Economic success: connecting people with progress



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CEDA Chief Executive Melinda Cilento presented our latest report in Sydney on 12 November 2018.

I’m here to talk about CEDA’s latest research report, out today.

This is a very important piece of work for CEDA.

Connecting people with progress is a pivotal document aimed at recalibrating the priorities for economic development to secure future progress that is tangible and relatable to the Australian community.

It will guide CEDA’s research and focus our policy efforts for coming years.

So today I want to talk to you about:

  • Why CEDA has undertaken this work and why now
  • What we found; and
  • The policy stack that CEDA believes is critical for future economic success.

Why have we done this work and why now?

Australia has enjoyed 27 years of uninterrupted economic growth – a world record.

Looking at the headline numbers – we have been incredibly successful.

However, there is a palpable disconnect between the narrative around the need for economic growth and development for Australia’s ongoing prosperity and the expectations of the community.

CEDA’s Community Pulse 2018 research released in June, was a nation-wide poll asking people how they felt about Australia’s economic progress and the issues that matter to them.

This poll showed that – despite our economic success as a nation –  only a small percentage of Australians believe they have personally gained a lot from Australia’s record run of economic growth.

This disconnect is concerning –  and it matters.

It matters because if people feel they have not benefitted from sustained growth, they will see little reason to support future growth and economic development.

For CEDA those survey results MUST mark a low point in terms of the disconnect from growth.

We must find ways to rebuild community trust that policy and growth are being pursued in their best interests. 
The question of course is how to do so. 
 

Therefore, in undertaking this research CEDA wanted to reflect three important issues:
  • what has our record run of economic growth delivered? In other words what we have done well;
  • where we have fallen short; and
  • how should we refocus policy discussion and reform so that it relates to the community – policy that matters to people’s lives – taking into account past performance and future challenges.

What we have done well

Let’s start with progress delivered.

Australia has realised incredible gains through the expansion of the economy, trade, technology and investment.

Let me quickly roll through some of the headlines.

Our economy has tripled in per capita terms since 1960.

The average disposable income of Australians has increased by 2.5 times since 1960.

Over the last three decades, average incomes have grown by just under 2 per cent a year across all income groups and substantially faster than other advanced economies.

Life expectancy has increased - by 10 years for women and 12 years for men since 1960.

Today 85 per cent of secondary school students complete year 12, compared to 23 per cent 50 years ago.

And a greater proportion of Australians are in jobs than in previous decades.

In other words we have achieved increased economic security for most Australians, more people in jobs, we are living longer and better education.

A stand out feature of Australia’s economic success has been our incredible resilience to economic shocks.

Australia has seen its way through the Asian Financial Crisis, the tech boom bust of the early 2000s, the Global Financial Crisis and collapsing commodity prices.

How? Well our flexible exchange rate, capacity for fiscal and monetary policy, proactive economic management and reform and a touch of luck have all played their part.

We should not underestimate just how important this resilience, and the avoidance of recession, has been in preserving and enhancing the livelihoods of many Australians. 

Australia has achieved all of this through its own unique brand of economic development.

It is a brand of economic development characterised by strong immigration and multiculturalism, a underpinned by a social compact to share prosperity, and an embracing of openness that has positioned Australia to benefit from globalisation and growth in Asia through trade and investment.

Where we need to improve

Despite this progress we know there are areas where growth has not delivered.
 
While measured inequality at the aggregate level has not increased in the last decade, too many Australians remain disconnected from opportunity and prosperity.

Like the 700,000 Australians who find themselves in persistent and recurrent poverty.
 
Like too many Aboriginal and Torres Strait Islanders who are not being afforded the same economic and social opportunities as others in our society.
 
And the 585,000-odd young Australians not in school, or fully engaged in study or employment.
 
We need to do a better job connecting more women to prosperity – women are underrepresented in senior roles, get paid less on average, have less super on average and still do most of the housework.
 
