As Australians prepare to go to the polls to elect a new Federal government it is fair to ask ourselves about what we want from this next term of government?
With the Australian economy so delicately poised, the 2022 Federal election is likely to be one of the most crucial in living memory. The national economy is currently struggling to deal with the economic fallout of a two-year global pandemic, to recover from the economic damage caused by a string of natural disasters (and prepare for the probability of more), and to navigate the uncertainty of a global economy that is being increasingly influenced by rising geopolitical tensions.
Like many of the Nation’s critical services industries (e.g. Agriculture, food, fuel and pharmacy), fuel businesses have shouldered their fair share of the financial pain of the past three years. Service station assets have been damaged by bushfires and floods. Fuel businesses have struggled with lower revenues caused by COVID19 lockdowns. Fuel wholesalers have struggled with access to supply of AdBlue for their diesel customers. And service station staff have dealt with increasing aggression from customers who failed to understand that the recent sharp spike in petrol prices was entirely due to the war in Ukraine.
The future wellbeing of the Australian economy will therefore be dependent on the quality of national leadership that is delivered from this point forward. The next Australian Parliament must step up and lead. This means making meaningful decisions on the tough issues that have been put in the ‘too hard’ basket for way too long.
Glib statements of economic aspiration without policy substance and/or a ‘grab bag’ of funding promises for local infrastructure to buy votes in local electorates, simply won’t cut it. The next Australian Government must tackle the big issues in a manner that is consistent with the courageous 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 reform agenda).
But what are those issues? What should the priorities be for Australia in the near term? If we, as a society, are not able to articulate these priorities then how can we reasonably expect our leaders to advance these issues.
It is suggested that, from a business and industry perspective at least, there is a need to address four key issues as we chart a course in a post COVID19 Global economy.
1.National Tax Reform
Almost everyone accepts that there is a need to revisit the Australian taxation system in terms of both direct taxes (i.e. PAYG and business taxes) and indirect taxes which include fuel excise. There have been numerous government and private sector reports prepared on this issue over the past 20 years. These reports have pointed to the need for a complete overhaul of the system to better incentivise investment by reducing tax on income and increasing tax on consumption (e.g. by lifting the rate of the GST). As we seek to encourage investment by business and industry to grow the national economy in a post-COVID era, the need for genuine and meaningful tax reform is more pressing than ever.
Businesses and individuals should be incentivised to invest in the economy and work harder by being allowed to keep more of the income they earned. But we also need to make sure that government revenues are sufficient to support the delivery of essential services such as health and infrastructure while also enabling the repayment of national debt. And so, reducing the tax on income will require a commensurate increase in the tax on consumption.
From a fuel industry perspective, there is also a need to look at excise – not just in terms of temporary reductions to reduce the cost of living – but by moving to an alternative form of taxation such as a Road User Charge that ensures government revenues are maintained as the national vehicle fleet is progressively converted to electric and/or hydrogen operation.
2. Worker supply and workforce productivity
This issue requires a focus on two related aspects. The first is increasing the supply of workers. The second is reframing both the industrial relations system and the national approach to workforce skills, to increase the output of Australian businesses and stimulate wage growth for employees.
The issue of worker supply has come into sharp focus in the wake of a reduced inflow of international workers due to a two-year closure of Australia’s international borders. But it would be wrong to conclude that this is the sole reason for the shortfall. The pandemic has also changed worker expectations and encouraged many to relocate away from the capital cities to regional areas (away from the concentration of job opportunities in capital cities), or to seek out jobs that allowed them to work from home over those that required a physical presence in the workplace (e.g. a console operator at a service station). Substantial growth in ‘Gig tech’ industries (and the share economy) has also seen workers shy away from traditional employment models.
But the solution to the current worker shortage is not simply about increasing permanent and temporary migration – although that is clearly part of the solution.
Given that the pandemic and technological innovation is changing the nature of employment, we need to rethink our national approach to workers. In terms of supply, we should consider how we might better utilise the ‘grey workforce’ – the significant and increasing number of workers who are over 65 years of age but still want to work.
The reality is that Australian’s are living longer. Few have developed the savings necessary to maintain a retirement life of 30 years or longer. Many want to work – and Australia needs them to work – but are actively discouraged by a Federal tax system which allows them to work a maximum of one day a week before they start to lose pension entitlements, or have their self-funded super scheme taxed at a higher rate because they move into a higher tax bracket.
No-one is saying that these older workers should be forced to work. But greater utilisation of older workers who want to work not only improves worker availability – it potentially delivers a lower health burden and aged-care as a result of this age cohort being more active than they might otherwise be
In respect of the second aspect, workforce productivity is not simply about reforming the Industrial relations system. It is also about ensuring that the skills of workers are continually enhanced and incentivised throughout the lifetime of an employee– from a first year apprentice working in a trade, to supporting a parent returning to the workplace after a long break or providing an older worker with the basic computer skills needed to get back into the workforce.
