Australia at crossroads with only one path likely to lead to growth
24 March 2018
This article was published in The Australian on 24 March 2018.
As a nation we are at a fork in our national journey, weighing up competing philosophies as we contemplate the paths ahead.
Paved in the sugar-coating of populism, one route appears far easier to navigate and promises all things to all people. The other is marked by rugged terrain, requiring the hard yakka of tax, workplace, regulatory and other reforms that will boost productivity. It is hardly alluring.
When things appear too good to be true, they almost always are. The seemingly obstacle-free path — glittering with limitless credit and giveaways — ignores the hard-won lessons of the past. It retreats from the shared belief that for Australia to thrive its private enterprises must be allowed to grow and prosper.
The easy road returns us to the dead-end of an old Australia, before the reforms of Bob Hawke and Paul Keating flung open the economy. An insular nation beset by industrial militancy, high unemployment and inflation.
The choice of paths now defines Australia’s political landscape. In the lead up to the next federal election, no one is adopting a small target or mimic-your-opponent strategy. Instead, two distinct road maps are fighting for oxygen.
What really matters is delivering for all Australians. You can’t grow and create businesses, provide jobs, increase wages and stimulate more opportunities with hollow promises, no matter how appealing they sound.
The risk of heading down the wrong path has consequences. A poor choice impacts on the lives of workers who want fulfilling, well-paid jobs. It robs Australians of the chance to deliver on that universal generational legacy of hoping to leave the country in better shape than they found it.
The choice is stark. One route is a free-for-all. We can spend what we want, tax what we want in a crippling smash-and-grab assault on business, mandate wages and throw in the towel on the hard slog of competing with the world.
This is a path back to the pre-Hawke days, before the first Prices and Income Accord was struck in 1983 between the ACTU and Labor to moderate wage demands in exchange for improving the social wage.
The decade leading up to the Accord was punctuated by recessions. The jobless rate was 6.3 per cent in February 1982 and a year later, by the time the Accord was signed, it had climbed to 9.6 per cent. Inflation was hovering at 11.3 per cent through the year to December 1982. The company tax rate was 46 per cent and there was no system of dividend imputation. The top personal tax rate stood at 60 per cent.
It was also a period marked by industrial unrest. Each year there was an average of more than three million working days lost to industrial disputes over the decade to 1982. By comparison, in 2016-17 there were 138,000 working days lost to industrial disputes.
The alternative road, as daunting as it seems, is tried and tested. It provides an ecosystem that enables the nation to drive prosperity through enterprise. It creates the climate for entrepreneurial spirit to flourish.
No one is arguing that business should get a free ride. But we do want an Australia that creates opportunities, encourages investment, and rewards effort.
The ACTU is pledging to build “a movement to change the rules to bring fairness back to Australia’’. But what’s fair about strangling the economy? What’s fair about eroding our competitiveness? What’s fair about letting the country slip further behind and failing to attract the investment and innovations needed to create jobs and drive higher incomes?
Thriving business isn’t just about growing numbers on a chart; it’s about creating more jobs and raising living standards. A war on business is an attack on the 10 million Australians employed in private enterprise, the almost six million investors in the businesses paying dividends and anyone with a retirement nest egg.
When business is growing, it is employing people, breathing life into regional towns, supporting communities and paying the taxes that fund vital services.
This is why the Business Council has partnered with Sky News and News Corp Australia, publisher of The Weekend Australian, to reach out to Australians beyond Melbourne, Sydney and Canberra.
The Strong Australia campaign, featuring some of the nation’s most influential business and community leaders, was in Adelaide this week to listen to the triumphs and concerns of locals.
Many liken South Australia to the proverbial canary in the coalmine. It is an economy in transition. The state is benefiting from an injection of defence spending but is grappling with the challenges of attracting, retaining and educating a highly-skilled workforce. It is working to overcome lacklustre growth and higher-than-average unemployment.
Strong Australia is designed to take the pulse of Australians living outside our largest metropolises. We want to come together to improve business investment, generate more jobs and reinvigorate the main streets.
Redistributing tax dollars does not increase the size of the economy; it does not deliver a steady revenue base to deliver the services all Australians want.
Of course, businesses should aim to pay staff more but wage growth must be sustainable otherwise it risks driving unemployment higher and increasing prices.
Do we really want to return to a society ruled by industrial militancy, where the government further encroaches on our lives with regulation, where we don’t care what we spend or how much high taxes stifle opportunity?
So we reach the crossroads. One path relies on redistribution and division, the other embraces growth underpinned by robust businesses and private enterprises.
Reflecting on an Australia before the Hawke and Keating reforms often sparks calls for a new Accord. The Business Council is up for that conversation but, as we know, the Accord was not with business, it was between the ACTU and Labor. Business would be happy to be part of an Accord but it must be a consensus to grow the wealth of Australia, not diminish it. We should all aim for a stronger Australia.
Jennifer Westacott is chief executive of the Business Council of Australia