Tuesday, 20 September 2011

Australia needs an integrated and coherent economic plan

Just because your party is ahead in the polls there is no reason to sit back and miss opportunities to strengthen your position.

One of those moments will arise soon when Arthur Sinodinos becomes a Senator for NSW. Arthur has a good mix of high-level intelligence and good judgement. He has had great experience at the centre of government so he knows how policies interact. The Coalition has lots of talent but Arthur would be ideal on the front bench in a coordinating role on economic policy. Anything less would be a lost opportunity.

Coordinated policy is much easier to sell and shows that you know what you are doing. So whatever your economic policy initiative, it is a good idea to demonstrate that your policies altogether add up to a coherent plan for managing the Australian economy.

The best example of an integrated policy in federal politics is Fightback! which was launched in November 1991. It stands as the biggest, most influential and the most comprehensive policy document ever released by an Australian political party. It included tax cuts, a new tax (the GST), the abolition of the wholesale sales tax, big cuts to government spending, a policy to abolish industry protection, industrial relations reform and numerous other policies.

Most importantly it demonstrated how all its policies were connected so that the whole package was much more powerful. It meant that policies reinforced each other; parts of the package that were difficult were counter balanced with others that provided substantial benefits. The critics said it was the longest suicide note in Australia's history, but it received a tumultuous reaction from the Australian public. Polling showed that the public responded well to a fair dinkum plan to deal with the recession engineered by the Labor government and described by prime minister Keating as the recession "we had to have".

I will be at the Press Club today with Professor Judith Sloan and John Lloyd to talk about Australia's labour market and economics. Our topic is labour market reform so we are not presenting a broad plan. However both political parties should be working on reforms to the Fair Work Act (FWA) as part of a broader, integrated plan to make the most of our good fortune with the resources sector and at the same time taking out an insurance policy in case the economy is badly buffeted by an economic downturn in the international economy.

Our objective today is simple; to encourage community support for improving the way we manage Australia's greatest asset, our people. To achieve that objective the public need to first understand that there are problems with the FWA. If they don't see the problems they will not support the changes.

Of course the issue includes ensuring that people are treated fairly and that the disadvantaged are not exploited and get a fair deal. This used to be a job for unions, but, as shown by the ongoing scandal in the HSU, many unionists are far more interested in getting themselves into parliament or feathering their own nest.

The main issue for most Australians is that the system gives them a satisfying job, a job that helps them live the life they want to have and an income to meet their needs and hopes. A job well done in a cooperative, close-working relationship between management and employees can generate more productive work practices, provide more income for workers and enhance the capacity of Australian businesses to compete locally and internationally.

As a supplier to the international economy we have no choice but to be free trade, but also we have the confidence in knowing that we can compete internationally by keeping costs down in Australia. So we don't want the carbon tax and we should abolish payroll tax and generally reduce as many other government-imposed costs as possible. Lowering tariffs has reduced costs for our businesses. And unit costs of production can be lower through higher productivity generated by a better labour market. So workplace relations policy links to policy on protection.

The Coalition was never purist on free trade. A little bit of give and take with our Coalition partners, empathy for those facing dumping activity and workers worried about their jobs need to be considered. However, at times a line needs to be drawn. Ultimately neither the Government nor the Coalition can afford to creep so far from free trade principles that an acquiescence of protectionism becomes a de facto position.

Despite all the barriers and cheats that Australia faces around the world in our efforts to compete we are free traders because it is in our own interest. Protectionism worsened during the Great Depression and the world's economy paid the price. The world would be a poorer place if protectionism was to return to plague international commerce and Australia would suffer. Today I detect a certain ambiguity about protectionism in the body politic, but not so much as to warrant any real reason for concern. However, adherence to an integrated and coherent plan would make it easier to achieve a little less ambiguity on protection and easier to find the necessary resolve to fix problems like the FWA.

No comments:

Post a Comment