Prime Minister Malcolm Turnbull today issued another rousing call to arms to face the challenges for the Australian economy, with a focus on rapid technological change and the need to be an agile nation. It was all about reform.
In a speech in Melbourne today, repeating his oft-quoted lines about it being an exciting time to be Australian, and the tech buzzwords that even two months in have become a hallmark of the prime ministership, Turnbull said an open discussion on reform, where things are no longer ruled in and ruled out, will be beneficial to Australia:
“Across government, business, the labour movement, the wider community, we need to have a grown-up discussion which first clarifies the policy goals, and then identifies and removes any obstacles that may be hampering our capacity to generate growth, productivity, investment and jobs. We need to work practically and in partnership to anticipate economic opportunities as they emerge and be brave enough and smart enough to make the most of them. If a particular policy approach doesn’t deliver as required or anticipated, we have to be ready to reappraise it, reset, as and when needed, to objectives can still be met. If a policy doesn’t work, chuck it out.”
Australia needs to be a culture that embraces change, he says. He cited the relative youth of companies like Facebook, Airbnb and Uber, which the Prime Minister said are changing the world. And as he and his advisers were no doubt finalising his speaking notes, his continuing and central point about the rapidity of change was underlined in the US where a third-quarter earnings release from Facebook revealed something staggering: that its daily active users averaged more than 1 billion every day of the quarter. And most of them, 984 million, were using Facebook’s core service on a mobile device. The billion-user figure had been touch towards the end of the second quarter, but the growth continued into the September quarter.
That is changing the media and market landscape around the world, undermining existing legacy print and TV businesses and sparking a wide range of new businesses — something Reserve Bank governor Glenn Stevens nicely pointed out in his speech to the same conference this morning about where the new jobs in the economy will come from:
“[G]ains will come from doing completely new things — the provision of new products to meet people’s changing desires and needs. These will also, in time, be sources of major employment opportunities. The answer to the question ‘where will the jobs come from?’ is usually: from lots of places we haven’t thought of yet.
“Many of the jobs in the economy today are in activities that few predicted 25 years ago. Few would have foreseen the vast growth in employment in a range of industries that provide services to both households and businesses. For example, employment associated with computer system design and related services has quadrupled as a share of total employment over the past 25 years. Few would have anticipated the rapid rise in employment related to social media, cloud computing and the creation of apps or other services related to environmental sustainability, to take just a few examples. It will also surely be the case in the future that jobs will come from unexpected places and new occupations will continue to emerge.”
Those points are ignored in the sort of debate the Prime Minister is promoting (sometimes it seems as though he is sees himself as a pioneer in this area of debate, but as Stevens said in his speech, a lot of new jobs and industries have appeared in the past 25 years that no one predicted).
And while Turnbull’s comments about how change is changing the economy and Australian society, (Facebook was just a promising new product back when he was opposition leader in 2009) are designed to gee us up to accept that change and to become a more agile society, Stevens made the same point, but in another way to the conference. In fact the governor made it clear he thought the economy and Australians were pretty agile already, though further changes are needed:
“The questions then are whether Australian businesses and their workforces have, or can, acquire the necessary capabilities to offer those services and perform those jobs; whether the incentives they face to do so are adequate; whether the public policy framework appropriately encourages risk-taking and entrepreneurship; and so on … Gains in productivity come in part from improvements to the way we do the things we currently do, in part from stopping doing things we are not very good at and doing more of things we are good at. It’s understandable that this is often seen as a threatening notion and it is certainly disruptive when adjustment has to happen in a short period. It is unrealistic, though, to think the pressure to adjust will simply go away.”
But Stevens had some pretty canny advice for Turnbull, Treasurer Scott Morrison and other proponents of change:
“No doubt various aspects of ‘reform’ are needed to ensure the answers to such questions are in the affirmative. As on other occasions when ‘reform’ has been discussed of late, my suggestion would be that such reforms are most likely to succeed — that is, to be implemented in a durable fashion — when the conversation is framed within a narrative about growth.”
And finally, Stevens showed Turnbull and the government how to reframe the debate by ignoring the worrywarts and others in the commentariat who have waffled on for ages about the weak state of the economy and how more rate cuts are needed.
“We are probably roughly halfway through the decline in resources sector capital spending now; the headwinds from that source are about as intense now as they are likely to get. We are still growing. It would be good if the growth was a bit stronger, but nonetheless over the past year the non-mining side of the economy has generated respectable growth in employment. The ‘rebalancing’ is occurring. It isn’t as seamless as it would be in an ideal world, but we don’t live in such a world.”
In debates about tax, fairness, change, agility, we have to remember that it is not an “ideal world”, but one that will require accommodation and compromise, and some pursuit of principle to achieve change for the national good, not solely for the good of specific groups, such as business, welfare recipients or high wage earners. That is also a message the federal opposition and other groups in the emerging and linked debates about an open, agile economy and the tax system, need to take on board.