TOO SLOW IN A FAST WORLD
Daily Telegraph, 4 January 2022
Sports stars are getting more remarkable every year. In 1950, no-one in history had run a four-minute mile. Now, there are more than a dozen high school students who have managed the feat. In 1950, the bench press world record was 181 kilograms. Now, it is 355 kilograms.
Today’s elite athletes have better equipment, better nutrition and better coaching than in past generations. Competitors start training at a younger age, and train harder than ever before.
Yet while today’s sporting stars are faster, higher and stronger than ever before, the same cannot be said for the Australian economy. Even before COVID hit, economic growth had slowed. Wage growth was tepid. Construction and business investment were languishing.
An especially worrying metric is something called labour productivity, which measures how much economic value the typical worker produces in an hour. Through Australia’s history, this figure has risen significantly. Productivity explains almost all the increase in GDP since Federation, and virtually all the growth in real wages. Thanks to productivity growth, Australian workers can buy more with one day’s pay than our ancestors could buy with one week’s pay in 1901.
Productivity is the economy’s engine. But under the Liberals, that engine is spluttering and blowing smoke. Labour productivity – output per hour worked – grew at around 2 percent a year from the 1970s to the early-2010s. But from 2014-15 to 2019-20, productivity grew at an average pace of just 0.5 percent – well below the historical average. The decade ending in 2020 saw the slowest rate of growth in income per person of any decade in the post-war era. That’s true even if we exclude the COVID pandemic.
Australian firms aren’t being encouraged to keep up with the world’s best. Only one in forty Australian firms invest in artificial intelligence, and just one in eighteen invest in data analytics. Only half take orders online. Only half of all businesses say that they are innovation-active. And in 2019, just nine per cent of Australian firms said they produced innovations that are new to the world – down from 11 per cent in 2013.
How do we make the Australian economy more dynamic and productive?
The first step is not to take a wrong step. The conservatives see productivity as a matter of cutting: cutting protections for employees, cutting environmental regulations and cutting the social safety net.
For Labor, productivity isn’t about cutting – it’s about investing. Smart investments in individuals, infrastructure and institutions are at the heart of a successful productivity agenda.
Investing in individuals means a more skilled workforce. An Albanese Labor Government will expand access to early childhood education, create hundreds of thousands of free TAFE places, and create tens of thousands of new university spots.
Investing in infrastructure means constructing roads and rail networks based on where congestion is worst, not where it suits the political whims of the Morrison Government. And it means getting the NBN right. As the COVID lockdown has made clear, no piece of infrastructure is more important than high-speed internet. The difference between fibre-to-the-premises and fibre-to-the-node is critical for applications such as cloud computing, high-definition videoconferencing, telemedicine and distance education. Time without internet connectivity is a critical source of lost productivity for students and professionals working from home. Unreliable copper services are letting many companies down. The immediate needs for the NBN sound like the advice parents might give a wayward teen: more fibre, higher standards, and proper accountability when providers fall short.
Investing in institutions means a competition regulator that curbs bad behaviour by big firms, stops monopolies throwing their weight around, and encourages new business formation, which has declined over recent decades. We need to have institutions that encourage entrepreneurship from across the community. Right now, Australian startup founders are more likely to be young men from affluent backgrounds. This isn’t just inequitable – it’s also inefficient. Society ends up missing out on the productive talents of potential Elizabeth Blackburns and Peter Dohertys, merely because talent springs up in an unexpected place.
Ideally, entrepreneurship should look more like jogging than polo. If starting a new business is a mass participation activity, we’ll get a whole lot more new firms than if entrepreneurship is an elite sport. Our institutions can do a better job of ensuring that disadvantaged youngsters get the same access to mentors and money that has helped successful startups grow their businesses.
Whatever your favourite sport, chances are that today’s players are better than they were a generation ago. Labor believes that as a society, we should aspire to an economy that’s as successful as our athletes – and rewards workers with the kinds of pay rises that are fundamental to a better standard of living and a fairer society.
Andrew Leigh is the Shadow Assistant Minister for Treasury, and his website is www.andrewleigh.com.
Authorised by Paul Erickson, ALP, Canberra.