Our economic future is dependent upon collaborative decision-making.
Australia's current economic performance is "OK", however it used to be better than that. How do we turn "OK" into another golden era, or at least one that is "really good"?
That was the key question that focused the minds of participants at a special roundtable dinner of the Global Foundation that was hosted by HSBC Australia in Sydney on 30 January 2018 and attended by 60 members and friends, from business, universities, faiths, the judiciary and society.
A distinguished panel, including Dr Philip Lowe, Governor of the Reserve Bank of Australia, Ms Libby Lyons, Director of the Workplace Gender Equality Agency, Mr Danny Casey, Chairman of Catholic Super and Mr Paul Bloxham, HSBC’s Chief Economist for Australia and New Zealand, considered a conundrum that Australia continues to face.
It was agreed the global economic backdrop was the most promising it has been for several years, although there was concern that the economic governance needed to underpin growth was weaker than required.
World economies have generally started the year on a solid footing and the legacy of the global financial crisis is fading. For Australia that means GDP growth is likely to be around 3%, inflation will hover around 2% and unemployment will sit around 5.5%.
But wages growth in Australia, like most everywhere else, remains stubbornly low and this is holding back the economy. Meanwhile, the share of profit going to owners of capital is the highest in decades.
What’s more, wages growth is unlikely to pick up speed anytime soon. The reality is that income growth per capita in Australia prior to the global financial crisis was far superior to other Western countries. This level of real income growth is unlikely to recur, at least in the near future.
Globalisation and rapid technological change have created intense competition in business, which means that companies are reluctant to push up prices for fear of losing customers. This, in turn, leads to lower wages growth.
Many Australians feel that they are not benefitting from prosperity. A greater sense of participation in the progress of Australia may require some solid rethinking
Can anything be done? The panel considered a range of options – many of which would require business and government to act. Initiatives to increase female participation in the workforce (even though it is already rising), policy and tax incentives to encourage business investment and initiatives to boost infrastructure development were all thrown into the mix.
The need for more infrastructure was identified as a priority – as long as public trust in infrastructure projects is restored with better governance. Properly-run projects can provide a tremendous boost to employment and economic activity, as well as provide a social benefit.
A laser-like focus on productivity was also proposed and attention was drawn to the recent work of the Productivity Commission in this regard.
Finally, turning to world economic affairs, Australia needs to more generally appreciate that its prosperity is built on a successful international trading system. It benefits more than most nations from open, rules-based economic relationships and its expanding services sector positions it well to benefit from rapid growth in Asia.
The concept of ‘cooperative globalisation’ - that is transformative, fair, inclusive and prosperous - as championed by the Global Foundation and an increasing number of world leaders, was strongly endorsed. The continuing work of the Global Foundation, with its proposed national conversations around Australia and in the Pacific, Asia and globally, led by the private sector and involving contributors from across society, was warmly welcomed.