Business Needs To ‘Mind The Gap’

Written by:
7 June 2019
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Anyone who’s ever been to London and travelled on the Underground will know the words “mind the gap”.The phrase, together with concepts such as parliamentary democracy, the rule of law, freedom of speech and freedom of the press is one of Britain’s great contributions to the world.

“Mind the gap” is a useful description for one of the reasons why Scott Morrison and the Coalition won the federal election. Between what the elites living in Sydney/Melbourne/Canberra think is important, and what the rest of Australia living in the suburbs and in the regions put priority on: there’s a gap.

On Wednesday The Australian Financial Review’s senior correspondent Aaron Patrick provided a crystal clear insight of this.

At the election: “the poor; the isolated and the little educated were more likely to switch votes to the Coalition. Only the privileged residents of the inner cities were convinced to shift to Labor.”

As Patrick pointed out, these results might appear to some to be counter-intuitive. But from another perspective they’re not at all. All that’s happened in this election is that the difference between what the Coalition and Labor used to be, and what they are now, became more obvious.The policies of the progressive left are a long way from the concerns of the middle and working classes and that’s always been the case. Many Australians still prefer to practice their faith by going to church instead of watching an Al Gore video.

Likewise, Treasurer Josh Frydenberg should mind the gap when it comes to economic policy reform. He should understand that one side there’s the virtue-signalling engaged in by the chief executives of big business and their followers in the accounting, law and consulting firms.

On the other side there’s the real-life, day-to-day concerns of the productive economy. And the gap between those two is growing.

Calls for a comprehensive program of economic reform have grown this week in the wake of the national accounts showing that the annualised growth rate of the economy fell to 1.8 per cent. Per capita economic growth fell for the third consecutive quarter – for the first time in nearly four decades. Meanwhile the limits of record-low interest rates are starting to become obvious.

Twenty-seven years of uninterrupted economic growth has bred a complacency in business and the community that our prosperity will always be assured. That’s one of the explanations for a lack of debate about serious economic reform.

Interest in big picture reform wanes

Another explanation is that the CEOs of Australia’s major companies simply aren’t interested in big picture reform anymore.

It’s wrong to say big business doesn’t have a voice in public policy debates: it does. The debates most corporate CEOs get involved with these days are about identity politics, diversity targets, and climate change. None of those topics has anything to do with generating economic growth. Even on climate change, very few of those CEOs advocating “a price on carbon” do so because it will help grow the economy. Instead the argument simply is that some form of carbon tax is inevitable.

In the same way as the Coalition could have gone after the votes of wealthy voters in the leafy suburbs of Sydney and Melbourne during the election campaign and so probably lost office; Josh Frydenberg could follow big business down the path of things such as gender quotas for company boards. And he can see where they will get him and the economy.

The Treasurer’s alternative is to jump the gap. The “Big Three” issues of economic reform: red tape, tax, and industrial relations are what the Coalition must engage with. As countless surveys make clear they’re the real issues for real business.

Furthermore, no-one needs to study surveys to see what works to generate growth. Anyone can just look at America under Donald Trump.

Policymakers obsess over his trade policies while ignoring his cuts to red tape and tax that have had a huge impact on business confidence and investment.

There’s nothing trendy or glamorous about reforming red tape, tax, and industrial relations. They’re the policy equivalent of the bread-and-butter kitchen table concerns of voters in western Sydney and regional Queensland. And it was those voters that helped the Coalition to win the election.

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