Speaker 1: Hi, I'm Ruby Jones and you're listening to seven AM.
Speaker 1: This week in Canberra, the press, unions, business leaders and
Speaker 1: politicians have all been talking about one thing, the Economic Roundtable.
Speaker 1: It's been spooked by the Government as a way to
Speaker 1: address a core problem with the economy, sluggish productivity. But
Speaker 1: what is actually on offer and will it make a
Speaker 1: difference to the rising structural inequalities we face today. Executive
Speaker 1: Director of the Australia Institute Richard Dennis on what's happening
Speaker 1: behind closed doors in Canberra and the challenge and opportunity
Speaker 1: labor now faces. It's Friday, August twenty two, so Richard,
Speaker 1: welcome back to seven AM.
Speaker 2: Thanks for having me on.
Speaker 1: This week started with the Chair of the Productivity Commission,
Speaker 1: Daniel Wood giving an address to the Press Club where
Speaker 1: she laid out one of the big problems the Economic
Speaker 1: Roundtable needs to address, and that is intergenerational inequality. Can
Speaker 1: you just lay out for me how that is playing
Speaker 1: out right now? Oh?
Speaker 2: Absolutely, I mean intergenerational inequality is a terrible problem in Australia.
Speaker 3: We all want our kids to grow up having better
Speaker 3: lives than we have. We want them to be healthy,
Speaker 3: to get a good education, to have more options in
Speaker 3: their careers and perhaps even a bit more leisure time
Speaker 3: than some of us have managed.
Speaker 2: The reality is for someone that left UNI ten years
Speaker 2: ago and started saving for their deposit teen years ago
Speaker 2: for their house, they're on average likely to be further
Speaker 2: away from a deposit than when they started.
Speaker 3: That expectation that life will get better for each successive
Speaker 3: generation is Australia's generational bargain, and for many generations we
Speaker 3: have fulfilled that promise until perhaps now.
Speaker 2: The housing market is very much stacked in favor of
Speaker 2: people that own two or more houses, and stacked against
Speaker 2: people that don't own any houses. The housing market is
Speaker 2: stacked against people whose parents can't bail them out and
Speaker 2: give them that magical deposit.
Speaker 3: At their heart. These are productivity challenges, and by adopting
Speaker 3: a growth mindset we improve our capacity to address them.
Speaker 2: But let's be clear, not all young people are going
Speaker 2: to miss out. Young people with rich parents are going
Speaker 2: to get into the housing market quicker because the banker
Speaker 2: Mum and dad is going to give them that head
Speaker 2: start that everyone wants. But by definition everyone can't get
Speaker 2: a head start, and when they inherit large amounts of
Speaker 2: money that their parents have accumulated thanks to superannuation tax
Speaker 2: concessions and thanks to the capital gains tax. Yeah, there's
Speaker 2: going to be some really rich young people in the future.
Speaker 2: So that inequality is just going to get worse because
Speaker 2: of these I would argue deeply flawed structures that we've
Speaker 2: built with advice from Treasury in the Productivity Commission. For decades, growth.
Speaker 3: Has simply fallen down the list of priorities in policymaking.
Speaker 3: This manifests not just in less economic reform, but in
Speaker 3: decisions by governments federal, state and local, to pay less
Speaker 3: attention to growth trade offs in pursuing other policy goals.
Speaker 2: It's a terrible problem that's taken decades of neoliberalism to cause.
Speaker 2: It's decades of deregulating the labor market, it's decades of
Speaker 2: privatizing and outsourcing a whole range of essential services. Decades
Speaker 2: of enormous tax concessions for superannuation have helped older generations enormously,
Speaker 2: and now we're standing here with this sort of look
Speaker 2: of shock, going how young people ever going to catch
Speaker 2: up if their wages are growing slower than house prices.
Speaker 2: So I just fear that we're kind of going back
Speaker 2: to the same poisoned well to get more of the
Speaker 2: bad advice that's caused the problem.
Speaker 1: Well's talk a little bit about this week, this roundtable
Speaker 1: and all of the framing around productivity. I mean, as
Speaker 1: it kicked off, we heard from the treasurer. He talked
Speaker 1: about making the economy more productive. He said that was
Speaker 1: the best way to make everyone better off. So is
Speaker 1: there a productivity problem that needs solving?
