It will be 20 years ago in October that Howard’s coalition government went to the polls with a policy to introduce a goods and services tax (GST). The policy had harmed John Hewson’s attempt to unseat the Keating Government five years earlier, and it was deeply unpopular with the electorate. Nonetheless, two weeks after announcing that a GST would be government policy, Howard called an election.
This was a bold attempt from a first-term government to defy recent history and achieve an important reform to broaden the tax base.
It is now a generation since either side was able to achieve significant reform.
Australia’s reform era evidenced the potential for bold policy from both major parties, sometimes supported by the crossbench at critical junctures. The achievements of the Hawke-Keating government to float the dollar, to bring down tariff barriers and to introduce Medicare were arguably further-reaching and at times displayed an even bolder willingness to take on their party’s base.
It is now a generation since either side was able to achieve significant reform. The Australian economy over this time has been the envy of the world, registering a record period without a recession. But Australia has been fortunate to reap the benefits of the difficult work done by the Hawke-Keating and Howard governments, while taking advantage of bold economic reform by the Chinese government, which helped to create our historic resources boom.
Political leaders over this period have tried to usher in reform — in energy, education, industrial relations and innovation. No recent government has been able to mobilise public support sufficient to introduce a systematic reform program to prepare Australia to compete
in a dynamic, innovative global economy.
For the past two years, the AICD has released our Governance of the Nation: A Blueprint for Growth, a set of proposed reforms in national governance, fiscal sustainability, innovation, education, human capital, infrastructure and the not-for-profit sectors, informed by the AICD’s State Councils and advocacy committees and twice-yearly survey of our 41,000 members, the Director Sentiment Index.
These are all areas in which decisive long-term action is needed to reverse the signs that our good run might be coming to an end. Australian productivity has languished for the past decade and the drivers of the next phase of growth are not apparent. As a nation, we continue to face global geopolitical uncertainty as well as an increasing sense of frustration from those who have not shared in the prosperity of recent decades.
The AICD’s latest Blueprint, which features in this edition of Company Director, unfortunately shows we are failing to rise to these challenges. Our approach this year has been to issue a report card. While there are some reasons for optimism — such as progress on national infrastructure and an improved fiscal position — overall, we are yet to see the commitment to action on national reform that Australia needs. The results can only be summarised as: “Must do better”.
To achieve a better result, we need a more constructive debate, not just in political circles and parliaments, but in the community. The 2018 Edelman Trust Barometer tells us that trust is at a low point for business, NFPs, government and the media. The Sydney Morning Herald recently published a report that polarisation in politics and the electorate has increased significantly, much like in the US and Europe, leaving little hope for the compromise that a functioning democracy can achieve. The potential for reform is further limited when even to debate complex matters like GST reform is subject to a 24-hour media storm.
As governance leaders, AICD members have a critical role in the community, leading by example. As one step towards rebuilding trust, we must support and encourage constructive debate in the national interest. Another year of marginal grades is not a path towards a competitive economy and prosperous society.
Australia will go to the polls within the next 12 months and our leaders have an opportunity to define their era by championing reforms they think essential to our future. It no doubt comes with political risk. As in 1998, it always has.