Op-ed: We have a once-in-a-generation chance to reset our economy
The Australian Financial Review, Andrew Charlton, 9 June 2020
Even before the COVID-19 crisis, the engine of our economy was getting rusty. On almost every objective measure – business start-ups, innovation, R&D, worker mobility – our economic vitality was waning.
Successive governments have launched attempts to address our economic challenges, but each time, the debate quickly became bogged down in partisanship. Each time, the reform agenda stalled.
The aftermath of COVID-19 has created a new motivation for reform as well as a new mindset of co-operation. This is a once-in-a-generation chance to set Australia up and pragmatically create the foundations of growth that will take us to the next decade.
There will be many different perspectives on Australia’s economic problems, but any list should include the following 10 areas where we need to do better.
- Falling investment: Private business investment is at the lowest point in two decades as a percentage of GDP.
- Low business creation: New business entries have fallen nearly 30 per cent over the past two decades.
- Weak labour productivity: Labour productivity growth in the market sector is 80 per cent below the long-term trend. This is a major drag on wages growth.
- Growth constraints in the tax system: Australia has many state taxes (for example, payroll taxes and stamp duties) which create a welfare loss of 40 cents or more for every dollar raised.
- Falling behind on digital: Australia’s ICT sector is about half the size of global peers as a share of GDP. Our listed tech sector is four times smaller than that of the US, as a share of the total stock market.
- Low worker mobility: Workers are moving jobs 25 per cent less frequently than they were 20 years ago, limiting wages and productivity growth.
- Gridlocked cities: The avoidable costs of urban congestion are about $20 billion.
- Lack of skills for the future: Even before the crisis, nearly one in three young people in the labour force were either unemployed or underemployed, even though businesses were crying out for skilled workers.
- Complex IR system: Partisanship has slowed progress in modernising our industrial relations system and prevented us from delivering labour productivity growth and fairly sharing its benefits.
- Energy and climate policy uncertainty: 15 years of policy inertia on climate change has left us with slowing energy investment and rising costs.
This article was published on The Australian Financial Review on 9 June. Read it here.