Australia’s capital class remains too focused on profit to truly address productivity

Policy can seem like opening a blind box: you’ll get something, but probably not what you want. Jim Chalmer’s economic roundtable was no different. Every option is on the table, yes, but what we’ll get is as unknown as what is driving the Labubu craze. 

First, the positives. Holding the roundtable is at least an indication that the government is looking to expand the mandate it took to the election. Despite Anthony Albanese’s repeated statements (always carefully worded in the present tense) that “the only tax policy that we’re implementing is the one that we took to the election”, every Labor MP privately admits there is not only the need to do more on tax but also the space. A whooping majority tends to focus even the most recalcitrant minds on the art of the possible.

The issue with the roundtable is that the same groups advising on how to disarm the intergenerational economic bombs that have started to explode are the same groups that helped set them.

The Productivity Commission, Treasury, the Business Council — the same outfits that have spent the past 25 or more years advocating for more privatisation and tax cuts, claiming they are panaceas for productivity growth — are now sounding the alarms that productivity has continued to fall.

And while they are all trying to find the guy who did this, the answers they have put forward are, shockingly, to cut regulations and tax. They are certain that this time it will be the way to boost productivity. Obviously. It has worked so well in the past. But many of these people have spent their careers teaching Australians to accept low wage growth for the good of the country, because “higher wages mean lower productivity” is a much easier sell than “we love high profits and don’t want to eat into those”. 

Productivity is a measure of the output of goods and services per unit of input. But our capital class have had such a focus on profits and returns to shareholders, efficiency is prioritised above all else. Just look at Qantas: productivity is determined by owners and managers, yet workers are always expected to pay the price. Lower wages, higher prices, a lower standard of living, but the first to be asked to sacrifice. 

It’s no surprise, amid headlines screaming the roundtable was a “stitch-up” for the unions, that ACTU boss Sally McManus admitted to feeling “a bit outnumbered” at the event. In the end, unions can’t be confident of any wins beyond the captain-obvious measure that creatives should be paid for any work used to train the AI models that may eventually replace them, and a concession that the Tech Council is not quite as hostile to an AI Act as it once was. 

But McManus was never going to be heard above the Abundance Bros, who see cutting regulation as the pathway to productivity nirvana — mostly because it does not force them to reckon with the impacts of climate, neoliberal policies or poor planning. No, the only barrier to increased productivity is red tape. Let’s just ignore that every royal commission into major failures of policy pinpoints the lack of government oversight and regulation as having contributed.

Since the Productivity Commission was formed, average productivity growth has fallen decade after decade. That’s not the Productivity Commission’s fault, but either no-one is listening to its advice or its advice is ineffective. 

Or perhaps the problem is that we don’t know what the problem is. Is it because we are shifting to things where productivity is harder to measure? Well, then we don’t have a problem. We could easily double the productivity of teachers by doubling their class sizes, but we don’t do that because we know it won’t improve education outcomes. Productivity as we measure it doesn’t take quality into account, but that doesn’t seem to be something we want to discuss. 

Maybe it’s that Australia is moving more into industries where you can not measure traditional “productivity” (such as the service industries like aged and child care). But, again, that’s not what the Business Council wants to discuss, mostly because that would mean a larger role for government. Everyone knows you can’t have public services and higher productivity — except in Nordic countries, where they have a bigger public sector than we do but also larger productivity growth.

At least we have seen some focus on intergenerational inequality, which in large part has come from the Australian policy habit of grandfathering concessions for older generations while asking younger generations to pay for it. This isn’t new: a recent ANU study found the “pre-tax income of Australians aged over 60 was 65% of the population aged 18-60 and the post-tax income is equal to 95% of their income”.

While there is at least some talk of wealth taxes, it is worth pointing out that it has been framed by the Australian Financial Review — largely seen as very sensible and without motive by the press gallery, despite being the paper of capital and therefore as objective as Green Left Weekly — as “an assault” on superannuation and wealth, rather than as a necessary redistribution (cue the “we worked very hard for our tax breaks” defence).

The Labor government has all the space in the world to make changes. It’s broadening the conversation. Now it just has to find the courage to use the power that it’s been handed to make the hard but necessary reforms people not only expect, but need.