This post is one of the series of articles on the Australia in the Asian Century report.
Chapter five of Australia in the Asian Century looks at the domestic settings the nation needs to achieve the “2025 apirations” described in Chapter Four.
To do this lays out a number of national objectives to achieve Australia’s 2025 Aspirations which are at least ambitious. These include education, innovation, infrastructure, communications and tax.
Education
National objective 1: All Australians will have the opportunity to acquire the skills and education they need to participate fully in a strong economy and a fairer society.
Probably the most worthy of the report’s objectives is to improve the nation’s already good level of education. Unfortunately the detail in the report is lacking beyond rehashing existing programs.
These programs do cover important initiatives such as improving literacy rates amongst the disadvantaged which is essential if Australia is going to address its poor participation rates which are going to be one of the major domestic challenges for the country in the 21st Century.
At the other end of education though there is little more than empty words as the discussion of workforce training is rendered hollow by the decision to further cut back apprenticeship training and universities find their funding continually reduced making it less likely they can get into the world’s top rankings.
Most importantly, there is little space given to addressing Australia’s poor performance in the STEM – Science, Technology, Engineering and Mathematics – subjects.
Innovation
National objective 2: Australia will have an innovation system, in the top 10 globally, that supports excellence and dynamism in business with a creative problem-solving culture that enhances our evolving areas of strength and attracts top researchers, companies and global partnerships.
More fine words but this commitment to ‘innovation’ is again hollow when the Federal government cuts commercialisation incentives and export program.
Any talk of encouraging innovation is pointless anyway without reforming the nation’s tax system which currently favours asset speculation over building productive businesses and products – we’ll come to the tax impasse later.
Infrastructure
National objective 3. Australia will implement a systematic national framework for developing, financing and maintaining nationally significant infrastructure that will assist governments and the private sector to plan and prioritise infrastructure needs at least 20 years ahead.
This section is a sour sick joke which illustrates all that is wrong with Australian governments at all levels. Infrastructure planning for the next 20 years should largely be in place now and the fact it seen as being a national objective by the authors of this report
At best this section of the report reads like an ode to the corporatist ideologies of the 1980s and in fact illustrates exactly where Australia lost its way in the 1990s as the country’s business leaders realised that Asia was too hard when there were easy pickings in convincing gullible Liberal and Labor governments into selling assets cheaply and exploiting the resultant monopolies.
Communications infrastructure
National objective 4. Australia’s communications infrastructure and markets will be world leading and support the rapid exchange and spread of ideas and commerce in the Asian region.
This is a fine objective and may be achievable if the National Broadband Network is rolled out on time and isn’t affected by poor management decisions or gutted in an act of political bastardry by a future Liberal government.
Hopefully this is one are where actions will meet the the report’s words.
Taxation
National objective 5. Australia’s tax and transfer system will be efficient and fair, encouraging continued investment in the capital base and greater participation in the workforce, while delivering sustainable revenues to support economic growth by meeting public and social needs.
In 2007 the then Labor Prime Minister Kevin Rudd appointed Ken Henry to review the Australian tax system. That report was comprehensively ignored and the effects of the political bumbling around that lead to Rudd’s axing as Prime Minister and Gillard’s incompetent half-baked Mining Tax.
To have an efficient and fair tax system which encourages investors and workers should be a given. That it has to be spelt out, and then ignored, probably illustrates the greatest failure of Australia’s political and business leaders.
Australia’s current tax system is probably the economy’s greatest weakness as much of the resilience boasted of in the report is based around stimulating the housing market, the wealth effect in turn is reflected in the country’s affluence measures.
Reforming the Australian tax system to favour workers and investors over property speculators is going to require great strength by the politicians who attempt to do it and they’ll need the reform of business leaders and the financial media. None of these three groups have the courage or integrity to be trusted to carry this out in the next 15 years.
Reforming regulation
National objective 6. Australia will be among the most efficiently regulated places in the world, in the top five globally, reducing business costs by billions of dollars a year.
Possibly the greatest hubris in today’s Australia is about the efficiency of the nation’s regulators. In reality Australia is a country that’s quick to legislate but slow to regulate.
We’re very good at passing laws and regulations, not to mention building bureaucracies of thousands of memo writers to oversee these rules, but we aren’t very good at actually enforcing them.
Real reform in regulation is essential to a resilient Australian economy, but like taxation reform this is a complex and thankless task for any politician who attempts it.
Sustainability
National objective 7. The Australian economy and our environmental assets will be managed sustainably to ensure the wellbeing of future generations of Australians.
A worthy objective – unfortunately the ideological war that saving the Murray-Darling has become, the bitter argument over the carbon tax and Australia’s rejection of clean tech entrepreneurs makes one wonder exactly where the country can have a competitive advantage in this area.
One rare note of warning with this report identifies sustainability issues as affecting Australia’s ability to supply food to the growing Asian economies. This is a fair warning but its unlikely opportunistic politicians at all levels care too much to distract them from politicising discussion on the sustainability of various Australian communities and industries.
Sound economic policies
National objective 8. Australia’s macroeconomic and financial frameworks will remain among the world’s best through this period of change.
Approaching this section fills one with dread at the prospect with being served up with more hubris wrapped around Australian exceptionalism.
While the section doesn’t disappoint in this aspect, the writers have identified serious weaknesses in the funding structures and regulation in the capital markets. This probably reflects Ken Henry’s background in the Treasury.
The not unexpected emphasis on AAA credit ratings and the size of the Australian superannuation industry make one wonder why we bother with restrictive economic policies when we clearly have the capacity to fund productive national investment.
All the criticisms of the earlier parts of this chapter flow from this bizarre form of Australian Austerity that has crippled investment in education and infrastructure over the last thirty years and ditching that mentality could be the greatest reform of all.
Every objective objective in the chapter is worthy and true, but state and Federal government actions are acting directly in the opposite direction to the stated intentions of the chapter. The introduction says;
We have made substantial reforms and investments across the five pillars of productivity—skills and education, innovation, infrastructure, tax reform and regulatory reform—and these efforts will continue.
This is not true – in almost every single one of these areas, Australia has been at best treading water. Just in the weeks before this report was released the Federal government’s mini-budget further cut innovation incentives.
The New South Wales government announced in the week the report was released that it would de-skill the state’s workforce even further by following the TAFE “reforms” introduced by Victoria and Queensland which have seen industry training reduced to churing out pointless barista and nail grooming certificates.
At the same time, the regulation “reforms” introduced by successive Liberal and Labor governments at state and Federal levels have followed the 1980s ideologies of gifting assets to ticket clipping managerial and banking classes. Nowhere is this more apparent in the debacle of Australia’s soaring power bills which are becoming a real competitive disadvantage to the nation.
Infrastructure is probably the biggest failure of successive governments, the same corporatist ideologies of the Liberal and Labor Parties of the last 30 years have prevented the construction of infrastructure beyond toll roads which favour the same ticket clipping bankers.
Much of Australia’s core transport infrastructure such as power companies, railways and ports have been sold off to the ticket clippers who have in turn “sweated” these assets by charging monopoly prices while spending the bare minimum to keep them running.
At present Australia has a resilient and productive economy, as did Ireland and Spain before the economic winds turned against them. It’s hard not to think that if a similar report had been written in Madrid or Dublin five years ago the same chapter would have read much the same as Australia’s today.
The big challenge will come for Australia when China, India, South Korea or Japan hit a tough spot.
Even with the rose glass projections of the previous three chapters of Australia in the Asian Century, it’s at least reassuring there are a few notes of warning in this section of the report.
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