February 13, 2015 / 7:36 AM / in 3 years

Business leaders say clock is ticking for embattled Australian PM Abbott

SYDNEY (Reuters) - Australian business leaders are fuming over government instability that has become “poisonous” for investor confidence, and doubt that conservative Prime Minister Tony Abbott can reverse his leadership’s downward spiral within six months.

Australia's Prime Minister Tony Abbott addresses members of the media after a party room meeting at Parliament House in Canberra February 9, 2015. REUTERS/Sean Davey

Private anger bubbled over after Abbott emerged wounded this week from a leadership challenge within his ruling Liberal Party, a confrontation that also damaged the traditionally close relationship between his party and business leaders.

Australia’s business leaders almost unanimously united behind Abbott when he pledged during his 2013 election campaign to end the instability that marked previous center-left Labor Party governments.

Within months Abbott’s pugilistic style and policy missteps - from his handling of the economy to awarding Queen Elizabeth’s husband Prince Philip an Australian knighthood - have proved hugely unpopular with the public and divisive within his party.

The uncertainty that has created has become “poisonous” for investor confidence, said Kate Carnell, CEO of the Australian Chamber of Commerce and Industry.

“Do we feel like, ‘okay, everything’s okay now?’ We don’t. We feel like he’s been given ... six months to deliver and I don’t think there is a huge, overpowering confidence that that’s going to happen,” Carnell told Reuters.

His obsession with political “trench warfare” against the opposition Labor Party rather than reforming Australia’s wobbly economy was reflected in this week’s unemployment figures, which jumped to 6.4 percent from 6.1, the worst since 2002, she said.

“We don’t want him to focus on beating Bill Shorten.” Carnell said, referring to the Labor Party leader. “We want him to focus on running the country.”

On Wednesday, the head of the Commonwealth Bank of Australia echoed Carnell’s fears in unusually sharp public criticism of the government from a business leader and he was soon joined by David Thodey, CEO of Telstra, Australia’s largest telco.

“The business community is looking for stability in leadership and stability in vision for the country. That’s what we need because as a business we work off certainty,” Thodey told a news conference.

Abbott’s trouble with business began early in his tenure, said Peter Chen, political science professor at the University of Sydney.

His refusal to pursue industrial relations reform, a failed push for paid parental leave funded by a tax on industry, and lack of policy focus has broken any remaining support from industry.

“They don’t just dislike him, they kind of actively hate him because he is so quixotic,” Chen said.

Several sources said a move to replace Abbott with Communications Minister Malcolm Turnbull, a millionaire lawyer and former investment banker, would be welcomed.

A Sydney-based financial services lawyer said Turnbull would be a welcome change because of his center-right views and business background.

“We need somebody who is moderate, and it is Turnbull who can get us some stability. Businesses will be very happy with a change,” he told Reuters, on condition of anonymity.

Abbott is working against the clock if he to win back the business lobby.

On Friday, a Labor government was installed in Queensland state after a massive swing against the incumbent conservatives that was also seen as a referendum on Abbott’s rocky tenure.

Additional reporting by Swati Pandey and Byron Kaye; Editing by Paul Tait

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