By David Hetherington and Tim Soutphommasane
Introduction
Dear Prime Minister,
Congratulations. With the election now resolved, you will be forgiven for drawing breath and surveying the prospects for the upcoming Parliamentary term.
The conventional wisdom is that the Australian economy is in rude health. Unemployment and interest rates are low. There is a well-established path back to budget surplus. China continues to boom and our terms of trade remain high. Australia’s performance during the global financial crisis appears to confirm that the reforms of the 1980s and 90s quarantined us from the vicissitudes of the global economy.
This interpretation is a recipe for dangerous complacency. Our recent economic resilience is a mixed blessing. Though we have not been ravaged by recession as in the North Atlantic, the challenge of structural economic reform remains. As an economy supported by Chinese growth and reliant on foreign capital inflows, we cannot take our national long-term economic prosperity for granted.
Furthermore, action on climate change has been repeatedly delayed in the face of scientific advice and community support. The flagship Garnaut Report has essentially been shelved, with key recommendations ignored. The same applies to the Henry Review of taxation.
This state of affairs raises several questions. What are the forces within our public debate that feed this complacency? What are the challenges that this complacency masks? And how must these be addressed?
In the first place, our complacency reflects a collective myopia: we have an almost exclusive focus in the public debate on short-term interests at the expense of long-term ones. This is why our national savings rate is so low; why we borrow to consume rather than to invest; why we have failed to build infrastructure and to address climate change.
Part of our problem stems from language. As with other English-speaking democracies, our civic vocabulary has hollowed out. We now tend to consider questions of public concern in terms of profit and loss. This has made it harder to transcend short-term interest in the name of a long-term common good.
This constitutes the environment in which you and your government will find yourselves over the next parliamentary term. The vista is far from perfect. Our national landscape is blighted not only by strategic complacency but also by a depleted civic culture.
Three particular challenges give the lie to our present complacency: addressing our long-term economic vulnerabilities, delivering a coherent population and infrastructure policy, and fixing our broken climate change debate. Each carries serious long-term implications. But in each also lies a reform opportunity.
In this Memo, we explore how a progressive agenda can incorporate the building of a stronger, fairer, and more prosperous Australia.