And while strong immigration and population growth have underpinned our success, we failed to predict or address growing pains in our capital cities – housing affordability, congestion and access to public transport are all areas of concern.
 
Our environmental performance has been described as Australia’s Achilles’ heel.  
 
Australia’s biodiversity is under threat. 
 
And we still do not have a credible, consistent and efficient policy for reducing emissions – all the more surprising given that both major political parties went to the 2007 federal election supporting an emissions trading policy. So a decade of lost opportunity on that front.
 
We face emerging limits to the progress that has been achieved. 
 
Australia’s productivity growth is not at the levels that underpinned solid income growth in the past. And quite frankly we know that future success relies on figuring out how to do more with less. 
 
That all-important resilience to economic shocks I mentioned earlier has eroded  – government and household budgets look more vulnerable in the event of an external shock. We have less wriggle room and need to build our resilience in other ways. 
 
And, we face new challenges including how to make the most of the next wave of great structural change - what we might think of as virtual globalisation. 

A new policy stack

This takes me now to CEDA’s reform priorities for the future. 

What you might expect me to do now is to outline a headline grabbing list of ‘must have’ reforms. 

There are some that I could advocate without too much hesitation. 

Implement the NEG for instance.

But as we thought about the key challenges and opportunities for Australia’s future progress AND how to connect the community to that progress in tangible ways, we didn’t think the answer lay in a reform ‘to do’ list.

We concluded that what mattered more to securing Australia’s future in a rapidly changing and uncertain world was:
  • identifying those policy areas fundamental to capturing future opportunities and retaining our social compact; and
  • making sure we have the processes and capabilities to deliver effective and timely policy and to continually evolve policies in the public interest.
So what CEDA has identified is a policy ‘stack’ of five areas –  population; technology and data; workplace, workforce and collaboration; critical services; and institutions –  that are of critical importance to our future because:
  • they cover the areas that matter to future economic and social success; and
  • because they interact with one another so if we focus on them together, the chances of delivering sustained economic growth AND improved living standards in the areas that matter to the community are far greater.
In pursuing reform across this ‘stack’, policies will need to be adaptive, and policy makers agile and effective in tapping into expertise where ever it resides.

This last point is important – I believe it will require policy makers to adopt different approaches to engagement, collaboration and policy design – it requires what I like to call a new operating model to deliver better outcomes. 

In each of these five areas we have sought to highlight both the direction, some specific areas of focus that we will pursue through our research and advocacy. 

Now let me say a little on each of the five areas.

First up, institutions – I think this is an obvious one – trust in our institutions, be it government or business, has taken a hammering in recent years.

If that trust is not restored it will be very difficult to make reform credible.

We expect institutions to be accountable and have the community’s best interest at heart.

What does this mean in practice?

It means institutions – government, community, business, educational – working to understand community expectations.
 
It means institutions responding to those expectations – explaining their purpose and intent, and being clear about the outcomes they are striving for.
 
It means institutions being accountable – showing the community how they are performing.
 
So greater openness and transparency will be critical. 
 
But there is more to it from CEDA’s perspective. 
 
If we agree with US tech entrepreneur Nick Hanauer that, “Prosperity should be defined as the accumulation of solutions to human problems” then we need not only greater transparency but also new ways of working together.
 
In the face of complex and ‘wicked’ problems, we have to renew and refresh our institutions so that they can work well together - sharing ideas, sharing and connecting data, and co-designing  solutions – new ways of working, a new operating model.
 
Critical services such as health care, aged care and essential services are vital to people’s everyday lives and make a substantial contribution to the economy. We know this, and if there were any doubts that these are the top issues of concern for people, our Community Pulse research confirmed it – emphatically. 

The key challenge that was also called out in that survey, is how to meet community expectations that continue to focus on public provision.

The equation of rising costs, increasing expectations around service quality, ageing populations and constraints on the public purse can ONLY be resolved through new approaches, new sources of supply and new models of service provision in many sectors. 

