While the comparisons with Bob Hawke and the economic and tax summits of the 1980s are doubtless welcome to Prime Minister Anthony Albanese, the jobs and skills summit set for six weeks from now will be very different from that of 1983, when Hawke sought to give substance to his commitment to consensus politics.
That summit was at a time of genuine crisis. The economy was only just emerging from a savage recession under Malcolm Fraser and John Howard, brought on by the second oil shock in a decade. Unemployment had hit 10%. If you think inflation’s bad now, it was 10% too.
The economy was shuttered, our manufacturing sector protected by tariffs that forced consumers to pay extraordinary amounts for basic goods like clothing. Female participation was just 44%. Industrial disputes were 20 and 30 times higher than now. Australia had a persistent current account deficit and was a massive importer of capital.
But that also meant there was much low-hanging fruit in terms of reform. Opening the economy — floating the dollar, allowing foreign banks, reducing protection — would jolt Australian business out of its complacency and enable investment to flow to more dynamic parts of the economy. Convincing unions to accept smaller wage claims in exchange for “social wage” reforms would curb inflation in a centralised wage-fixing system with heavy unionisation. Ending blatant discrimination against women and curbing rampant sexual abuse in the workplace helped lift female participation. Repairing a broken tax system would fix big distortions and rorts and help lower the personal income tax burden.
The difficult challenges were primarily political rather than policy — challenges Hawke was uniquely well placed to deal with, aided by a brilliant proselytiser of reform in Paul Keating.
The low-hanging fruit is now gone and the problems are far more complex. We don’t have enough workers. While we have a spike in inflation courtesy of another energy shock and supply chain issues, our longer-term problem has been very low inflation. And we need wages growth to be higher, not lower. We’re running a current account surplus, and we’re an exporter of capital courtesy of our massive multitrillion-dollar superannuation system which simply did not exist in 1983 (and which now means all of us have a big stake in the successful operation of a deregulated market economy).
And to confirm the bizarro nature of this year’s summit, we’re now trying to bolster manufacturing. Both sides of politics, but especially union-dominated Labor, are insistent that we need to prop up manufacturing, which employed about 18% of the workforce in the early 1980s and now accounts for about 8%. Despite not having enough workers for the services sector of the economy — the great success story of the past 40 years — the government wants to increase manufacturing jobs.
Unexplained is where these jobs will come from: the government should explain which sector must shrink in order for us to reinflate manufacturing. Do we cut health and care workers? We can’t do that. Education? Construction? Retail? Professional services? At least when the NSW government says it wants to expand its health and caring workforce, it actually provides funding for training so it can build the workforce.
Instead of traditional “economic reform” of the Hawke years, our big reform challenge now is the transition to renewables. The government at least is talking about making a virtue of the transition, and seeking to expand Australia’s export and value-adding capacity in that area. As the Grattan Institute recently showed, there are sensible ways to pursue that (including by ceasing to subsidise fossil fuel industries).
But the environment in which the summit will be held is very different from 40 years ago, too. We’re a more fragmented society. Far more of us do not vote for major political parties or identify as Liberal or Labor voters. We’re a far more unequal society. Far fewer of us are union members. Our media ecosystem has changed from a relatively uniform and tightly regulated analog one to a severely fragmented user-controlled one.
Above all we’re a society that is far less communitarian and far more individualistic in its outlook, courtesy of more than three decades of Australians being told they have to fend for themselves in a global economy, and decades of Australian governments shedding, forgetting and selling off their capacity to get things done.
Perhaps, as in 1983, fundamental change starts with a summit. More likely it will confirm business as usual.
Doesn’t the current situation show that we can’t entirely rely on overseas supplies for goods?
And we can’t all work in services.
And not all services are necessary, some being middle level “ticket clippers”, as Bernard would say.
Middle level ticket clippers. Good one. I’ll have to use that in my meetings with management.
One thing it will do is bring the big Australia shills out in full voice. The BCA, on the back of that lunatic piece from the Financial Review advocating for an Australian population of 75 million(!), will demand de facto open borders to address a “skills shortage”.
One in which the average immigrant worker is paid around 30% than the median wage.
And the MSM, eternally conflicted as they are through their ties to the property industry, will be cheering them on.
Watch in awe as the government acquiesces to their demands.
And where will the new arrivals live? Who cares?
That’s the big Australia brigade for you: hoover up the profits, let others clean up the mess.
Oh and enjoy that two hour commute while you’re at it.
Best comment of all time I think?! Can u point to me which edition of the Fin Review please? We can barely manage with the 25 or so million we have now.
It is time Labor and others, I’m in, took a big stick to the Fin Review and the BCA – the ones that advocated for WorkChoices.
The BCA’s idea of planning is 100 storey apartment blocks wall to wall, station to station, highway to highway, ocean to mountains.
Reform of the lopsided tax system would repair much of the damage, as well as pay for zero CO2.
Thanks for all the cynicism Bernard, not! If we are going to change direction, and we simply must, we have to start somewhere. And na attempt to get some consensus on how to do that can do no harm. In fact, at the barest minimum it will expose the self-interested greed of big business for all to see. And that may provide the impetus to tax the thieves and eliminate clearly counter-productive subsidies to the fossil fuel industry that must urgently wither. And as Grattan and before that Ross Garnaut, have pointed out, piling into renewables, storage, hydrogen and R&D is the way to re-industrialise Australia, who know, perhaps by companies owned by Australians.
Re “…the self-interested greed of big business for all to see” was perfectly displayed today by the Victorian Health Minister Thomas who took the mask mandate advice from health experts over that of commercial interests.
Just joking.
“I made a decision based on the advice that I had received that further mandating masks was not the most effective way to get the message out about the importance of mask wearing,” Ms Thomas said that advice from big bu$ine$$ was that it will do more ensure the health of the population.
Cynics will be running short of bridges to sell.
Well I hope these summits end better than those of the 1980s and 1990s with their Accords. All that did was enshrine real wage cuts. Workers and unions were told to suck it for over a decade and accept wage rises well behind inflation. Between 1983 and 1991, real wages decreased by 10%. Fact. This is an ignominious comparison. This was unnecessary too when what were really needed were financial reforms.
Businesses were too lazy then and they are too lazy now. None of them showed initiative. This has continued. Have a drive all around our capital cities in all the good suburbs (in my opinion all of them are good) and you will see where all the profits go. To 1,2 3 or more storey houses on our land with views of the water – harbourside, riverside or ocean. Our businesses are just run down. Have a drive at 5 or 6.00 pm around the suburbs. You will see small, horrible mechanic shops still open. You will see ugly, tacky, poorly built, glass fronted commercial buildings selling all sorts of cheap wares or providing all manner of services people don’t really need. This is economics 101 people.