While the comparisons with Bob Hawke and the economic and tax summits of the 1980s are doubtless welcome to Prime Minister Anthony Albanese, the jobs and skills summit set for six weeks from now will be very different from that of 1983, when Hawke sought to give substance to his commitment to consensus politics.
That summit was at a time of genuine crisis. The economy was only just emerging from a savage recession under Malcolm Fraser and John Howard, brought on by the second oil shock in a decade. Unemployment had hit 10%. If you think inflation’s bad now, it was 10% too.
The economy was shuttered, our manufacturing sector protected by tariffs that forced consumers to pay extraordinary amounts for basic goods like clothing. Female participation was just 44%. Industrial disputes were 20 and 30 times higher than now. Australia had a persistent current account deficit and was a massive importer of capital.
But that also meant there was much low-hanging fruit in terms of reform. Opening the economy — floating the dollar, allowing foreign banks, reducing protection — would jolt Australian business out of its complacency and enable investment to flow to more dynamic parts of the economy. Convincing unions to accept smaller wage claims in exchange for “social wage” reforms would curb inflation in a centralised wage-fixing system with heavy unionisation. Ending blatant discrimination against women and curbing rampant sexual abuse in the workplace helped lift female participation. Repairing a broken tax system would fix big distortions and rorts and help lower the personal income tax burden.
The difficult challenges were primarily political rather than policy — challenges Hawke was uniquely well placed to deal with, aided by a brilliant proselytiser of reform in Paul Keating.
The low-hanging fruit is now gone and the problems are far more complex. We don’t have enough workers. While we have a spike in inflation courtesy of another energy shock and supply chain issues, our longer-term problem has been very low inflation. And we need wages growth to be higher, not lower. We’re running a current account surplus, and we’re an exporter of capital courtesy of our massive multitrillion-dollar superannuation system which simply did not exist in 1983 (and which now means all of us have a big stake in the successful operation of a deregulated market economy).
And to confirm the bizarro nature of this year’s summit, we’re now trying to bolster manufacturing. Both sides of politics, but especially union-dominated Labor, are insistent that we need to prop up manufacturing, which employed about 18% of the workforce in the early 1980s and now accounts for about 8%. Despite not having enough workers for the services sector of the economy — the great success story of the past 40 years — the government wants to increase manufacturing jobs.
Unexplained is where these jobs will come from: the government should explain which sector must shrink in order for us to reinflate manufacturing. Do we cut health and care workers? We can’t do that. Education? Construction? Retail? Professional services? At least when the NSW government says it wants to expand its health and caring workforce, it actually provides funding for training so it can build the workforce.
Instead of traditional “economic reform” of the Hawke years, our big reform challenge now is the transition to renewables. The government at least is talking about making a virtue of the transition, and seeking to expand Australia’s export and value-adding capacity in that area. As the Grattan Institute recently showed, there are sensible ways to pursue that (including by ceasing to subsidise fossil fuel industries).
But the environment in which the summit will be held is very different from 40 years ago, too. We’re a more fragmented society. Far more of us do not vote for major political parties or identify as Liberal or Labor voters. We’re a far more unequal society. Far fewer of us are union members. Our media ecosystem has changed from a relatively uniform and tightly regulated analog one to a severely fragmented user-controlled one.
Above all we’re a society that is far less communitarian and far more individualistic in its outlook, courtesy of more than three decades of Australians being told they have to fend for themselves in a global economy, and decades of Australian governments shedding, forgetting and selling off their capacity to get things done.
Perhaps, as in 1983, fundamental change starts with a summit. More likely it will confirm business as usual.