That in turn will require better access to and use of data, a sharper focus on outcomes and greater transparency, and collaboration.

And all of this will require community trust and confidence in institutions and processes - trust and confidence that good outcomes will be delivered. 

I look forward to discussing health and social infrastructure further with James during the panel discussion.

Population – the composition, growth and geographical distribution of our population is critical for economic development.

However, serious political debate about population policy in Australia has been episodic.

There are genuine community concerns about how population growth is being managed that need to be addressed.

Australia is one of the most successful multicultural countries in the world. Strong population and immigration growth has been a key feature in our brand of economic development.

But immigration policy has become a de facto population policy, and population growth has outpaced official projections with resultant growing pains emerging in cities.

To put this into perspective the 2002 Intergenerational Report predicted that Australia’s population would hit 25 million in 2030 – we got there more than a decade early. 

A more strategic approach to immigration, and therefore population growth, is required.

For existing residents and citizens, and new migrants the issues that impact quality of life are the same. That is, the ability to find a job, an affordable place to live, get to work easily and affordably, access good schools and affordable health care, and live in a safe and cohesive community and have access to environmental amenity.

These issues and the ability to deliver against them should guide a strategic approach to immigration, population and settlement.

Australia hasn’t had a population strategy since World War II – now it looks like we might have many.

There is a long list of elements that must be included in these strategies if they are to be effective.  And strategies across jurisdictions must work together.

This will be an important test for one of Australia’s most important institutions – our federated system of government. The issue of population should be a cornerstone of a revamped COAG agenda.

Workforce and workplace
Of course in so many ways, it is in the workplaces around Australia where we will succeed or fail in connecting people to future opportunities and progress. The issues are easy to list, but always harder to deliver on. 

What are the big challenges and our areas of focus?

Firstly, there are too many people not getting the education they need.  The disadvantages associated with this are building on one another and we now have clearly identified groups who are consistently disconnected from prosperity. 

Government policies on the whole are not making inroads – it’s time to focus on what the Productivity Commission calls handmade solutions, because this is where better outcomes are being achieved.

Secondly, our education systems have to evolve to enable life-long learning.  I know this is a catch all, over used term. But let me be clear, a frontloaded, once in a lifetime education to support a once in a lifetime career is not the way of the future. 

Concerningly, issues like access to new skills and training throughout working life and the ability to move between jobs and sectors were not issues that people flagged in our Community Pulse survey as being important too them – quite the contrary.

Maybe that is because the systems are working well now – but I suspect not.  I’m not going to say more on this because I don’t want to steal any of Attila’s thunder.

Finally – the vexed issue of workplace relations. 

For too long we have failed to have a ‘joined up’ conversation on this topic. Too often the debate is a polarising one about system change – more regulation, less regulation – and nothing in between. 

The workplace relations legislative framework is an important part of the jigsaw, but let’s not neglect the much broader set of factors that contribute to productivity and collaboration in workplaces including education, managerial skills and competence, organisational culture, structure and communication.

There is far too little discussion of the quality of regulation, the quality of management, the quality of the relationship between employers and employees or how we can better enable innovation in the workplace.   

I am proud to say that this section of our report includes external contributions from people representing business, workers and the education sector.

I think CEDA has the power to broaden this even further and keep a constructive conversation going in future.
Finally, technology and data – of course this underpins all of the other issues I have touched on.

Technology and data are central to efforts to raise productivity. Australians were rapid adopters of information and communications technologies in the 90s. But we have slowed down and we need to recapture that enthusiasm.

Technology has a role to play in addressing key challenges in areas of critical services, such as in energy, health and transport. But the solutions will not be straightforward and will always require a focus on public interest and communicating this well.

The MyHealth records experience is a case in point, where it appears that too little attention has focused on communicating the significant public benefits associated with better linkage and use of health data.  

While the future may be difficult to predict, we cannot afford to passively accept or react to technological trends.

