This week’s successful National Reform Summit made vested interest politics harder and national interest politics easier. How the parliamentarians in Canberra choose to respond to this opportunity is a matter for them, but the summit’s triumph of the national interest over vested interests was its single greatest achievement.
For years, vested interests lobbying for government preferment and against any reform that might adversely affect their members have been able to dominate policy-making in Canberra. They have successfully thwarted tax reform, carbon pricing, the introduction of competitive disciplines into cosseted industries and reforms to ensure the retirement income system is sustainable. Sectional interests have offered seemingly independent support for and validation of scare campaigns run by political parties opposed to reform.
Eight signatories to the summit statement representing business, organised labour, seniors and young people have agreed that reform in the national interest is urgent. Instead of hoping to frighten voters by running political scare campaigns against their opponents, the major political parties might now seek to inspire the electorate into supporting them as the party best equipped to govern the country. The political party that explains Australia's economic problems candidly and tells a credible story about how it intends to fix them will win the next election.
By summit eve the eight summit organisations had reached agreement on a statement of the problems, goals, guiding principles and specific actions that they and governments need to take in order to avert an economic crisis and lift living standards for all. Words were important, negotiated to the last syllable. During the two months of painstaking negotiations and redrafting of text, representatives of summit groups began to experience a variant of the Stockholm Syndrome, empathising with each other’s difficulties in finding forms of words that at least partially insulated them from media attacks. “ACTU supports a company tax rate cut”, “ACOSS backs a GST increase”, “BCA goes soft on spending cuts” and “seniors agree superannuation tax concessions are a burden on future generations” were to sorts of headlines each group understood their fellow hostages needed to avoid.
In order to thwart such gotcha reporting, the eight organisations agreed everything was on the table and that political parties should desist from ruling out reform proposals on the basis of political expediency.
Following strong opening presentations, including from Treasurer Joe Hockey and Opposition Leader Bill Shorten, Reserve Bank Governor Glenn Stevens, Productivity Commission Chair Peter Harris and economic modeler Janine Dixon, the 90 summit delegates offered a rich array of further ideas and proposals to strengthen the statement.
As testament to the quality of the contributions from the floor, the summit signatories had agreed by day’s end on a work program designed to strengthen and augment the pre-agreed summit statement, including in areas such as climate change, urban planning, greater use of new technologies in health service delivery and collaborative efforts to bring disadvantaged young people into the world of rewarding work.
Based on the summit debate, the BCA changed its pre-summit position that reducing budget deficits must be done only on the expenditure side, in exchange for the willingness of other groups to consider a faster timetable for restoring the budget to balance while protecting the disadvantaged and maintaining the quality of service delivery. Major spending programs such as health could be carefully reviewed as a matter of priority but precipitate cuts that ended up opposed by the community and blocked in the senate should be avoided. Repairs to the income tax base to assist in deficit reduction were on the table.
An intangible but enduring outcome of the summit process has been the trust built up among summit groups. Though not necessarily agreeing with each other’s positions on vexed issues, the groups empathised with their sensitivities, working collaboratively to accommodate them. If the summit groups, after many sleeps to recover from the exhaustion of weeks of intense negotiations, want to move onto specific areas such as tax reform, fiscal repair and ways to lift productivity growth, they know they have created a reservoir of goodwill from which they can draw.
Craig Emerson was a convenor of the National Reform Summit and is adjunct professor at Victoria University’s College of business.