The Albanese government is feeling a lot of pain from pincers

When a leader is on the back foot, small things are telling.

On Monday, Anthony Albanese, who leaves on Thursday for a meeting of the Quad – comprising leaders of the United States, India, Japan and Australia – in Joe Biden’s home state of Delaware, made a point of saying he anticipated staying only one night in the US.

The message to voters full of angst over the cost of living is that the PM doesn’t want to be out of the country more than he has to be.

Then on Tuesday, Albanese went out of his way to address in detail questions to be raised in a critical speech from the Business Council of Australia that hadn’t yet been delivered.

That morning, Albanese had found himself caught in a painful pincer.

Not only was the BCA, the voice of the big end of town, delivering a harsh critique, adding to that coming last week from the Minerals Council, but former union leader Bill Kelty had weighed in with a damning assessment of the government’s performance.

Kelty is seen by many as trade union royalty. Partnering then treasurer Paul Keating, Kelty helped make the union movement – which had a much bigger coverage of workers than today – integral to the Hawke government’s reform agenda, which transformed the Australian economy.

In remarks delivered this month at a business lunch and reported in Tuesday’s Australian Financial Review Kelty, while praising the government on a number of fronts, said: “The Labor Party seems to have lost its way to safely secure three terms of government”. It was “mired in mediocrity”.

“We need a Labor Party agenda in which the big issues are confronted,” Kelty said.

“What we do not need is a self-congratulatory government telling people they have really cared and looked after them.”

“People are not impressed by politicians telling them – or at least implying – that a tax cut has fixed their problem paying bills, especially a tax cut that leaves them paying more tax than they were two years ago,” he said. “The cost-of-living tax cut was welcome but it was a year too late and a thousand dollars too little.”

Kelty, long an advocate of tax reform, said more generally: “Taxing is a real political problem. People don’t like paying extra taxes. […] But that does not mean we cannot have tax reform. The majority can continue to live in this tax world and they will not be worse off, but for many there should be a new tax system which is simpler and fairer especially for younger people.”

In his speech for Tuesday night’s BCA dinner, released ahead of delivery, BCA CEO Bran Black declared that “rather than feeling confident in our growing national prosperity, many CEOs feel we are losing our way.

"Instead of taking big steps on the things that matter, we are taking incremental – but noticeable – steps backwards.”

“We have let the balance shift too far away from encouraging Australians to grow, hire, innovate and be more competitive on the world stage.”

Black spelled out the BCA agenda, including less red tape, more flexible workplace laws, simpler planning systems, a more efficient tax system.

“Abolishing multi-employer bargaining must be seen as a priority,” he said.

Some in the government will likely dismiss the BCA criticism on the grounds “they would say that wouldn’t they”, but others, including Albanese will be more concerned.

When Albanese was stalking Bill Shorten in opposition, one point of differentiation he made was the importance of a positive relationship with business. Labor had “to engage constructively with business large and small,” he said in 2018.

In the past two years, the Albanese government has delivered in spades to the union movement, with the facilitation of multi-employer bargaining at the top of a long list of union gains, which also include rights for casual workers, minimum standards for gig workers, “same job, same pay” legislation, and support for pay rises for the low paid.

The changes have inevitably alienated many in business.

Unlike the Keating-Kelty period, it has not been a quid pro quo arrangement between government and unions. Then, the unions played their part in economic reform efforts – in return they received social policy benefits.

Industrial relations issues are now shaping up as a major point of contention at next year’s election. The question is: how far will the Coalition go in committing to rolling back IR measures the government has brought in? And what will be the political implications of that?

The battle over industrial relations could be one potential lifeline for an embattled government. Just as Labor in opposition used the WorkChoices program against the Howard government, so the Albanese government could use the threat of a rollback of its workplace changes against the Coalition.

Meantime, the Kelty-business critique is not the only pincer the Albanese government is facing.

An unlikely Coalition-Green alliance is holding up key housing legislation: the Help to Buy (under which the government would take equity in some homes) and the Build to Rent (incentives for foreign investors putting money into new rental property).

The Greens have put a high price on support for these bills. As they have on legislation to split the Reserve Bank board into two boards, also now rejected by the Coalition.

Treasurer Jim Chalmers is hugely frustrated by the Reserve Bank change being stymied.

Kelty thinks it’s no loss. He calls that proposed reform “indulgent elective surgery”. “It is a change that delights only about two dozen connoisseurs of minutiae.”