Australia has had one big idea in the last 35 years. It has provided the foundation of our modern prosperity. The creation of an open, competitive economy has enabled 23 years of recession-free economic growth, proceeds from which have been harnessed to alleviate poverty and offer greater opportunity to disadvantaged Australians.
The outlook for Australia at the end of the mining boom with an ageing population is for slower growth and rising debt, leaving fewer proceeds for spreading opportunity to all and preserving the environment. We need new ideas. And we need a culture that nurtures new ideas instead of consigning them to the conflict zone of political partisanship.
Over the last four decades 80 per cent of Australia’s prosperity has been achieved through productivity growth. Commodity booms, population growth and increased participation in the workforce, mainly by women, account for the rest.
In turn, most of Australia’s productivity growth has been generated by the creation of Australia’s open, competitive economy beginning in 1983. But already having opened the door to competition, we cannot open it again. We can keep it open, resisting demands from vested interests that they be protected from competition. And we can push the door wider. That would involve removing protections for the likes of pharmacies, multinational book publishers, taxis and airport monopolies, which would be valuable to consumers but make only a small difference to the overall productivity growth rate.
Here are five ideas that could make a material difference to Australia's future living standards.
Idea 1: A very fast train. Widening roads and digging tunnels will not fix Sydney’s traffic congestion as its population continues to climb. Expansion of other urban centres, less physically constrained but linked to Sydney, could cut travel times, lifting labour productivity and improving lifestyles. Planners should initially concentrate on fast Canberra-Sydney, Nowra-Sydney and possibly Newcastle-Sydney rail links.
Idea 2: Lift the asylum seeker intake. Australia’s skilled migration program seeks to plunder the highly trained talent from poorer countries, saving tertiary education costs at their expense. Yet asylum seekers sitting in refugee camps in countries of first asylum are typically young, want a better life for their children and are willing to work hard to ensure they receive a quality education. Why not reallocate for asylum seekers say, 20,000 places of the existing 130,000 places in the skilled migration program, and add a further 20,000 asylum seeker places to the overall immigration intake? This would boost the annual humanitarian program from 13,750 places to 53,750 places.
Idea 3: Double teachers’ salaries: Top teachers should be paid double their present salaries to boost the quality of Australia’s schooling system. As proposed by former President of the Business Council of Australia, Michael Chaney, the best senior teachers should be paid around $140,000 a year enabling the profession to attract and retain the best teachers.
Idea 4: Increase land tax: State governments are desperately seeking new revenue sources to pay for rising health costs. As floated by the South Australian government, states could increase land tax, which is efficient and progressive, then use some of the proceeds to abolish stamp duty on insurance and possibly also on conveyancing, which are inefficient taxes. Additional net revenue would be hypothecated to hospitals, increasing the public acceptability of the reform.
Idea 5: Accommodate disruptive technologies: Fears are held that prospects for productivity growth in the developed world have dimmed, owing to the absence of major, new, breakthrough technologies. Just as Australia embraced competition in the final two decades of last century, it will need to embrace new, disruptive technologies such as Uber, 3-D printing and decentralised solar technologies in the 21st century. Owners and users of pre-existing technologies typically lose from disruptive technologies and will lobby governments to keep them out, pressures which governments should resist.
Some people will disagree with these five ideas. Others will have different ideas. But let a contest of ideas proceed instead of the sloganeering that is destroying our nation’s capacity to think big again as we have done so well in the past.
Craig Emerson, Managing Director of Craig Emerson Economics, is Adjunct Professor at Victoria University’s School of Business.