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Why business is losing faith in the government

Why business is losing faith in the government

Allegra Spender, The Financial Review -

The government is understandably focused on implementing its agenda, but it needs to listen to business as part of that process.


I welcome Jim Chalmers’ contribution to Australia’s economic debate with his essay in The Monthly. There are areas I agree, others I don’t. But borrowing from John F Kennedy, I challenge the treasurer to ask not just what business can do for the government, but to ask what you can do for business – and then actually deliver on it.

Dr Chalmers’ essay talks about the government having a leadership role in defining priorities, challenges and missions. I agree with this and some of the priorities he identifies, such as climate action, increasing inclusion and opportunities for all, and measuring more than just money. But the role of government is more than leadership, it is about delivery.

Although the treasurer focuses on market failures, businesses focus on the government failures of the past two decades and ask why the new government isn’t fully addressing those.

Few businesspeople think that the government is on top of tax. The Henry review showed a burning need for genuine reform, but the Rudd, Gillard, Abbott, Turnbull and Morrison governments have failed to deliver. Before Dr Chalmers remakes capitalism, business would like to see him deliver tax reform. Tax reform is not merely fiddling with the stage three tax cuts but changing the tax mix to ensure its long-term sustainability, meeting the challenges of the Intergenerational Report, introducing a trusted resource tax framework, and ensuring the Australian people share in our economic success.

Even fewer businesspeople think the government is on top of spending. In the past five years, government spending is up $166 billion a year. This spending is a contributor to our inflation outbreak and the Reserve Bank’s drastic action on interest rates. In three years’ time, it’ll be up another $85 billion – and that’s before the government implements all of its commitments in aged care, defence, education, health and social security. Budget deficits are forecast in every one of those years.

Government spending must actually make a difference, not just sound impressive. The Productivity Commission’s recent review of education demonstrated how critical this is; billions more are being spent in education, with no real educational improvements to show for it. Any business unit with those sorts of results would have a zero-based budget review.

We need to institute a rigorous and publicly available analysis of government spending, a process where all department spending is evaluated to see whether the same money could be spent for better outcomes. And finally, the business community feels that the government is focused on what business can do for them, but not focused on what they can to empower and unleash business.

There is a lack of recognition at how much better government should be.

The government is understandably focused on implementing its agenda, but it needs to listen to business as part of that process.

Industrial relations reforms are a clear example. Business went to the Jobs and Skills summit in good faith, but last year’s IR legislation did not reflect that good faith. COSBOA naively said it was open to opt-in, multi-employer bargaining templates and the government said it had a mandate for mandatory multi-employer bargaining that was opposed by every business group, including COSBOA.

No wonder the business community has grown sceptical that it will be “consulted” but not actually listened to. And that scepticism is no doubt contributing to reactions to Chalmers’ essay and the nervousness about what “partnering with government” and “making markets better” might mean in practice.

The problem is, the government does not have a real agenda for enabling businesses to thrive. Small organisations aren’t told until the last minute whether their government contract is being renewed. Businesses around the country are struggling with the complexity of the awards, and face regulatory changes that happen all at once, without any sequencing.

As well as a lack of action, there is a lack of recognition at how much better government should be. A sectoral level review of value-destroying regulation, a sequencing of regulatory reform, a wholesale review of the awards and a commitment from government to be a good contract partner to business would show that the government is serious about being a partner of business.

Things have to change. Although business isn’t perfect, the business community I know fully supports an agenda of making the country better, making our workplaces more inclusive, helping to share prosperity, making a positive contribution to our communities. This is demonstrated by the business community’s endorsement of paid domestic violence leave and the Respect at Work bill.

But if government won’t be a true partner for business, that goodwill will dry up. Now is the time government focused on fixing itself, and releasing the handbrake on business, so we can all thrive.

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