Sadly, many Australians have become so disillusioned with
the quality of national political leadership in recent years that their choice of
the next Federal Government during this weekend’s election may simply come down
to which colour they dislike least – the
Red Team (the Australian Labor Party led by opposition leader Bill Shorten)
or the Blue Team (the Liberal and
National Coalition led by PM Scott Morrison and Deputy PM Michael McCormack).
Some may even decide to lodge a protest vote in favour of other
teams like the Green Team (the
Greens), the Orange Team (One Nation)
or the Yellow Team (United Australia
Party) – or no colour at all (independents).
But with the Australian economy so delicately poised, this
election is more significant than any other in our recent history. It is true
that Australia holds the world record for the longest continuous period of
economic growth of all developed economies – 27 years and counting. But it is
also true that the rate of growth in the past decade has been much slower than
the decade before, and that many Australians (including most small to medium
business owners) have found the going tough in recent years.
New economic warnings issued by global organisations like
the International Monetary Fund (IMF) and the World Bank predict a slowdown of
the global economy in the near term. These warnings, coupled with the increasing
domestic business threat posed by global online shopping for traditional ‘bricks
and mortar’ small businesses, suggest there are significant economic challenges
It is therefore crucial that our next group of political
leaders step up and lead. They must tackle the big issues in a manner that is
consistent with the leadership shown by past leaders like Robert Menzies (with
his vision for a modern Australia), Bob Hawke (with his industrial relations
reform and global market engagement agenda) and John Howard (with his national tax
Leadership takes courage. It means governing for all
Australians. Not just the powerful unions in the case of the Red Team, or the climate change deniers
in the case of the Blue Team.
So, what are the big issues and what are the major parties
saying they will do on these issues?
Growing the national
economy for the benefit of all Australians
The first major issue is the development and implementation
of a long-term plan to grow the economy for the benefit of all Australians – not
just an economic plan to win government at the election in a few weeks.
Discussions about the economy are complex but let’s consider
two main items, namely: economic growth and the national balance of payments.
Most people understand that when the economy is growing at a
good rate, Australians generally do well. For those who are left behind, the
taxes paid by those doing well (i.e. wage earners and Australian businesses)
are generally enough to compensate those who are not doing so well (i.e.
unemployed and socially disadvantaged) – and so all Australians stand to
benefit from good economic growth if the policy settings are right.
What appears to be less understood is the link between public
discussion about the national surplus and consumer sentiment. The repeated
failure of both teams to deliver a national surplus over the past decade has
undoubtedly contributed to negative consumer sentiment which, in turn, means
consumers spend less and businesses earn less. With less money circulating in
the domestic economy, national growth slows. Consequently, delivering a surplus
against a backdrop of ten (10) successive years of deficit is vitally important
for the future of the national economy as it will help to rebuild positive
The Red and Blue teams both acknowledge that national
economic growth has been unsatisfactory. Both teams are proposing tax cuts that
will benefit those earning annual wages of up to $120,000 per year with the Red team providing an additional amount
for those earning less than $45,000 per year.
These proposed tax measures, to be delivered early in the
new financial year, will undoubtedly deliver a short-term boost to national
economic growth as households have more to spend in the first quarter of the
2019-20 financial year.
But then what?
The strategy of the Red
Team is to redistribute wealth from the ‘wealthy’ (i.e. those earning more
than $120k per year) to the less well-off and increase taxes by removing future
tax concessions in key areas such as: negative gearing for investors; removing
the franking credit concessions for Australian retirees; and abolishing the
planned tax cuts for higher wage earners in later years.
The strategy of the Blue
Team is to invest in large infrastructure projects to stimulate employment (and
flow-on private sector investment) and deliver planned tax cuts for all
Australian wage earners to increase disposable income by 2024.
Thankfully, both teams have committed to providing tax cuts
for small businesses earning up to $50M per year and reducing the small
business tax rate to 25%. But big business contributes to economic growth too
(many are, in fact, customers of small businesses), yet neither team has
addressed this issue.
Both teams have also committed to delivery of a surplus in
the coming financial year, but the Red
Team will achieve this by increasing taxes which effectively punishes some
sectors of the community like ‘mum and dad’ investors and retirees. The policy
is justified on the ‘Robin Hood’ principal of taking money from the well-off
(i.e. baby boomers) and returning it to the less well off (i.e. emerging
generation), in what effectively amounts to the introduction of generational
The Blue Team’s strategy is one of containing government spending and growing jobs. The
strategy runs the risk of some being left behind, particularly the younger
generation and those on lower incomes. The approach essentially advances the
principal of ‘survival of the fittest’.
