With the political cycle having lately taken a (pleasing) turn toward policy, Business Council chief Tony Shepherd yesterday joined in with a major speech outlining the council’s forthcoming economic vision for Australia. As a speech, it was long on rhetoric — yes, entrepreneurship and innovation are great things, Tony. It was also studiously non-partisan, with Shepherd by and large seeming to blame the whole political class for a lack of vision.
You can take issue with or choose to like individual items on Shepherd’s wish list, in accordance with your preferences. He predictably insists Australia’s labour productivity is “still poor” and we need IR deregulation to fix it, despite productivity constantly growing for over a year under the Fair Work Act, while it fell significantly under WorkChoices. He wants nuclear power to be in the energy policy mix, not “excluded on ideological grounds”, which seems to forget that for Australia nuclear power is excluded on simple maths — it’s hideously expensive, compared even with renewables. Or you can wonder what level of government intervention in business Shepherd wants in order to achieve his laudable goal of 50% of board positions filled by women.
But more important is Shepherd’s essential logic, which ignores that Australia has performed very well in the past five years, let alone in the past 20 or so years. Shepherd said:
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“The next six months in Australia will be critical … Perhaps the greatest risk is that we continue to wind back hard-won reforms that will be even harder to win back a second time around … These things will go a long way in determining the choices Australians will have over the next 20 years … We want to show there is another way — by presenting a vision and a plan that looks well beyond the next six months to the next decade, and the decade beyond.”
Shepherd doesn’t identify the “hard-won reforms” that are currently being wound back, but presumably he means WorkChoices (he’s so careful to avoid any sort of partisanship, it’s hard to know). The only “crucial” thing happening in the next six months is the September 14 federal election. It hardly strengthens Shepherd’s case that he refuses to offer any commentary on the specific policies and records of the parties.
Contrary to the impression created by Shepherd in his “edge of destruction”-style comments is that, even if it was frequently contrary to the demands of the Business Council, we have muddled through economically to the point where we’re one of the world’s strongest economies. Under the John Howard government, we survived the Asian financial crisis (which was going to hurt Australia — indeed, Peter Costello used the Asian crisis to improve Australia’s global economic standing) and the tech wreck, and under Labor we survived the biggest crisis of all in the past 50 years, the GFC.
Moreover, the BCA ignores the inconvenient fact that many of its members were bailed out or survived because of good policy action and management by the federal government, the Reserve Bank, Australian Prudential Regulation Authority and state governments. In particular, Labor’s stimulus spending during the financial crisis helped the country avoid the sharp and continuing increase in unemployment that we saw in the recession of the early 1990s. In turn it allowed many BCA members to grow and expand their market positions (the banks) and to keep paying huge salaries to management and boards and dividends to shareholders.
And once the financial crisis was over, decision-makers responded by withdrawing fiscal stimulus, paving the way for Australia to secure its triple-A credit rating — something Shepherd entirely ignores when he demands “we have to pull out all stops to maintain Australia’s high credit ratings, including our sovereign credit rating”. And remember the business class, led by senior members of the Business Council and their supporters in the media, have regularly warned of the “sovereign risk” from the resource and carbon taxes and industrial relations — but that was as far from the truth as possible, as Australia’s growth and credit standing have been maintained (or lifted) since July 1 last year.
In short, even when items of Shepherd’s wishlist are fulfilled, he’s not prepared to give politicians any credit. In fact, Shepherd goes further and wants “political leaders who are prepared to lose their jobs to get things done”.
Well, what about Prime Minister Julia Gillard and Treasurer Wayne Swan, Tony? They’ve delivered your triple-A credit rating, low inflation, low unemployment, low government debt, an increase in compulsory super to further expand the already massive pool of investment your members rely on, and a market-based mechanism for reducing carbon emissions, which the BCA supports. And they’re going to lose their jobs on September 14. Swan might even lose his seat.
Sure, they’re not Hawke-Keating redux, but they’ve managed a complex set of economic challenges with some good calls, the occasional bit of luck and support from a faster-moving, more tuned-in central bank. And the result will be six years of growth and low unemployment — something Bob Hawke and Paul Keating never delivered.
Shepherd seems to live in a fantasy world in which kamikaze politicians are prepared to do whatever it takes to implement the Business Council’s agenda, regardless of the wishes of the electorate. Shepherd even suggested we extend parliamentary terms to four years to give gun-shy politicians more space away from the voters to deliver his agenda.
This isn’t to complain about the imbalance implicit in Shepherd’s even-handedness. It’s unreasonable to expect the Coalition-aligned BCA to give Labor much credit. The problem lies in the serious point Shepherd raises: how do we encourage politicians to make the right economic calls rather than doing what is politically most advantageous?
If politicians are given no credit when they do make the tough calls, it’s rich to complain about their unwillingness to embrace reform. When Labor goes into opposition, what lessons will its leaders take from their time in government? That being a cynical, negative and populist opposition is the most effective way to return to power, that there’s no political benefit from being fiscally disciplined, because even critics who complain that you’re profligate attack savings proposals, and that there’s no reward for being brave in policy.
And it would be good if Tony Shepherd and his members applied the same test to themselves when they report weak or poor results, fail in a business strategy, overspend, or simply get paid too much for the results produced. Let’s see some business executives prepared to lose their jobs if they don’t get things done. Indeed, we’d be happy merely with business executives who don’t get handsomely rewarded even when they preside over a debacle.
But then again, as Shepherd would be quick to point out, business leaders aren’t accountable in the same way as politicians. Indeed. Business is different from politics. The latter should be about the national interest. And Shepherd forgets that the national interest is not the same as the interests of business. Like government, business is a means to an end of maximising the community’s welfare. What’s good for business isn’t always good for the rest of us.