These Are Good Times, But Not for All

The Age

By Michael Chaney
Immediate Past President
Business Council of Australia

Australia has never had it this good. The horizon of prosperity seems to stretch indefinitely into the distance. We’ve experienced some jolts and bumps along the way; but the economic shocks and deep uncertainties we were all accustomed to in the 1980s and ‘90s seem to have departed our shores – at least for the foreseeable future.  

A couple of decades ago the language of prosperity was almost like a foreign language – hard to understand, let alone discuss with any fluency. Now, phrases like full employment, stock market highs and the commodities boom roll off the tongue. The language of prosperity is now the second language of many Australians.  

And it’s a comfortable conversation to have. Our companies and our employees represent a very fortunate part of the community. Across the board, jobs are plentiful, wages are high and individual wealth continues to rise. The business sector reinvests huge amounts into the community through increasing levels of corporate taxes and shareholder dividends. Governments spend the money on any number of new or expanded programs. There’s no doubt this is a golden age of prosperity - possibly the best of economic times Australia has experienced.  

But in the midst of so much prosperity, it is easy to overlook the many Australians who continue to confront a vastly different reality. This is a world where economic opportunity is limited or non-existent, and social isolation a fact of daily life. For all the talk and mutual congratulations over economic prosperity, we need to remind ourselves of the other Australia.  

This other Australia includes the 3 million people who remain outside the workforce, many of whom want to work. It includes the one in seven Australian children who live in households where there’s no wage earner. It includes the unacceptably large numbers of Australia’s indigenous population for whom very low rates of workforce participation, poor health and low life expectancy remain endemic. For a nation which prides itself on equality and a fair go, these figures are out of sync with its core values.  

Over recent years, the BCA has maintained a strong focus on issues like infrastructure renewal, modernising federal–state relations and updating Australia’s tax, red tape and workplace systems. They remain critical issues for business and the Australian community. In a highly competitive world, economic growth will slow and prosperity will stall without reform. In the last 12 months, the pressure exerted by organisations like the BCA has started to bear some fruit. States and the Commonwealth are now pushing ahead with deep reforms to regulation-making.  

We’re now starting to see better planning and policies on infrastructure reform – in line with the BCA’s strong advocacy. One of the most glaring problems facing Australia, which has been highlighted through our research on tax, infrastructure and red tape reform, is the quite dysfunctional state of our federation. Only through reform of our federal and state arrangements will we achieve a truly productive economy.  

During the year the BCA has continued to argue strongly against any reversal of the workplace reforms which have delivered strong economic growth, higher real wages and record jobs growth over the last decade. We have taken every opportunity to point out that reversing these reforms, for example by abolishing individual workplace agreements, will result in a fall in productivity and increased unemployment.  

These areas remain the building blocks of reform and further progress on them will establish the foundation for continued economic prosperity. For its part, the BCA will continue to monitor the actions of all governments in these critical areas, and comment on the pace and direction of reform accordingly.  

Now the prosperity debate needs to take a different turn, and better serve those who remain isolated from, or on the periphery of, opportunity.  As business leaders, we need to do much more to incorporate objectives for social prosperity into the reform debate. We need to be as proficient in the language of social prosperity as we are in economic reform.  

The BCA’s vision is to make Australia the best place to live, learn, work and do business. In particular, we’re starting to focus on whether existing policy pathways are enough to maximise participation in prosperity. We’re asking what new policy approaches are needed to better align economic reform with social outcomes.  

The case for action is compelling if for no other reason than this – will there ever be a better time for our nation to tackle entrenched disadvantage and welfare dependency?  

I am sure that as business leaders you appreciate that this is not driven by pure altruism. There are significant costs to our businesses if we fail to address these issues. Costs resulting from:  

  • Long-term unemployment and entrenched disadvantage.  
  • An ageing population that will open up huge and costly gaps in the labour force.  
  • Lack of education and job skills among many young Australians.  

These problems constitute an unacceptable waste of individual talent. With such a strong economy, we talk a lot about Australia realising its full potential. But we can’t realise our collective potential unless each and every Australian has the opportunity to realise theirs. The BCA starts from the premise that lifelong learning and ongoing employment are the best ways of realising this potential. Education and employment are what will drive economic and social prosperity.  

One of our greatest concerns today should be that our best and brightest young people are not entering the teaching profession. And it’s not surprising; teaching is not held in the high esteem by our society that it once was. The job carries a lot more stress today than in the past because of the need for teachers to provide pastoral care that was formerly provided at home; and teachers’ remuneration structure provides no incentives for excellence.  

Why should we tolerate a system where, after a few years in the profession, the best teachers are paid much the same as the mediocre? Most teachers can reach the maximum salary level after, on average, only 10 or 12 years in the profession.  

How much better would it be if people entering the profession knew that if they performed at the highest level they would be rewarded accordingly? By performance, I mean how teachers would rank against national standards of accreditation focused on teaching skills and achieving improved learning outcomes for students.  

For example, I could imagine a system where 50 per cent of teachers are remunerated at current levels, with 5 per cent paid a premium of 10 per cent, another 5 per cent a premium of 10 per cent above that, and so on; with the top 5 per cent paid double the current remuneration. This would potentially see our top teachers paid up to $130,000 a year.  

The cost of doing that for all Australian teachers, public and private, would be around $4 billion. That, to me, seems like a manageable amount, given the potential savings that might be made from rationalising education bureaucracies across Australia and the projected surplus of the Commonwealth Government. We should consider such expenditure an investment rather than a cost.  

The federal election is a good starting point. As we outlined in April when I announced the BCA’s reform standards for the election, the federal poll has the potential to set out new pathways to prosperity. But many of the commitments and promises in this election are likely to benefit those who are already part of the mainstream economy.  Economic prosperity should be the catalyst to unwind disadvantage – not perpetuate it. We need to aim for broader social prosperity linked to policies that support economic growth. This should be a priority for all parties in the election. 

This is an edited version of an address by Michael Chaney to the BCA 2007 Annual Dinner. The full version can be accessed via the link provided below.

Growing Social Prosperity in a Growth Economy