Jay Weatherill urges no progress in scare campaigns

History tells us that the Australian people accept the need for difficult economic reforms only during a crisis. Our richest period of reform – from 1983 to the mid-1990s – followed a recession during which both unemployment and inflation topped 10 per cent. Reforms were spurred on by a 1986 collapse in commodity export prices that led to a balance of payments crisis. Hawke and Keating explained the economic problem and the Australian people responded. Contrast that period to today, when there is no agreement on the need for reform and the people are left to bathe in the afterglow of a fading mining boom. Yet a bold experiment is taking place in one state that points to the direction the rest of the nation should follow.

South Australia’s premier, Jay Wetherill, is arguing for reform, not in the midst of a crisis but certain that without policy change a crisis is on the way. He even knows the date of its arrival. It is 2017, when the auto assembly industry in South Australia will close, shedding thousands of jobs.

Weatherill and his government have two choices: do nothing, wait for the inevitable crisis and get voted out at the next election; or be candid with the people and develop a post-auto reform program to give the state an economic future. Maybe his government will be rewarded for thinking of the people ahead of saving their own jobs.

In this experiment in pre-crisis reform, Weatherill has announced replacing inefficient stamp duties with efficient and equitable land tax, support for an increase in the GST and a serious inquiry into a nuclear future for the state, including the possibility of storing the world’s nuclear waste. Whether you agree with these proposals isn't the point: Weatherill should at least be applauded for having a go.

Contrast the real-time South Australian experiment the rest of the nation. Labor announced reform of superannuation taxation at the top end; within an hour the government opposed it. The government mentioned the possibility of increases in the GST; Labor opposed it. Labor announced it would review negative gearing; the government opposed it. The government released a tax discussion paper that said every option was on the table; the government quickly opposed its own document, ruling out almost every option. Labor announced an interest in a comprehensive review of retirement incomes policy; the government opposed it, pledging that no such a review will ever take place under its stewardship.

As in the South Australian control experiment, not all these ideas should necessarily get up, but political parties opposing them outright and preparing scare campaigns against their rivals is an abrogation of their responsibility to the nation.

Politicians would not be the main victims of an economic crisis caused by the Australian economy being poorly equipped to cope with a global meltdown. Rather, young people denied the opportunity of rewarding work would become alienated, as they did in the race riots of Britain. Older workers would suffer the indignity of losing their jobs, never to be re-hired. The underprivileged, and the homeless would fall through the holes torn in the social safety net.

There is a better way: implement reform to build resilience to deal with global economic shocks. In the current toxic political environment that better way is unlikely to come from Canberra. That’s why civil society, business organisations and trade unions have agreed to take the lead in a National Reform Summit next week. Its purpose is not to condemn the political process but to support it. If representatives of a large section of the community can agree on the essential features of a national program of economic and social reform it will be easier for a reform-minded political party to develop and announce its own reform program and harder for its rival to oppose it.

The major organisations participating in the National Reform Summit agree that vested interests should not be allowed to override the national interest. Next Wednesday’s meeting can be a start to recapturing the reform zeal of the 1980s that led to almost a quarter century of growth and prosperity.

Craig Emerson is a convenor of the National Reform Summit and is an adjunct professor at Victoria University’s College of Business.

Source: http://www.afr.com/opinion/columns/jay-wea...