And so, while both have committed to delivery of a national
surplus to lift consumer sentiment and increase economic growth, they are
pursuing radically different paths to achieve this goal.
standard of living for current and future generations
Australia is a country that has been built on the concept of
a ‘fair go’. While some may argue the concept is ‘old hat’, it has stood the
test of time and remains as relevant now as it was when it was first framed
more than 100 years ago.
Basically, the concept means that we aim to provide every
Australian with the opportunity to succeed – essentially providing a hand up, as opposed to a hand out. It means that when our farmers
and rural communities are suffering due to natural disasters, we help put them
back into a position where they can again succeed, with a view to securing our national
food supply – both now and into the future.
It means ensuring that our tax system is fair by ensuring
that tax rates are based on the capacity of individual wage earners to pay tax.
It is right that those who earn more should pay more tax, but the tax on these
higher wage earners should not be set at such a level as to discourage them
from working ever harder in the future, as Australia’s future tax and national
investment success is intricately linked to the success of middle and high wage
It means that our wage system is fair and seeks to maximise
wages paid to all Australians but does so within the capacity of all businesses
to afford these wages – not according to some trumped up target rate advanced
by the bullying activities of big unions.
It means that our competition and contract laws are
effective in ensuring that big business is not able to take unfair advantage of
small business, while still recognising that fair competition between big and
small business is a positive thing for Australian consumers.
But the concept of a ‘fair go’ does not just apply for the
We must also ensure that we strengthen our country into the
future so that the current generation is able to hand over a country to the
next generation that is economically, socially and environmentally stronger
than the one we inherited. Protecting the interests of emerging generations,
however, must not come at an unfair cost to the older generation who helped
make Australia what it is today.
Resolving the climate
and energy impasse
If ever there was an issue that demonstrated the manifest
failure of successive political leaders to lead, it is the debacle that is the
national climate and energy policy debate.
Those of us who are old enough to remember will recall that
the national energy and greenhouse emissions debate started nearly 30 years
ago. Over that time, successive Australian Governments developed numerous draft economic and other policy
instruments that sought to strike a balance between Australia’s economic and
Sadly, all these actions failed to secure bipartisan support
of the Australian Parliament with the last being the National Energy Guarantee
proposed by the Blue Team – resulting
in yet another Prime Minister being rolled as a result.
While some might take comfort in the proposition that a new
government might resolve this 30-year impasse, the powerful interests of
resources unions like the CFMEU are likely to result in the Red Team facing the same internal
challenges that the Blue Team faced (with
the small band of climate deniers that exist within its own ranks).
What is worse is that the prospect of an early resolution of
this important issue does not appear even close. If anything, we seem further
away, with the whole debate having now degenerated into an ideological debate
about whether coal is “good” or coal is “bad”.
Meanwhile, the businesses investing in energy infrastructure
for the delivery of energy to the Australian community struggle with the ongoing
investment uncertainty that comes with the absence of an agreed national
policy. And so, aged coal fired power stations are progressively closed because
they are no longer economic to maintain and necessary new investment in
traditional and renewable energy generation is delayed indefinitely.
The result is that the supply-demand balance tightens in the
national electricity market, and energy prices rise sharply for businesses and
households alike – meaning more money is spent on the basics of energy and less
money is available for consumer spending and business investment across the
Australia’s energy and climate policies are linked to the
point that one cannot be addressed without simultaneously addressing the other.
The energy price stress created for many Australians in recent years has therefore
been created by the absence of a coherent national policy on climate change and
The resolution of this impasse remains a critically
important economic issue for all Australians – whether you believe in climate
change or not!
And so, it is again time
for real national leadership
The three issues cited might be used to guide our collective
choice of the next group of national political leaders. Short term tax benefits
are merely sugar hits designed to secure our vote but do nothing to address the
real challenges facing all Australians as we navigate our course in an
increasingly complex and connected global economy.
And so, the real question for this election is who has the
capacity to step up and lead on these issues. Good politics is about finding
compromise – not highlighting differences.
Our leaders must craft a vision that can be supported by all
Australians, not just the party ‘faithful’. It requires people to step away
from their ideological positions, agree on a vision and then deliver it over successive
None of this is easy, as evidenced by the leadership turmoil
of both teams over the past decade. But we must make it happen. Australia’s
future depends on it.
It is not simply about articulating a vision
that provides a rallying point for traditional party supporters. It is about
crafting a vision for all Australians and then having the political skills to unite
us in making that vision a reality.