The frightening prospect of consensus



The Australian 25 August 2015


The most frightening prospect at tomorrow’s National Reform Summit is that the participants may end with consensus.

Margaret Thatcher once said consensus was “the process of abandoning all beliefs, principles, values and policies in search of something in which no one ­believes but to which no one ­objects”. Civic debate in Australia may have its problems, but there is hardly a shortage of cant. The last thing the summit should be seeking is a contrived like-mindedness spoken through gritted teeth.

The ambition of the National Reform Summit should be to identify the common ground from which the nation can move forward. Common ground is not a place to bury differences. It is a place where one can state them clearly.

The presence of unions and business in the same room conjures images of 1983 when Bob Hawke’s new government staged the National Economic Summit in Canberra to forge a path for reform. Finding common ground seemed so much simpler then. “The indispensable condition for the achievement of this common legitimate goal is real economic growth — an increase in the per capita output of goods and ser­vices,” Hawke told the summit in his opening address. Wage and salary earners, business and welfare recipients shared a common interest in “the maintenance, and through time, an improvement, of their standards of living”.

The grating sound of deckchair shuffling from pre-summit discussions in recent weeks suggests a shared interest in economic growth can no longer be taken for granted. Hawke, for example, did not have to compete with the deadening doctrine of sustainability, taught almost universally in modern schools, which considers there is something disreputable about an expanding economy.

The “Sustainability priority” (their capital S) is embedded in the national curriculum, encouraging students to develop “an appreciation of the necessity of acting for a more sustainable ­future and so address the ongoing capacity of Earth to maintain all life and meet the needs of the present without compromising the needs of future generations”. Even the Pontiff agrees. “Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Pope Francis wrote in an “apostolic exhortation” in Nov­ember 2013. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power.”

Economic growth — the mechanism that has steadily improved the length and quality of life for humankind since about 1750 — is now contentious. No wonder much of the advice to the National Reform Summit from some of the contributing thinkers has been, to say the least, a little confused. Sustainability, together with its soft-headed cousin inclusiveness, demands that we divide the spoils rather than create new ones.

The Grattan Institute’s discussion paper on tax reform is a case in point. Commonwealth and state governments are urged to “boost revenue” to repair the budget deficit, which in layman’s language means increasing taxes. The rich are not being taxed enough, it claims, or at least not as high as the rich in Portugal, Denmark or Sweden. Tax breaks on superannuation should be wound back; negative gearing and capital gains tax discounts should be limited; the rich should be slugged more through a higher and broader GST.

Talk about unsustainable. International experience has shown time and again that fiscal consolidation that relies on raising taxes always ends in tears. The extra revenue is quickly spent on electoral sweeteners to cope with the backlash the higher taxes generate. Increased government spending hinders, rather than helps, private-sector growth.

Economic rationalism, as we called it in the 1980s, used to appeal to trade unions. ACTU secretary Bill Kelty’s role in Hawke’s National Economic Summit and the subsequent Accord agreements was crucial to their success. Kelty recognised that wage restraint and lower inflation would be better for wage earners, putting more people in jobs and delivering prosperity.

“Kelty never spoke in sectional terms,” Paul Kelly writes in The End of Certainty. “He spoke only about national advancement.”

It will be interesting to see if Dave Oliver’s ACTU takes such a magnanimous approach tomorrow. It has been a while since the union movement took part in an intelligent debate about the challenges facing the nation.

Oliver’s claim to a seat at the table is far weaker than was Kelty’s in 1983, when three million-plus union members made up 57 per cent of the workforce. Today the ACTU represents fewer than 1.8 million employees, or 17 per cent of those in work. Kelty could make a reasonable claim to represent the interests of working people. Oliver’s ACTU is just another pressure group, an increasingly disreputable one at that. As the Heydon royal commission has demonstrated, the business model adopted by many unions depends on extortion and corruption.

The unions’ connection and dependence on industry super­annuation funds compromises their view on retirement income, one of the four policy strands of the summit. On productivity and participation, another policy strand, they advocate more government spending on worthless training programs. Labor market deregulation, needless to say, will not be on the table.

On fiscal and tax reform, the unions’ views are irrevocably skewed in favour of greater government spending. The latest Australian Bureau of Statistics survey found that 42 per cent of those who work for the government are union members, compared with just 12 per cent of those in the private sector.

If there is a representative body for the poor and the needy — as opposed to public servants who make a living from devising schemes to help the poor and the needy — it is probably the Australian Council of Social Service, a group that far more than the unions these days is capable of becoming a partner in reform.

Its chief executive, Cassandra Goldie, has two things in common with Kelty. First, she is a redoubtable defender of her constituency and stands up for its interests. Second, she understands that those who truly want to give the poor a helping hand see business as an ally, not an enemy. They understand that wealth has to be created before it can be redistributed.

In the end, the summit will be worth the price of admission if it simply affirms our common interest in growth.

Nick Cater is executive director of the Menzies Research Centre and a co-convener of the National Reform Summit.