This opinion article by Business Council President Catherine Livingstone was published in The Australian on 15 June 2016.
In the heat of an election campaign, the debate can narrow to a few emotive themes, often captured by simple slogans. Lost in the moment is the depth and extent of the debate we need to have about the long term: good policy is abandoned for near term political advantage.
If we lived in a benign global economy, secure in our place and prospects, then losing focus on the long term might be less consequential. These, however, are not our circumstances: the wrong policy settings in this global economy – dynamic, disrupted, distributed – will leave the next generation of Australians worse off, in an uncompetitive economy, with groups and regions at permanent disadvantage, and a society lacking the capacity and skills to address our most pressing social and economic issues.
Where do we stand? Our competitive position has slipped. In the most recent World Economic Forum ranking, we came in 21st, behind Singapore, the US, the UK, New Zealand, Canada, the UAE, Malaysia, all the Scandinavian nations and more. Our current economic growth is being driven by past decisions to invest during a resources boom. Our education system is not delivering the results.
There are bright spots, especially when we compare ourselves against more troubled economies, but our aspirations for Australia are more than matched by the aspirations and capacity of other competitive and larger economies, particularly when it comes to the potential of innovation and technology. We are all ‘start-up nations’ it seems.
In June of 2014 we set out markers for the policy pillars we need for the future well-being of Australia:
- fiscal discipline, including resolving roles and responsibilities between the Commonwealth and the States and Territories, and preserving our AAA credit rating;
policies which promote economic growth, building on our comparative advantages, and which lift our productivity;
- a globally competitive tax system which encourages investment by individuals and businesses; and
social policies that provide an effective safety net, and enable the disadvantaged to have a greater engagement in the economy, as well as delivering better outcomes for investments made.
These pillars are mutually reinforcing and must be treated as such. In this election campaign we have, instead, seen a debate that seeks to divide the electorate between social policy and tax policy, with little acknowledgement of the fiscal constraints and growth challenges we clearly face - challenges that will have to be faced by whichever party wins the election, as well as by the post-election Senate.
We can lament and decry the inevitable 'broken promises' post the election, or we can take responsibility now, look beyond the short term mirage of simplistic assertions, and demand policies that address the reality of the long term.
We must call for a refocussing of the debate to include the pillars of fiscal discipline and a growth plan for Australia. We should demand that the four pillars be based on settings that sustain a competitive economy and give us options for economic growth and hence social well-being: the very narrowness of the campaign debates is evidence of the extent to which our options have already been constrained by our lack of competitiveness and sustainable economic growth. We need to aspire to something better than our current ranking of the 21st most competitive economy.
Our aspirations are individual as well. Each of us hopes for economic security and prosperity, but the nature of work is changing. McKinsey Global research suggests that up to 45 per cent of work activities could be automated using already-demonstrated technology. Economic history suggests that this disruption may itself create new jobs, but we are individually anxious about what this means for ourselves and our families.
In the evolving world of freelancing, online markets, and the sharing economy, the potential exists for small business to scale quickly, larger enterprises to engage more small businesses in national and global supply chains, and for more opportunity for those in regional areas to participate in the economy. We talk about an ecosystem of large and small business - because that's exactly what it is.
We must embrace the interdependence between individual employment, small business and larger enterprises. Small business provides significant employment, and so too the health of larger enterprises is core to our economy and international competitiveness.
We need a policy environment that attempts to maximise our potential and economic growth by embracing that interdependence, not by establishing barriers to collaboration across sectors, and obstacles to our international competitiveness.
Our focus should therefore be on an integrated set of policies that will enable this to happen swiftly and efficiently. We need policies that promote efficient investment; innovative workplaces that develop and adopt new technology; and an education system that will foster the skills needed to enhance workplace capability and agility.
A focus on these policy areas will do more to generate the economic growth necessary to address our most pressing social issues than the current debate on redistributing tax will ever achieve.
We need only look to many European economies to observe the reality of what happens when governments - and the electorate - do not embrace the need for determined, broad based reform; when the community's denial of the reality of inexorable change, and its desire to maintain the practices of the past, outweigh the urgency of adapting to the evolving global economy.
In some countries, town after town is being hollowed out – with the buying power of the local community falling significantly, as a consequence of the loss of employment in larger enterprises and the flow on effect of the closure of small businesses. The downward spiral is starkly evident.
At the core of a robust democracy, is the integrity and transparency of its institutions. Elections do not a democracy make, but they are a fundamental institution that we disrespect at our peril. It is therefore incumbent upon us to demand during an election policies which face up to reality, and to demand a coherent vision for our future.