Unionists, business folk, community advocates, lobbyists and rent-seekers, a nation awaits your wisdom. Mark Sawyer looks at some of the challenges facing the summiteers.
The nation sat agog, waiting for the verdict. But enough about Chris Dawson’s murder of his first wife. Australians are waiting, breathless, to see what course will be steered by our overlords in government and business over the next three years.
The Jobs and Skills Summit wrapped up its first day in Canberra on Thursday. The famous Hawke-Keating economic summit of 1983 lasted four days. The 143 summiteers will get this one done and dusted in two. We are living faster lives.
What will be the biggest lessons, apart from Anthony Albanese’s desire to be the new Bob Hawke? (On Thursday Albanese spoke of ”common ground”. With Hawke it was ”consensus”. You say potato …).
Will the Better Off Overall Test get the boot? It is looking set to get up, albeit with no detail yet to bedevil. And what about the Opposition? David Littleproud is there, representing the junior Coalition partner, the Nationals. But Peter Dutton is a notable absentee. He has already offered his salvation for the economy: fruit picking for pensioners.
The roadblocks
There is something gummying up the economy. Wages are flat. The unions say it’s because of enterprise bargaining. The ACTU advocates a return to industry-wide bargaining. This was whittled away by the Hawke, Keating and Howard governments. Business agrees with the unions that the system is too complex, but business warns against radical changes. to enterprise bargaining.
Inflation is rampant. Rents have skyrocketed, even as statistics emerged on Thursday that house prices had experienced their biggest monthly decline since 1983. There was a lot more going on that year than Michael Jackson’s Thriller and Molly Meldrum’s Flashdance contest. The decline in house prices, as estimated by CoreLogic, was 1.6%.
Australia is lagging the world on transitions in so many areas. A decarbonised economy is only the first. We are lagging on the transition to digital technology, particularly AI (artificial intelligence).
Perhaps the worst aspect of our national economic report card is that more than one in eight adults and more than one in six children are living in poverty.
In 1983 there was only one woman at the summit. Women’s place in the economy is now centre stage. The pay gap (cited as 14% to 17%) remains stubbornly high. And the stage three tax cuts scheduled for 2023 are predicted to overwhelmingly favour males. The Albanese government will come under increasing pressure to cancel the cuts and keep that $243 billion. There is time, they are not to be phased in until 2024.
Economists speak of a lack of dynamism in the economy. The big players have not changed in decades. We sell planet-killing fossil fuels to the world to keep up our living standards. Productivity is slowing.
There is mobility in the economy. A tenth of Australians have changed jobs in the past year, two-thirds into similar fields but another third into something completely different. Healthcare and social assistance lost the most, and teaching gained the least. But if your house was wiped away in one of the climate disasters, there may be nobody able to build you another one. There are skills shortages everywhere we look – in education, in medicine and aged care, in teaching, in trades, in tour guides, baristas and kitchen hands. Education standards are stagnant.
The road ahead
Perhaps the most cogent summary of the situation comes from the progressive think tank, the Grattan Institute. Its CEO, Danielle Wood, made a keynote address to the summit outlining the good, the bad and the road ahead. Her analysis tactfully puts the blame for the roadblocks on nine years of Coalition rule.
The good news is that unemployment has a 3 in front of it. Before Covid, a jobless person took a year on average to get a job, now it’s three months. There has been 80 years of extraordinary growth in the standard of living: amazing advances in technology, health, infant mortality, life expectancy and income.
The bad news is that real wages stagnated for a decade. The cost of living is through the roof, with inflation at levels not seen since the GST was introduced in 2000, and barring that one-off, not seen since the 1980s.
“Grattan Institute analysis suggests at least one-third of the slowdown in wage growth in Australia since 2013 occurred because of tepid macroeconomic conditions,” says Wood. ”But my central point remains: strong macroeconomic conditions and a strong labour market will, over time, translate to higher pay for all workers.”
The good news is that lower wage earners and less wealthy have most to gain in this tight job market. But unlike most of the summit delegates, those workers won’t get the average $9000 return in the Stage 3 tax cuts.
Has biz done its bit?
”The animal spirits of business appeared to be largely in hibernation,” says Wood. ”Profits were high and interest rates were low, yet investment was weak, rates of new firm entry and entrepreneurship declined, and so did rates of firm exit.
There has been a lost decade of productivity, although world growth has been flatlining since the global financial crisis (GFC). Between 1970 and 2020, Australia’s labour productivity ranking fell 10 places, from sixth in the OECD to 16th.
”Grattan Institute work shows that among the 20 per cent of Australia’s most profitable firms in 2015, almost one third were also among the most profitable a decade previously,” said Wood. ”And recent research by Australia’s Competition Minister Andrew Leigh shows that turnover in the group of market leaders across Australian industries has slowed.
”Making sure that Australia’s competition laws are fit for purpose is part of the response,” said Wood. ”Healthy competition is not just about lower prices, but the relentless quest to innovate to deliver new and better products and services.”
Rent-seeking and cream-skimming
The practice known as rent-seeking has been a facet of Australia’s economy since the Gold Rush. It lives on, indeed thrives, today.
‘’Cream skimming,” as Wood puts it, is bad for productivity. The biggest skimmers are mining, property and gambling.
Grattan Institute’s 2018 report, Who’s in the Room, suggests this concern is real for Australia. Heavily regulated sectors such as mining, property and construction, and gambling are characterised by remarkably high levels of political donations and lobbying compared to their relative economic contribution.
The caring economy
The need to give women more opportunities to enter or return to the workforce means that childcare places is high on the agenda. Victorian Premier Daniel Andrews cites the stats and costs of locking so many women out of the economy for lack of childcare. Andrews has led calls to accelerate the program scheduled for July 2023 that will cover 90% of childcare costs for the first child of a couple earning up to $80,000 a year. Some sort of subsidy will be eligible for families on up to $530,000 a year.
”Fifty-eight per cent of early childhood workers are paid award wages, which can be as low as $22 an hour,” says Wood. ”You can certainly understand why an early childhood educator might decide to step away from their important but complex and emotionally-taxing work to take up a higher-paid position at Bunnings or working the drive-through at McDonalds.”
It’s a complex issue. Leaving aside the arguments about middle-class welfare (and the almost taboo questioning of the benefits of young children spending more and more time in the care of strangers), the question remains unanswered: where will the extra carers come from? There are not enough people in training now, and many suburbs and towns have become ”childcare deserts”. Defined as districts with fewer than 0.33 places per child, these ”deserts” are home to one-third of Australians.
Then there’s the crisis in aged care, a similar but different beast. The $1 trillion debt will have the last word on the improvements to childcare – and anything proposed at the summit.
And so on to Day Two.
Mark Sawyer is a journalist with extensive experience in print and digital media in Sydney, Melbourne and rural Australia.