Why Australian business needs to think on its feet

The government, which was elected partly based on its touted its green credentials, recently cut off the Renewable Remote Power Generation Program 18 months early.

And an $8000 solar panel rebate which could be used on residential housing was canned in mid-June, three weeks early.

This followed a backflip on this scheme late last year, scrapping a means test which proposed to limit it to couples earning less than $100,000 - a move which led to a massive drop off in orders for the industry when it was first introduced in last year’s Federal Budget.

The funny thing is, I suspect that these programs are often closed because, shock horror, they are actually popular and working well i.e. costing the government money.

So what can we deduce from that? The government was either hoping they would get good PR from their announcement and have to fund little in the way of actual rebates, or they just underestimated demand.

Neither of these explanations screams good management.

A new system of solar credits, which is yet to be legislated, would replace the household rebate.

It’s unclear how much the new credit would offset the cost of a new solar system, as compared to the old rebate. Confused yet? Don’t worry - debate on the new scheme has apparently been delayed until August so you’ll have plenty of time to get your head around it.

It’s enough to make my mate reach for a pre-mixed drink. That will cost him a fair bit more than it did last year too after the Government introduced a 70 per cent tax hike on lolly water in a bid to stop the kids binge-drinking - a measure it’s still trying to make stick in Federal Parliament.

At the big end of town, the Government last year ended a 31-year exemption on taxing condensate - a lucrative by-product of oil and gas production.

And let’s not even get started on the confusion and uncertainty the government’s carbon pollution reduction scheme is causing.

Luckily the whole thing has been pushed back a year to July 1, 2011 - if it ever gets through parliament.

Don’t get me wrong, governments are allowed to change their minds and introduce new policies designed to shape community behaviour, such as the alcopops tax grab.

However a track record of inconsistency and fluidity in terms of government policy will scare off investment from big business, drive some small businesses over the edge, and deter entrepreneurs from having a go.

Running a small business with 10 or so employees is difficult enough when times are good.

Throw in four or five policy changes in a year, plus a financial crisis and a weak Australian dollar driving down your purchasing power and you’ve got a recipe for disaster.

Large scale policy indecision, such as the dithering around the carbon pollution reduction scheme, or the abrupt change to a three decades’ old oil tax regime, will have multi-billion dollar companies wondering whether Australia is the best destination for their investment dollars, and rightly so.

The Achilles Heel - perceived or real - of any Labor Government is its ability to manage the economy.

This government has been handed a poisoned chalice - or a catch-all excuse - in the form of the Global Financial Crisis. But it’s no excuse for poor policy making and an unstable commercial regime.