By Michael Chaney
Business Council of Australia
As Australia enters its 16th year of continued economic expansion, a reasonable conclusion – based on history – is that slower growth is inevitable.
But this is not how the Business Council of Australia sees it. We believe Australia has a unique opportunity to set its sights higher. We believe that the country can strive to depart from past economic cycles that have seen the nation’s fortunes decline because of a failure to manage prosperity effectively.
Certainly, the past 16 years of continuous growth have demonstrated that Australia has become better at managing the good times as well as the bad. But there are important challenges.
Australia continues to run a big current account deficit. Exports outside of resources are performing poorly and infrastructure bottlenecks are limiting activity. We are not effectively managing key resources such as water. And significant pockets of entrenched community disadvantage remain.
Add to these challenges the impact of an ageing population and slower productivity growth as the benefits of past reforms fade, and it is clear that we must avoid not only the backsliding that traditionally follows strong growth, but set our sights even higher in terms of reform.
The BCA acknowledges that 2007 is a federal election year and that federal and state electoral cycles can truncate the time frames for making decisions. But if we are to tackle long-term challenges, Australia cannot allow elections to be yet another reason for inaction and for not taking the hard decisions.
At the federal level, strategic vision cannot apply in only two out of three years.
The BCA argues that Australia can and should commit itself to a national goal of lifting its living standards into the ‘top five’ band of developed economies by 2012. To achieve this, important economic reforms need to be implemented that build on the changes of the past 20 years.
There is now considerable agreement about the need for reforms to continue. In addition, there is also a consensus among politicians and policymakers about which areas of our economy need reform and what direction this reform should take.
Implicit in this consensus is that the issues our economy faces – and the reforms needed to resolve them – are different in nature to past challenges.
Sustaining growth as the economy operates at close to capacity means governments need to shift their thinking to manage the supply side of the economy better.
These challenges are long term, or intergenerational, in nature and require governments and policymakers to depart from the paradigm of short-term approaches and ‘just-in-time’ fixes and adopt a mindset that involves more strategic decision making.
To its credit, the federal government initiated just such an approach with its Intergenerational Report. That report clearly focused debate and created a longer-term policy discipline.
The BCA is calling on governments across the board to use the Intergenerational Report as a template to set out strategic frameworks for our nation to invest in far-ranging policy reforms.
This year the BCA will outline a clear set of reform ‘standards’ consistent with its broader reform agenda. These standards play a fundamental role in sustaining growth and living standards and must be supported if Australia is to enter the top band of global living standards by 2012.
The reform standards will articulate the quality, competitiveness and outcomes required of our tax system, red tape frameworks, infrastructure renewal, environmental management, workplace productivity and participation.
We believe these standards will help focus the attention of politicians in this election year beyond just short-term political gain to a more strategic policy that puts national interest ahead of sectional interest.
BCA community polling has shown that Australians are ready for a strategic vision built around passing on our prosperity to future Australians. With 81 per cent of employed Australians working in the private sector, 55 per cent of people owning shares directly or indirectly, and strong corporate tax revenue underpinning the federal budget surplus, never before has economic prosperity in Australia been more closely linked to business performance. The question remains whether governments can play their part in delivering on these aspirations and commit to a vision of even greater economic prosperity.