It is also about ensuring that national competition laws are fair and equitable so that the productivity dividends realised by innovative businesses are not lost to unfair competition. In deeply competitive industries like the Australian fuel retail industry, this means eliminating deliberate and systemic wage underpayment so that unscrupulous businesses do not get an advantage over the majority of businesses that are paying their employees correctly.
3. Disaster preparation and resilience
Since 2019, the Australian community has been hit by fires (September 2019 to February 2020), a destructive ice storm in the Nation’s Capital (February 2020), major flood events in NSW (March 2021) and unprecedented floods in NSW and Queensland (February 2022). That, on top of the economic damage wrought by two years of the COVID 19 pandemic.
Apart from the devastating economic and social impact on local communities, these events have repeatedly belted asset-laden industries like the fuel industry – and the devastating impact on the fuel supply industry on the NSW North Coast is a case in point.
Australia cannot continue to walk blindly into these events. Despite the best endeavours of Australian Governments, the planning for these events and delivery of post-disaster services is not good enough. In addition, businesses impacted by these events are now facing insurance premium rises that are cost prohibitive as the insurance industry factors in rising probability of loss (That is if they can get insurance at all).
Regardless of whether you believe in human-induced climate change, the frequency of these events (and the devastating impact on the economy from same) is increasing. More must be done to prepare for these events and ensure timely and consistent delivery of support when natural disasters occur.
Thought must also be given to the rebuilding of human settlements following a disaster – whether that be flood affected cities like Lismore in NSW, smaller towns on the NSW south Coast destroyed by fire, or east coast communities impacted by erosion caused by storm surges. While virtually every Australian Government has established a disaster management or disaster resilience agency, this work is not coordinated. And nor has it proven effective to date. The current approach is largely reactive and there has been no meaningful progress on better planning and construction of human settlements, to reduce their vulnerability to future natural disasters.
4. Reducing global supply chain vulnerabilities (via increased domestic production)
At first, this issue may appear to be an odd one to be prioritised by a national body representing part of the fuel industry (i.e. given the progressive reduction in self-sufficiency that has occurred with respect to liquid fuel self-sufficiency in Australia over the past 30 years). But much of the change in the fuel industry has been driven by both the exhaustion of oil supplies close to the Eastern Seaboard and the commercial reality of a product where there is an acute national sensitivity to price.
The pandemic has shown that in other areas, where there is less sensitivity to price (and less reliable supply chains than the sophisticated and diverse supply chains that operate in the global fuel industry), there is a need to consider opportunities to increase domestic self-sufficiency. COVID has exposed the vulnerability of our economy to the supply of manufactured goods from places like China, for example, and these impacts have unnecessarily curbed business output and constrained consumer spending.
One recent example of relevance to the Australian fuel industry was the AdBlue shortage which threatened to ground the national truck fleet late last year – a crisis that was ultimately averted by some outstanding leadership by the Australian Government and unprecedented support of the fuel industry and local AdBlue suppliers (Ironically, the Australian Government had spent the prior three years focussing on liquid fuel security but completely overlooked AdBlue supply vulnerability and that has been a lesson well learned).
The AdBlue issue is just one example of areas where Australia needs to rethink its supply chain given that the economic and risk benefits of domestic production dwarfs the ‘self-sufficiency premium’ (i.e. increased domestic production costs compared with imported product) that comes with domestic manufacturing.
It is time for political courage and brave leadership on the issues that matter
If you are reading the above and concluding that these issues are too political contentious for our current set of politicians – or that none of our political parties (including independents) have any political appetite for these issues – then you would be right.
But that is not to say that these issues are not of vital importance to all Australians. Nor is it to say that they should not be addressed now. The reality is that the world has been changed by COVID 19 and escalating geopolitical tensions in Europe and SE Asia. Those hoping for a return to a pre-pandemic ‘norm’ are unrealistically optimistic.
Australia must therefore address the key pillars that underpin the very fabric of our national economy – such as taxation, labour force inputs, disaster risk and manufacturing self-sufficiency. Failure to do so, risks the economic and social well-being of our generation and the ones that will follow.
The challenge for the next Parliament is to meaningfully tackle these issues now, notwithstanding the initial political ‘heat’ that might come from political idealogues that are largely motivated by narrow self-interest.
Australia needs its future politicians to govern for the overhaul good of the nation, rather than cowering to the noisy minorities that prosecute their own narrow agendas via social media. And we as voters need to become the noisy majority who support those who demonstrate brave leadership on these critical issues.