Amid falling real wages and lower living standards shown by seven consecutive quarters of negative per capita economic growth, business leaders finally are sharpening their message for government. There is new public acknowledgment that business must push back harder on government nuisance and better educate voters about why living standards depend on our ability to grow the economy and create more prosperity. For this to happen, government must change course, get out of the way of enterprise and people’s lives, and remind global investors why Australia is the best place to put their money.
The Business Council of Australia has set a target for Australia to be a top 10 global destination for investment. Australia currently sits halfway down the ladder at 21 out of 42 countries on the BCA’s global investment competitiveness index. While we perform strongly on trade at No. 2, we are at the bottom of the list for regulation (37), business taxation (38) and investment restrictions (38). BCA chief executive Bran Black is right to remind government it must stop expanding and create the conditions for businesses to invest, innovate, grow and employ more Australians.
In contrast, the Albanese government’s approach has been to employ more public servants, increase regulation and make it harder for businesses to employ people while taxing them more. The latest tax changes to negative gearing, capital gains and trusts make Australia a less attractive place to invest and build a business; changes to industrial relations laws add complexity and remove workplace flexibility; and compliance burden costs have grown to the equivalent of 6 per cent of GDP, of $160bn a year. Anthony Albanese, meanwhile, is proposing more federal regulation to dictate how companies should be able to invest in the highly competitive field of data centres and artificial intelligence. The Prime Minister points to government success in changes to the National Disability Insurance Scheme, media bargaining laws and gambling as proof that reform is still possible. These reforms are important but business is rightly more concerned about IR, high government spending and debt, and changes to tax arrangements.
Mr Black is correct that we cannot tax, regulate or redistribute our way to higher living standards. It is a message that business must continue to prosecute with vigour after dropping the ball for too long with distractions on net zero and equity issues rather than the core business of productivity.
The BCA’s message is that we must not squander our strengths of abundant natural resources; strong institutions; political stability; smart, creative and hardworking people; and a geography that places us at the doorstep of the fastest growing region in the world. Mr Black says those advantages don’t guarantee success and we cannot assume investment will come here simply because it has in the past.
It is the same message being sent by OECD secretary-general Mathias Cormann, Australia’s longest-serving finance minister, who warned on Saturday that Australia was showing worrying signs of drifting into a slow but relative decline. Mr Cormann said productivity data showed what happened when the reform effort stopped, and the quiet drift back towards protection demonstrated how easily hardwon gains could be surrendered by increments. After being among the OECD’s leaders in terms of competition-friendly market regulation in the early 2000s, Australia has fallen back to around the OECD average as other countries have pursued more ambitious reforms.
Business leaders have a duty to keep the pressure on government and to build the community case for another round of muchneeded economic reform that puts limits on government involvement and restores living standards by growing the economic pie.
Amid falling real wages and lower living standards shown by seven consecutive quarters of negative per capita economic growth, business leaders finally are sharpening their message for government. There is new public acknowledgment that business must push back harder on government nuisance and better educate voters about why living standards depend on our ability to grow the economy and create more prosperity. For this to happen, government must change course, get out of the way of enterprise and people’s lives, and remind global investors why Australia is the best place to put their money.
The Business Council of Australia has set a target for Australia to be a top 10 global destination for investment. Australia currently sits halfway down the ladder at 21 out of 42 countries on the BCA’s global investment competitiveness index. While we perform strongly on trade at No. 2, we are at the bottom of the list for regulation (37), business taxation (38) and investment restrictions (38). BCA chief executive Bran Black is right to remind government it must stop expanding and create the conditions for businesses to invest, innovate, grow and employ more Australians.
In contrast, the Albanese government’s approach has been to employ more public servants, increase regulation and make it harder for businesses to employ people while taxing them more. The latest tax changes to negative gearing, capital gains and trusts make Australia a less attractive place to invest and build a business; changes to industrial relations laws add complexity and remove workplace flexibility; and compliance burden costs have grown to the equivalent of 6 per cent of GDP, of $160bn a year. Anthony Albanese, meanwhile, is proposing more federal regulation to dictate how companies should be able to invest in the highly competitive field of data centres and artificial intelligence. The Prime Minister points to government success in changes to the National Disability Insurance Scheme, media bargaining laws and gambling as proof that reform is still possible. These reforms are important but business is rightly more concerned about IR, high government spending and debt, and changes to tax arrangements.
Mr Black is correct that we cannot tax, regulate or redistribute our way to higher living standards. It is a message that business must continue to prosecute with vigour after dropping the ball for too long with distractions on net zero and equity issues rather than the core business of productivity.
The BCA’s message is that we must not squander our strengths of abundant natural resources; strong institutions; political stability; smart, creative and hardworking people; and a geography that places us at the doorstep of the fastest growing region in the world. Mr Black says those advantages don’t guarantee success and we cannot assume investment will come here simply because it has in the past.
It is the same message being sent by OECD secretary-general Mathias Cormann, Australia’s longest-serving finance minister, who warned on Saturday that Australia was showing worrying signs of drifting into a slow but relative decline. Mr Cormann said productivity data showed what happened when the reform effort stopped, and the quiet drift back towards protection demonstrated how easily hardwon gains could be surrendered by increments. After being among the OECD’s leaders in terms of competition-friendly market regulation in the early 2000s, Australia has fallen back to around the OECD average as other countries have pursued more ambitious reforms.
Business leaders have a duty to keep the pressure on government and to build the community case for another round of muchneeded economic reform that puts limits on government involvement and restores living standards by growing the economic pie.