In June, the Commonwealth introduced an indemnity for GPs who administer an AstraZeneca vaccination to individuals under 60. The government wants the public to make individual decisions about the well-reported risks. GPs are understandably concerned with their personal liability in the event someone experiences the well publicised but small risk of blood-clotting.
Directors understand risk aversion. In our report Driving Innovation: The Boardroom Gap, directors reported that Australian corporate culture was overly risk averse, in part because of our complex regulatory environment and director liability settings. In our Director Sentiment Index, AICD members have consistently said that an excessive focus on compliance over performance is driving a risk-averse decision-making culture.
Risk is a fundamental aspect of innovation. While organisations have used technology to adapt during COVID, as David Thodey AO FAICD notes in the first episode of the AICD’s new podcast series Directors on Digital, this is just scratching the surface: “These areas of videoconferencing, asynchronous communications, all those things that people talk about, are superficial to the deep [digital] transformation [required].”
Australia’s economic growth over the next 40 years will be slower than the past 40 years. According to the 2021 Intergenerational Report (IGR) released by Treasury in July, our future standard of living relies on lifting productivity. Helpfully, Treasury assumes that Australian productivity growth will revert to its 30-year average of 1.5 per cent per year, above the 1.2 per cent average in the years leading up to the pandemic. Without that improvement, real and nominal GDP will be about 9.5 per cent lower than the baseline by 2060–61. In a competitive global economy, our relative wealth and standing will be greatly diminished.
When the first IGR was released in 2002, taking a 40-year perspective to support long-term policy planning was innovative. The limitations are obvious, too. For example, the 2002 IGR did not anticipate how the commodity boom would boost our terms of trade and drive the Australian economy over coming decades. In a period of limited economic reform in Australia, the policy decisions with the greatest impact on our economy since the 2002 IGR have been made by the Chinese government.
In that context, the 2021 report is largely silent on the geopolitical headwinds we face as the relationship with our largest trading partner deteriorates. Navigating out of our pandemic-driven monetary and fiscal settings is a global, generational policy challenge. Quantifying the implications of climate change for our economy, investment levels and trade relationships is critical. We are seeing, for instance, that investor expectations around the management of ESG risks and opportunities are becoming more pointed. Investors are looking for measurements that can be reported and assured.
For the 2021 IGR, past performance is no guarantee of future results. We know that in this uncertain, volatile and competitive global economy, we must set out and sustain polices that address the fundamental issues in our economy. From an innovation perspective, Australia’s spending on research and development as a share of GDP has been below the OECD average for the past 20 years. Ties between research institutions and industry are weak, with only 2.3 per cent of published research in Australia having an industry co-author. If these trends continue, capital will concentrate on our existing industry structures with super returns, and move to faster-growing economies with larger populations, worsening our productivity performance.
The IGR’s demographic projections tell us Australia’s population profile will grow older over the next 40 years. While this resulted in predictably ageist responses from some commentators, this shift should not be a cause for pessimism. Our ageing population reflects a modern economy that allows people to live richer and longer lives. Migration remains the policy lever to bring the best and brightest from around the world to enrich our economy and society, and people will continue to aspire to come to Australia if we remain a strong democracy with a dynamic economy.
The dynamism of our economy rests on business, government and the community encouraging and supporting sensible risk-taking to tackle the challenges ahead. Shouting “This went wrong” now passes for public debate and media commentary; we need to accept there will be imperfect and unanticipated outcomes and missteps along this unpredictable and challenging path. Those are risks we should accept and manage as a community if we have a common goal of shared and increasing prosperity. There is no indemnity available to counter the effects of an Australian policy vacuum.