This would risk Australia having a workforce unprepared for change, a regulatory framework that stifles innovation and competition, or fails to adequately protect human rights, and a tax system that no longer collects adequate revenue.

Most importantly reactive, default yes or default no approaches to technology, or ad-hoc policy interventions will undermine community trust in the genuine power of technology to drive improved standards of living.

Government has an important stewardship role to play. And it must do this in a way that puts people and public interest at the centre of policy and technology. 

One great example of this is the commitment to legislate a national Consumer Data Right. This is a transformational reform because it will enable consumers to guide the use of data in a way that should promote competition and deliver benefits directly to them.

It empowers consumers to use data about them for their benefit. 

Getting the balance right including - a focus on proactive engagement first and regulating second - will be tricky but vital for encouraging beneficial new technologies and engendering community trust.

Governments will need to find ways to get up close to emerging technologies to understand their implications and to develop good policy and regulation.   Building internal capabilities AND broad and trusted external relationships will be critical. Again – that new operating model.

Similarly, ensuring that those at the forefront of technology understand the community issues and expectations guiding government actions will be important. 

So against this backdrop – what role can CEDA play?

Most importantly, we believe that with our cross sectoral membership base that includes, business, government, academia, and the not-for-profits sector, will enable CEDA to bring unique insights to the policy issues that we have highlighted.

And in case you missed it on the way through, we think greater collaboration must be a feature of Australia’s brand of future economic development. 

Already we are starting to dig into a few of these topics for research pieces in 2019. And over time CEDA’s expectation is that our research and advocacy on key issues within each of these topics will evolve as critical issues emerge. 

However, along with a greater focus on this policy stack, CEDA believes that Australia needs to significantly change how it thinks about reform.

In the 1980s Australia required major economic reform – there were big ticket items such as freeing Australia from the shackles of trade protection, floating the dollar and reforms in domestic markets.

In fact, these are the reforms that have underpinned the economic success we have enjoyed for the last 27 years, but they were reforms that can only largely be done once.

The next generation of reform will need to be different.

Policy frameworks must be more nimble and responsive.

Policy and regulation are struggling to keep up with both the community’s expectations and technology.

That needs to change.

To use a technology analogy –  that is probably already out of date – we need a plug and play policy approach.

I know Uber has been used as an example many times over, but it is a prime example of policy being unable to keep up. The Uber model is pretty simple. It shouldn’t take government two years to deal with the regulatory requirements around a market disrupter.

The community certainly didn’t wait to embrace ride-sharing – five years since its official launch almost one in five Australians were using Uber. And the recent growth has been exponential – more than tripling in just the last two years.

However, there are other examples – it shouldn’t take a Royal Commission to see change in areas that the community has been raising concerns about for some time.

Essentially, we need to change the policy building blocks, so that Australia has the right foundations to develop new policy solutions that can be easily plugged in and updated to secure economic development as circumstances change.

How we talk about change also needs to evolve.

In the past major change has come about because of a burning platform or threat.

I hope that we might drive change now by engaging with the community and painting an aspirational picture of a future that people want to be a part of.

This will set our community up for future and enduring success.

There will no doubt be challenges in changing how we tackle policy and emerging opportunities, but we faced fundamental reform challenges in the past and succeeded.

We have stared down inflation persistently running at double digits, not to mention double digit unemployment after recessions.

The challenges this time are different, but fundamentally they require the same kind of courage and creativity. 

What we have sought to show with this research is that Australia’s track record supports an optimistic take on our ability to deliver another generation of opportunity and progress. 

That is the approach CEDA is taking and I look forward to using this report as the starting point for our future discussions and collaboration to build that optimistic future. 

Thank you for your time today.

Check speech against delivery. 

Report downloads:

Connecting people with progress: securing future economic development full report 
Connecting people with progress: securing future economic development summary report
Connecting people with progress: securing future economic development  infographic brochure 

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