Challenging complacency

The second annual Governance of the Nation: A Blueprint for Growth outlines six key areas for reform, writes Elizabeth Proust.

Australia’s track record of growth and openness will not be sustained by complacency. Bold policy decisions are needed to support long-term growth and prosperity for the nation.

To support this, the Australian Institute of Company Directors (AICD) recently launched its national reform plan for 2017, Governance of the Nation: A Blueprint for Growth. The Blueprint proposes reforms that would deliver real benefits in six key areas, from improving the governance of government to national infrastructure investment.

Without policies to grow our economy, wages and wealth, we risk losing the sustained periods of growth our nation has enjoyed. Without greater certainty and confidence in future policy direction, it’s hard for business to invest. Our call is for policymakers to focus on the longer-term view to deliver increased prosperity for all Australians.

This initiative is deliberately big picture, and reflects the board’s focus on broadening the AICD’s policy engagement and bringing the governance perspective to national debates.

The AICD has a broad membership of governance leaders, which just this month reached 40,000. Collectively our members are responsible for millions of jobs and billions of dollars in investment and services.

The Blueprint draws on the views of our members through the Director Sentiment Index, our twice-yearly survey of economic conditions and policy priorities, as well as input from AICD division councils, policy committees and our chief economist, Stephen Walters MAICD.

AICD members report frustration with the quality of public policy debate and the current state of policy paralysis. As the voice of excellence in governance, the AICD can bring a unique perspective to addressing the challenges facing Australia, and this perspective is needed to boost the quality of policy debate.

Two central themes run through the 2017 Blueprint recommendations: boosting productivity across the nation and pushing back against protectionism in all its forms.

To encourage a longer-term perspective in national decision-making, we are calling for fixed, four-year terms for the Commonwealth Parliament. The current average term of federal government is two-and-a-half years, and this short and variable election cycle is contributing to the short-term nature of political decision-making.

The AICD also calls for a greater sense of urgency in addressing our nation’s fiscal sustainability. This requires action on spending restraint in order to bring Commonwealth expenditure back to pre-global financial crisis levels, and taxation, to deliver a more sustainable and fairer tax system overall.

Comprehensive tax reform is a challenging task. Our Blueprint proposes reform that includes lifting the rate and broadening the base of the GST, accompanied by targeted compensation for lower income earners. We propose significant cuts to personal income tax rates, reforms to the capital gains tax discount and negative gearing, and incentive payments to states to drive the removal of inefficient state taxes (such as stamp duty). We’re calling for comprehensive reform, not piecemeal changes that tackle only part of the debate.

The AICD’s Blueprint also proposes substantive recommendations on investing in the nation’s people, pushing back on protectionism, creating greater certainty for the vital not-for-profit sector, and promoting productivity growth through investing in national infrastructure.

There’s no doubt that business investment in jobs and infrastructure needs to lift, and we firmly believe that productivity-boosting investment is needed. If adopted, the AICD’s recommendations will help break the policy paralysis and improve the focus on long-term decision making.

Importantly, this is not a job for government alone. The Blueprint explicitly recognises the role that each of us, as governance leaders, can play in driving reform and boosting national productivity.

Of course, not everyone will agree with the AICD’s prescriptions, and there will be differing policy ideas on how best to achieve a long-term focus on growth and prosperity. We look forward to discussion of these issues and options.