Business

Oct 27, 2011

Who killed economic reform? Maybe we all did

There's plenty of blame to go around for the death of the economic reform project. But was popular resentment of its impacts the ultimate killer?

Bernard Keane — Politics editor

Bernard Keane

Politics editor

So far, there have been two competing theories about why the economic reform project has died in Australia: the media blames the politicians, and the politicians blame the media.

33 comments

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33 thoughts on “Who killed economic reform? Maybe we all did

  1. Suzanne Blake

    Bernard,

    No one trusts politicans anymore. The backroom deals with minor parties, where we don’t get to see the agreements, the lie regarding the carbon tax, the horse trading with the big miners on the mining tax, the list is endless.

  2. Scott

    Economic reform is not dead. It’s just on hold until a government is elected with enough political capital (Hawke, Howard) or ego (Keating) to drive unpopular reforms through.

  3. Jimmy

    This article laments the lack of economic reform and points to Rudd not delivering on “carbon pricing but on tax reform and housing affordability”, businesses lack of support for the mining tax and businesses call for IR reform in response to productivity increases.

    The article itself points out the issues regarding the IR reform demands, a carbon price and a mining tax (more than likely) will be introduced next year. “Tax reform” is a particularly broad request and always requires long lead times to implement (look at the GST) and the Henry review and even the recent summit are steps along a long and difficult road.

    The only issue to which absolutely no action has been taken is “housing affordability” (although the market does seem to be addressing that itself in recent times).

  4. Ben Shurman

    Think you need to clarify what you mean by economic reform as compared to a change of practice e.g. indirect tax practice change – a bunch of ill-defined ill-targetted hot potch of indirect taxes to a f#*k youse all [GST] tax is an administrative reform and the only thing economist might be interested in is cost, efficiency, incidence, etc.

    Again the privatizations you mention are not economic reforms. and give me a break on this productivity nonsense. Bernard how are you individually going to improve your productivity? Work longer hours?

    But a general comment consumers are supposedly rational. Many, except the 1% are yet to feel, experience the benefits of these so-called economic reforms. What’s that saying you can follow some of the people some of the time…

  5. cpobke

    Though provoking article as always Bernard.
    However, i can’t see how the big ticket economic reforms you point to result in the kind of souless atomisation reffered to in the concluding paragraph.

    “In the world created by economic reform, your only value is as a functioning isolated member of a market economy, as a productive employee and big-spending consumer, and you shouldn’t rely on the community to soften that reality”

    It seems a bit too dramatic to suggest that because the Australian government does not own and operate an airline (or because the taxes paid on manufactured goods produced overseas are lower now than they were in the past) Australians find no (or less) value in the work they do, their family and other relationships, the recreational activies they pursue and the various ways they engage with their community.

  6. Jimmy

    “Thought provoking article as always Bernard” Yes a vast improvement on the poll talk of recent times.

  7. Joe Magill

    Even though I own a small business, I believe that business and business organisations are quick to criticise any reform which has any (perceived) negative impact. The SA state government recently introduced changes to OHS legislation as part of a national OHS standard, a negotiating process which took many years. Local business, particulalrly housing, immediately launched a campaign against the changes, arguing, just for a change, that “jobs will be lost” and “more red tape”.

    Business is also quick to duck for cover when reforming support is needed. Again in SA the local business lobby BusinessSA lobbied vociferously against the mining tax even though most of its members would have gained from the resulting cut in corporate tax rates.

    Sure today’s crop of politicians doesn’t have the ability to deliver the reform argument to the public, and sure, the media in general is not really interested in covering stories as much as capturing those gotcha moments, and sure, the academics are reluctant to loudly and proudly advance the case for reform. But to my mind the major failure is big business and big business organisations who vigourously pursue their very short term interest and refuse to engage in debates which may well be for their long term benefit.

    The group which you have not referred to are the unions – where do they stand in the reform debate?

  8. arunta

    Wait a minute Bernard, Im excited about all the reforms that an Abbott govt. will bring in.
    #Dismantle the NBN
    #Repeal the Carbon tax
    #Repeal the MRRT
    #Repeal plain packaging of cigarettes
    #Repeal the Pokies legislation …… the list of potential achievements is spectacular.

  9. jeebus

    I don’t understand how anyone can say economic reform is “killed”. There is more to reform than flogging off public assets. If anything, it seems that the pendulum is starting to swing away from the laissez-faire economic rationalism that has led to staggering and unproductive wealth concentration, erosion of the middle class engine, and de-industrialisation of the west.

    Three examples of big economic reforms under the current government – NBN, carbon tax, mining tax.

    If a private monopoly owned all the roads in Australia imagine with all of the tolls how big a drag that would impose on the national economy. Should the NBN rollout proceed uninterrupted, and the infrastructure remains a public asset dedicated to selling low cost wholesale data to any and all private companies with equal favour, then as the foundation for Australia’s digital economy, it will ultimately be seen as a worthy reform indeed.

    The carbon tax will bring Australia to the renewables investment tipping point a lot sooner than would otherwise have happened, which will be a very transformative force in the economy. Whether Australian businesses seize the opportunity to innovate and improve their energy usage & environmental sustainability, or to whinge and price gouge is another question altogether.

    Finally, the mining tax is another big reform that is aimed at fixing Australia’s Dutch disease. Would have been much more effective under Rudd’s original plan, though. Can’t say he didn’t try!

  10. Jimmy

    Jeebus – Agree completely, you could also add on to those more social “reforms” (for want of a better word) like a disability insurance scheme and Paid parental leave.

    “Finally, the mining tax is another big reform that is aimed at fixing Australia’s Dutch disease. Would have been much more effective under Rudd’s original plan, though. Can’t say he didn’t try!” And saying it isn’t a worthwhile reform would come under the area Bernard himself recognised “economists demanding perfect policy had no right to complain about politicians lacking the will for reform.”

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