Questions of magnitude

In 1901, the states of Australia joined in “one indissoluble Federal Commonwealth” through a union that would address, in the words of Sir Henry Parkes, “all great national questions of magnitude”.

In 2021, the Commonwealth was tested by COVID-19. The early unity of National Cabinet frayed through the year. State leaders focused locally and bickered among themselves and with the Commonwealth — and media coverage focused on the spectacle. When Australia most needed cooperation and coordination across our federal system, constituent parts were found wanting. COVID-19 was far from a case study in the practice of national unity.

Other great national questions of magnitude remain, even more urgent in our post-pandemic environment. Through the AICD Director Sentiment Index, members have identified over many years that climate change and energy policy are the most pressing priorities at a national level. Yet we have ended up with a patchwork approach. For example, we have a national hydrogen energy strategy through the COAG Energy Council, and state governments including Victoria, WA and NSW, have announced hydrogen energy strategies to attract investment. On the one hand, state initiatives to tackle climate change have advanced the nation. On the other, while exploring the development of hydrogen as a clean, low-emission fuel source is sensible, if every state pursues independent energy policies, the problems that emerged in 2016 that led to the South Australian blackouts will never be resolved.

As the Grattan Institute points out, state government actions to pursue renewable energy targets without national coordination have contributed to mismatches in supply and demand. Ensuring reliability of energy supply while reducing emissions and supporting regional economies most impacted by transition can only be achieved through “joined-up” national policy.

This is one example of the significant national governance challenges we face in 2022. A report by Infrastructure Australia released in October 2021 identified a shortfall of 105,000 workers to complete the infrastructure plans of governments across Australia. Again, policies that are important and necessary for the growth of the economy collectively require national coordination. “Continued investment in public infrastructure without significant expansion of workforce supply will likely compound shortages already evident in the workforce,” the report said.

The shortfalls are not only in infrastructure and construction. The pressure on the healthcare system during COVID-19, exacerbated by border closures, emphasised the prevailing shortages of qualified nurses and aged care workers. This is not a short- term training challenge. The federal government announcement last month that it would open borders before Christmas to foreign workers in industries with workforce gaps was welcome, but more is needed in the long term to ensure we have the capabilities we need across the country. As we have attempted previously, a migration program that matches the needs of our economy is essential, supported by plans to absorb and distribute that population growth so it does not strain already overburdened infrastructure. We also must explore whether the policies and institutions we rely on to develop domestically the capabilities and skills we need to advance our economic potential and social services are delivering the best outcomes for the country.

Finally, through the crisis, Western governments have undertaken the most significant peacetime fiscal expansion since WWII, and the need to normalise public finances globally and in Australia after the crisis will necessitate tax reform. Yet national discussion of the tax system rarely moves beyond squabbling over the split of GST revenue. The inertia of the status quo, whereby the federal government raises revenue then distributes it to the states, has been a powerful force to overcome. It has held us back from asking what a fairer and more efficient tax system might look like. National regulatory reform is a perpetual issue — in such a small national market, having different licensing and regulatory regimes is a barrier to economic potential and productivity.

In 2022, we will vote in a federal election. The challenge for voters is to ask whether the “sugar hit” of policies focused on the margin will address the great national questions of magnitude. The challenge of national governance is to develop long-term policies that will collectively lift our common wealth.

As another challenging year for many AICD members and their organisations draws to a close, the vaccine uptake and the reopenings give considerable optimism for the year ahead. I hope this summer allows you time to rest and repair, ready to steer your organisations to success in 2022. Thank you for your ongoing support as a member and best wishes from all of us at the AICD for this holiday season and the new year.