian Segal raised strong opposition to a carbon tax on motorists.

Mr Segal said that emissions targets should be voluntary. "You should give an incentive to motorists to buy more efficient cars and have incentives for manufacturers to produce greener cars," he said. "Also, there should be incentives to use alternative fuels.

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The whole urban planning process needs to be looked at holistically -- especially what investments can be made into things like public transport."

(Source:Australian)