How Turnbull can avoid retreating to the Liberal rump

A government of national unity might be too ambitious, but if Malcolm Turnbull is eventually sworn in again as prime minister he could do a lot worse than negotiate with Labor on the passage of important legislation. The alternative is to seek the agreement of up to six cross-benchers in the House of Representatives and 13 in the Senate, including the Greens on the left and One Nation on the nationalist right.

Despite the protestations of business organisations, Labor is arguably the only remaining stable, truly mainstream political party in the parliament. As Abbott supporters and their cheer squad in the media drag Turnbull towards the hard right, not even the Liberal Party will be able to claim that credential.

As Turnbull struggles to remain relevant to voters in the sensible centre, consider just a few of the hard right's non-negotiable demands. Turnbull must abandon the superannuation changes he took to the election, allowing the tax shelter for the wealthy to remain wide open. He must repudiate the science of climate change or at least pay no more than lip service in pretending to address what the right are convinced is a global green-left conspiracy.

He can go ahead with a plebiscite on same-sex marriage but they will remain free to reject the people's verdict. He must toughen up against Islam or risk bleeding more votes to the One Nation Party into which he and the Greens breathed new life in their deal for a double dissolution election.

And he must create opportunities to wedge Labor on defence and national security so that he can stand in front of a wall of Australian flags with his Immigration Minister, Peter Dutton, an angry victim of bikies scaring old ladies about Medicare in his now-marginal seat of Dickson.

Yet if Turnbull succumbs and moves further away from the centre to the hard right he will plunge in the polls and his party room will replace him. If he doesn't shift to the right, they will destabilise him anyway. His best chance is to get policy runs on the board. That won't be achieved by negotiating with One Nation or the Greens, but with Labor.

While the business community and editorial writers like to characterise Labor under Bill Shorten's leadership as having shifted to the left through its support of trade unionism, opposition to cutting penalty rates and refusal to accede to their demands to cut the company tax rate for multinationals, they might ask themselves whether the Hawke or Keating governments would have done any different. The answer is no.

One of the business community's strongest allies in the shadow cabinet, Treasury spokesman Chris Bowen, was done over by the Business Council of Australia after he staunchly opposed the effects test for the misuse of market power that Turnbull introduced and to which it purportedly was opposed.

Instead of expressing white-hot anger at the Turnbull cabinet's decision, the BCA issued a timid, three-line press release expressing disappointment and offering to work with the government on implementation. Small business organisations welcomed Turnbull's decision and campaigned for him and the Greens and against Labor.

In the minds of senior members of the Labor caucus, the weak acquiescence of the BCA to an anti-competitive effects test confirmed that many of its members were more committed to the Liberal Party than to sound economic policy.

When these same members demanded that Labor support a $48 billion company tax rate cut – to be funded out of cuts to health and to Labor's cherished needs-based school funding scheme – Labor refused. Relations broke down and Labor campaigned against the business tax cut and the business organisations demanding it.

Business leaders and Turnbull can stamp their feet, insisting they were robbed by a scare campaign and that the voters got it wrong. They can go back to the people and demand a majority government. They will get one and it will be Labor. Or they can seek common ground with Labor in the coming parliament.

Recall that the whole purpose of the National Reform Summit held last August, which The Australian Financial Review co-sponsored, was to find common ground on policies that were in the national interest. Business, trade unions, community organisations and seniors groups came together in a spirit of cooperation.

It seems so long ago and so far away. But when the wounds are healed, we could try to get the band back together and invite leaders Turnbull and Shorten as keynote speakers at a reconvened National Reform Summit in the search for common ground on budget policy and a national economic, social and environmental reform program.