Coalition governments and the politics of business

2010 has seen the formation of coalition governments in the UK and Australia, whilst Belgium has struggled to form one since its June elections. Opinions are divided in all countries. Some suggest that a coalition government leads to more consensus-based politics and better reflects the popular opinion of the electorate. Others believe they have a tendency to be fractious, indecisive and prone to disharmony and delay.

Whatever their view, businesses need to understand the changing dynamics so they ensure the right approach.

UK by Tim Fallonuk-flagTimFallon
head of corporate affairs, UK

In May of this year, the UK elected its first coalition government since the 1940s. Whilst many observers question whether a coalition was actually what the UK general public voted for, or indeed needed, it is certainly a very different proposition to the previous 13 years of New Labour government and one that commercial organisations and interests are quickly having to come to terms with for a variety of reasons.

“….the dynamic of decision making changes in a way that modern commercial organisations in the UK have never encountered.”

A coalition government is very different to majority governments. Civil servants might not change, nor the process of legislation, but the dynamic of decision making changes in a way that modern commercial organisations in the UK have never encountered. Understanding the complex, often personal political agendas of key government ministers, mixed with the potential growth of influence of the House of Commons, and its various committees, will be key.

The central politik of the UK Cabinet is ideologically mixed. The Liberal Democrats and Conservative Party are not natural bed fellows, and often find themselves on opposite ends of the political spectrum. For example, there is little common ground on major policy areas such as energy (especially nuclear) and the regulation of financial services. How these issues resolve themselves is still to play out, but commercial interests need to play greater attention to the political heritage and dogma of the two parties to have a better understanding of future direction.

The political environment is more challenging than ever before. Companies should fully recognise the current economic challenges for UK government, especially in the public sector, and tailor their case and needs accordingly. Recent issues associated with parliamentary expenses and governance have also heralded an era of greater transparency and regulation with regards to political management and commercial lobbying, whilst the growth of online media and social media channels has resulted in almost 24/7 scrutiny of all political and governmental concerns.

Australia by Jacquelynne Willcox
practice director, public affairs, Sydney
 australia_flag_map JWillcox

Australia’s first minority national government since the 1940’s has been heralded as a paradigm shift in Australian politics. Labor now forms government with the parliamentary support of a surprising mix of newly powerful Greens, experienced rural conservative Independents, and a first time Independent who was once a Green candidate. Speculation continues about the length of time this arrangement will last.  There has been every indication that the opposition conservative coalition expects (and hopes) it won’t be long before it all comes crumbling down – and they can snatch control of government.

“…..more miles of parliamentary corridors will have to be trudged by those of us who advise businesses, to ensure all those minor parties and independents are  briefed, on side and understand what is in it for them.”

What this all means for business and those who advise the sector is that knowledge of process is power. For the first time the large number of committees and inquiries that take up so much of a parliamentarians working life will be relevant.  Also helpful is an astute understanding of the relationships and alliances that are formed on the floor of parliament, often for reasons other than policy puratism. Indeed, the power of one is now more than ever very obvious in Australia. It literally means that more miles of parliamentary corridors will have to be trudged by those of us who advise businesses, to ensure all those minor parties and independents are  briefed, on side and understand what is in it for them.

We can’t afford surprises in this climate. While it also poses opportunities for influencing  policy and legislation for those who have worked out  where the buttons are that need to be pushed to get matters ‘over the line’, there are some areas that are now on the risky list such as online gambling and food labelling issues.

The key for business will be as always to continue building relations with all ministers and their shadows, understanding their policy priorities and how to help make them work in a fractured parliament as well as cynical electorate.  But that will not be enough.  As I have indicated, the disparate  Greens, Independents and the government backbenchers will also be integral.

Everyone matters in a minority government.

Belgium by Jeroen Van Seeters
CEO, Benelux Region
 BelgiumflagJeroenVanSeeters

Since the general elections in June 2010, Belgian political parties have been negotiating fruitlessly to form a new coalition government. The absence of consensus on how to reform the constitution in order to devolve more power to the French and Dutch speaking regions and communities, is the main obstacle preventing a majority coalition to emerge. But meanwhile the country is not left in chaos. In recent history, Belgium has known other periods of lengthy government formation, during which the caretaker government ran the affairs of the State without major interruptions or difficulties. For example, in 1992 when Belgium signed up to the Euro in the Maastricht Treaty.

“Some claim that it is precisely because of the absence of national authority that Belgian ministers can focus fully on the European decision making process.”

The current caretaker government of Prime Minister Yves Leterme is currently running a relatively successful presidency of the European Union, if one considers the number of legislative agreements and policy decisions taken so far under her leadership. Some claim that it is precisely because of the absence of national authority that Belgian ministers can focus fully on the European decision making process. But that is underestimating the efficacy of the Belgians in negotiating compromise.

For businesses, the absence of a fully empowered federal government in Belgium has only limited consequences. The regional governments of Flanders, Wallonia and Brussels continue to be the most important interlocutors for companies and investors, since they seem to be competent over most business critical issues. The regional governments are in full power and functioning normally.

So, even though the political uncertainty at federal level remains high and it is unclear when a new government coalition agreement will be agreed upon or a new election called for, the country seems to be running smoothly and all necessary decisions are taken. Another proof of Belgian pragmatism?

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