5 April 2012
President, Business Council of Australia
This is an edited extract of a speech to the Australia–Israel Chamber of Commerce that was published in The Australian.
While the international media is optimistic about our economy, Australians are not. Every day people are told how well the Australian economy is doing yet for many Australians, the truth is they’re doing it tough. They hear stories of mining companies and some big-name business people making huge dollars, and they don’t see the windfall trickling down to them.
I contrast this sense of unease with the feeling of optimism and clarity that characterised Australia through my childhood and early adult life. Whether it was in sport, in business or in the arts, we reckoned we could take on the best in the world and beat them – and we often did.
It was a time when Australians recognised there was a job to do and we went about it with a real unity of purpose. We wanted to grow. The truth is we are still that Australia. And we are at one of the great tipping points of history. We have an unprecedented opportunity to lock in prosperity and high living standards for future generations. But Australians are waiting for the call, the vision for the future and the plan that’s going to help us get there.
When I was growing up we really did punch above our weight. Australians won eight Nobel prizes, we planned and built the Snowy Mountains scheme and the Sydney Opera House.
We invested nearly 16 per cent of gross domestic product in education and welcomed more than six million immigrants to Australia. I look back on the fundamentals that supported those achievements. First and foremost was an understanding that growth is vital and is the unifying force for the Australian people. All parties agreed on the building blocks of immigration, resource development, infrastructure, industrialisation, defence and education.
We had an open economy and an understanding of our place in the world. And we had a strong sense of the need to share wealth and tackle inequality and these two pursuits – growing wealth and sharing it – were not seen to be in conflict.
But on the league tables that tell us where we are now and what our future is going to look like, some important things are looking pretty crook. On the World Economic Forum’s scale of global competitiveness, Australia has dropped four spots to number 20, as other countries have passed us by. On key ingredients of competitiveness, we are a long way from the gold, silver or even bronze medals. When it comes to the quality of overall infrastructure we come in at number 37, behind such economic powerhouses as Croatia and Namibia. On the section of road between Sydney and Brisbane, Australia is in the middle of an 80-year program to build one highway. It sure puts a new spin on steady as she goes.
It feels like after decades of investing in infrastructure, investing in education, investing in immigration, we are taking a very long post-season hiatus. We are sitting around talking about what we might do next season while the biggest game in our history is already into the second quarter.
China and India now account for more than 30 per cent of global GDP. By 2025 they will account for more than 50 per cent and, together with the rest of Asia, will account for more than 60 per cent.
Better national educational outcomes are a strong predictor for future economic growth. The top five countries in the most recent study are Asian. Australia comes in at 15.
All this goes to show how much is changing, around the world and for Australia. Nearly 70 per cent of our goods and services are exported to Asia. Only 15 per cent go to what we still think of as our traditional markets of Britain, Europe and the US. Despite what we think of as our traditional exports – agriculture and manufactured goods – our second biggest export is services.
In my view, the continuing strong growth of our resources sector has made many of our leaders complacent. Sure, Australia’s terms of trade are 40 per cent higher than the average of the past 50 years. But it’s the years of work done confronting hard issues that set Australia up for the quality of life most of us enjoy. If we don’t confront the hard issues again now, Australia’s moment will become a lost opportunity.
The belief that resources by themselves will carry us through is a convenient fairytale most Australians don’t even believe. I raise these issues not to be a scaremonger but to highlight that if we lose our competitive advantage, there are enormous consequences and they will affect people’s jobs and lives.
We are not staring down the barrel of a European-style crisis.
But we do need to reflect on our competitiveness and what it means to miss the moment and lose opportunities: the jobs we could have created; the investment that could have come; the wage increases people could have had; the lifestyle we could have enjoyed.
I’d like to see the federal government do more than restate its aspiration of meeting a 2 per cent a year growth in labour productivity.
I’d like to see it draw up and follow a realistic plan to achieve it.
But we can’t work up the plan if we don’t start by asking ourselves the right questions.
Australians are nervous because they know the public policy questions we’re debating are not the right ones to set us up for the future.
Instead of asking technical questions about the Fair Work Act, we should be asking what kind of system Australia needs for a changing world and a changing economy.
We should be asking if the carbon and mining taxes encourage new investment in industry and infrastructure or whether they handicap us against the competition. If we truly believe we are part of the Asian century, we should be asking a whole lot of questions about what economic integration really looks like.
Australians are world beaters, and we’re in a better position geographically, economically and in terms of the make-up of our nation than ever before to build ourselves a great nation in this new century. But we are now playing in a much more competitive game. Elements of leadership are latent in us all. But more often than not, those elements come by way of inspiration. By a vision, that lifts us up and inspires us to do great things.
It is my strong sense that Australians, young and old, are hungry for such vision and leadership, with the promise of a bright future for current and future generations.