JACKSON HEWETT: Political pocket watch puts business on edge in age of electoral short-termism

The election is shaping up to be a hip-pocket showdown.

After three years of economic grind, where the cost of living has been at the forefront of voters’ minds, there is little appetite for aspiration.

‘Ask yourself if you feel better off than four years ago’ is the Opposition’s mantra.

‘You would have been thousands worse off under a Coalition government’ is Treasurer Jim Chalmers’ most recent retort.

While the campaign concentrates on the rearview mirror, America is speeding off into the distance. Even before the election of Donald J. Trump, the U.S. economy was surging at a growth rate of three per cent. With a big-spending, deregulating President in the White House, it might grow even faster.

Australia is sputtering along at less than one per cent growth, well behind the average of other advanced countries, with a 1.7 per cent growth rate.

Business is getting worried. Not only is Australia’s growth anaemic, but the most important driver of long-term wealth—productivity—is going backwards.

The Australian Chamber of Commerce and Industry fears that as both parties go toe to toe on appealing to the hip-pocket nerve, they’re failing to sell the vision of the importance of economic reform.

“We can’t continue to drift into sort of transactional politics, hyper-partisanship, political expediency,” said Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry.

ACCI has entered the pre-election debate with 40 policy recommendations across five key priorities: boosting productivity and business competitiveness, growing skills and workplace flexibility, ensuring affordable energy, enhancing digital capabilities, and supporting an open trading system.

“If we are to turn this (economic) performance around, we must enable the private sector to get back into the driver’s seat and implement an ambitious agenda to boost productivity and competitiveness,” Mr. McKellar said.

Unfortunately, most attempts at economic reform in Australia have stalled. Failure to address the longer-term issue of the country’s falling productivity dates back a quarter of a century.

Part of that is because the “low-hanging fruit”— floating the dollar, deregulating industries, and eliminating tariffs — has already been picked.

The harder reforms get the more voters get bogged down comparing winners and losers, fertile ground for partisan politics.

“We’ve seen politics and policy-making become increasingly transactional over a number of years. That’s not unique to any one party or any one government,” Mr. McKellar said.

“It has become very difficult for political leaders to make the case for difficult economic reforms that result in a level of disruption or dislocation but are necessary if we are going to end up with a more productive, more competitive economy that leads to higher living standards.”

It’s a challenging problem, particularly after a period of post-COVID paternalism and with an electorate that is increasingly fragmented and driven into tribal echo chambers.

But the economic reality is GDP per capita has gone backwards for the past seven quarters, and real wages have fallen back to 2011 levels as a result of three years of elevated inflation.

The challenge for business lobby groups such as the ACCI is convincing salary earners that reforms favourable to business are also in their interest.

That means convincing younger voters to accept rolling back commitments to protect the environment or putting more power back in the hands of business. In today’s social media-driven society, business groups have some marketing to do.

ACCI hopes they can tap into the entrepreneurial spirit of Australians.

“There’s more than two and a half million small businesses in Australia, and they share many of the challenges that individual households are facing at the moment,” Mr. McKellar said.

“There’s a lot of people who have jobs, and there’s a lot of people who want to create an opportunity for themselves and for their family, and sometimes go on and grow that and employ other people. We’ve got to make it easier for people to start their own small business to make a success of it.”

ACCI is calling for the repeal of legislation favoured by the Greens and the unions, including multi-employer bargaining and definitions of casual work and small business. They advocate for more access to gas, eliminating red and green tape, a cut in the corporate tax rate, and less government spending.

Mr McKellar is expecting pushback from the Greens, whom he called “destructive… because they have a very radical economic and social agenda.”

He had a similarly dim view of the unions.

“I can’t remember the last time I heard a union leader in Australia talking about productivity, it’s just not part of the message that they are crafting at the moment,” he said.

Despite the divide, Mr. McKellar believes reform is still possible.

“Whichever government you’re looking at over the past several decades, they’ve had to bridge the divide in the Senate—even going back to tax reform support from the Australian Democrats,” he said.