Media & Speeches

Australia must grow faster and spend less, and encouraging private enterprise is the best way forward

This opinion article by Jennifer Westacott was published in the Daily Telegraph on 8 May 2018. 

Politicians like to say budgets are about choices, and they are. But instead of only focusing on the decisions our politicians make, we need to look at the choices they shelve and put in the too-hard basket.

Avoiding the hard calls today doesn’t just kick the can down the road, it leaves all Australians with fewer and harder decisions to make in the future.

Where there used to be a 3 in front of our growth numbers, there is now a 2. That economic jargon hides the basic truth — our poorer performance means mediocre wages growth and less to invest in projects and services that really matter. It’s just not good enough.

It’s time for all Australians and our political leaders to wake up. There are no fairies at the bottom of the garden and money doesn’t grow on trees. It’s dishonest to pretend otherwise.

Either we correct our course to grow the economy faster and to make sure we’re controlling our spending, or we keep frittering away cash we don’t have, do nothing to boost growth and hope for the best.

The latter course would leave us adrift, just barely growing and continuing to rack up billions of dollars of debt on the national credit card with no plan to pay for it.

Our paper, Economic Realities — Budget Choices For A Strong Australia, paints a stark picture.

Continuing to muddle along could leave us with an extra $50 billion of debt every year. To pay for this debt, taxes would have to rise some $5000 per household or we’d need to drastically cut services — roughly the equivalent of the entire education and defence budgets combined.

If things remain the same, we face the horrible prospect of a budget deficit of around 8 per cent of GDP by the middle of this century. That’s a staggering deficit of more than $140 billion in today’s terms.

None of this is to mention that we’d be left without any buffer should the global economy take a hit.

So, it’s clear we need to act. To protect Australians, we’ll need to see a budget that tackles the key problems.

First, we have to grow the economy at a faster rate. It’s the only proven strategy. Growth means a bigger pie and it provides the confidence and capacity that we can pay for the services people expect.

This growth strategy means having fairer and competitive tax rates, an education and skills system that prepares the workforce for the future and an environment that rewards private enterprise.

Second, we need to be disciplined about spending. Just like your household budget, the government needs to be very clear about how much it can spend, and what it can do when something unexpected pops up. 
You buy the family groceries before you book your holiday; why should government be any different? Essential services must come first.

We also have to make sure taxpayers get value for money. Australians expect world-class services and so they should — they pay top dollar but there are serious questions about how well this money is spent.

It is surprising to know, for example, that the Productivity Commission estimates that more efficient and effective health programs alone could deliver gains of at least $140 billion over the next 20 years which could be reinvested.

The most important thing we need to see is a budget that gives business the confidence to grow and invest in new jobs and higher wages — the key ingredients to lifting living standards for all Australians.

This is the message we’ve been hearing from communities across the nation as we visit regions, towns and suburbs as part of our Strong Australia campaign with Sky News and News Corp Australia, publisher of The Daily Telegraph. We are determined to listen to Australians about what matters most to them.

Recent economic data suggests that businesses will be expected to do the heavy lifting when it comes to paying down debt and funding services. We can’t take for granted that they will always be there.

Our next event is in Penrith on May 17, focusing on infrastructure as well the challenges and opportunities facing one of the nation’s most important and rapidly growing regions.

Strong businesses are at the heart of Western Sydney’s success. We can’t forget that. Well-publicised poor conduct by some businesses shouldn’t be an excuse to punish all Australians.

Recent economic data suggests that businesses will be expected to do the heavy lifting when it comes to paying down debt and funding services. We can’t take for granted that they will always be there.

Business employs five out of six working Australians, from your local hardware shop or cafe through to office workers in the city. A pro-business budget will be a pro-Australian budget.

All indications are that this year’s budget is on track. The signs look good. We can return to surplus and give Australians the opportunities that only a booming economy provides — but only if the politics isn’t allowed to stifle much needed action.

Budgets are also about courage.

The one choice we can’t make is to just let things drift as they are.

If we do, in 10 years’ time, people will look back and ask, “How did that happen?”

It’s a question we shouldn’t have to answer.

Jennifer Westacott is chief executive of the Business Council of Australia.