Speaker 2: There is And look, so productivity it means output per
Speaker 2: unit of input. The reason economists gets so excited about
Speaker 2: productivity growth is it's kind of like magic. Productivity growth
Speaker 2: says that we can get more stuff with the same
Speaker 2: amount of labor input, with the same amount of land
Speaker 2: input and the same amount of capital input. This magic
Speaker 2: is widely discussed, but not widely understood. And unfortunately, while
Speaker 2: the concept of productivity is very important in a country
Speaker 2: like Australia, whenever someone with power would like more money,
Speaker 2: the case they make is give me more money and
Speaker 2: it will increase productivity. Right, So we have CEOs in
Speaker 2: Australia saying you need to cut the company tax rate
Speaker 2: for me so that productivity will go up, or you
Speaker 2: need to make it easier for me to sack workers
Speaker 2: so that productivity will go up. Or we need to
Speaker 2: make artists give all their intellectual property away for free
Speaker 2: to tech giants so that productivity will go up. So
Speaker 2: it's just this lazy way of dressing up self interest
Speaker 2: as national interest.
Speaker 1: Right, So it's clear you don't agree with the case
Speaker 1: that big business is making, but they are not the
Speaker 1: only ones at the rout and table. Also, have there
Speaker 1: been any ideas that have emerged that you think would
Speaker 1: be effective?
Speaker 2: Oh, look, I think there are some good ideas that
Speaker 2: have been floated both in the lead up to the
Speaker 2: round table and by people at the round table. For example,
Speaker 2: how about we get rid of the enormous subsidies for
Speaker 2: diesel use by the mining industry that had save US
Speaker 2: ten billion a year that we could spend on more
Speaker 2: productive purposes. How about we put a twenty five percent
Speaker 2: tax on all gas exports, stop giving gas away for
Speaker 2: free tax gas exports. That will encourage the gas industry
Speaker 2: to provide more and cheaper gas to Australians while putting
Speaker 2: another ten or so billion dollars into the government to
Speaker 2: go and spend on more useful things. How about we
Speaker 2: rain in the capital gains tax concessions. These are very
Speaker 2: good ideas from the ACTU and while while the housing
Speaker 2: stuff got a bit of a mention in the media,
Speaker 2: because nothing sells newspapers in Australia like scaring baby boomers
Speaker 2: about changes to capital gains tax.
Speaker 4: So we're going to take a proposal that both negative
Speaker 4: gearing and capital gains tax should be reformed, that they
Speaker 4: should be limited to one investment property and grandfathered for
Speaker 4: existing arrangements for five years to allow people to adjust.
Speaker 2: So sorry, I think it's exciting and important that you know,
Speaker 2: we gave a loud voice to Sally McManus to bring
Speaker 2: what I think is a more more productive agenda to
Speaker 2: the table. I don't think she'll persuade the business people
Speaker 2: in the room, but that's the point. We've got to
Speaker 2: stop giving them a veto over what we do. My
Speaker 2: hope is that by ventilating these ideas at the round
Speaker 2: table over the next year or so, we can build
Speaker 2: some political awareness and support for doing that. So if
Speaker 2: the government convince most of the people, then in a
Speaker 2: democracy we should be able to crack on.
Speaker 3: And do it.
Speaker 1: Coming up, where is Labour's appetite for ambition. Richard, what
Speaker 1: are your expectations that this Economic Ground Table could deliver
Speaker 1: the kind of changes to the economy that really do
Speaker 1: benefit everyone.
Speaker 2: Oh, this summit is not an ambitious summit, to be clear.
Speaker 2: As someone who's been interested in the things for decades,
Speaker 2: I've got pretty low expectations about what will come out
Speaker 2: of the summit. But I'm more focused on what's gone
Speaker 2: into the summit. We now admit we have a productivity problem.
Speaker 2: We've now got quite competing arguments for what we should
Speaker 2: do about that. The Business Council think their members should
Speaker 2: get a big tax cut. The ACTU think maybe we
Speaker 2: should start taxing gas and stopping fossil fuel subsidies and
Speaker 2: reiin in housing tax concessions. They are two quite different views,
Speaker 2: and it's rare in Australia for us to hear quite
Speaker 2: different views about what would be good for the economy
Speaker 2: because the Labor Party is stuck so close to the
Speaker 2: Coalition on so much of the sort of big economic
Speaker 2: narrative that most Australians have just never heard that there
Speaker 2: might be benefits from increasing taxes and spending more money
Speaker 2: on nice things. I mean, imagine if we had a
Speaker 2: tax on gas exports and made childcare free for all
Speaker 2: this tin families. I don't think there's an economist in
Speaker 2: the country that would disagree that taxing gas and helping
Speaker 2: more families participate in the workforce would be great for
Speaker 2: the economy. But those kind of ideas don't usually come
Speaker 2: out of our very conservative election campaigns. Those sort of
Speaker 2: ideas don't get much airplay in our major newspapers or
Speaker 2: our public broadcaster. So you know, the reality is Labour
Speaker 2: took a pretty thin agenda to the twenty twenty five election.
Speaker 2: It's hard to see it taking more than more than
Speaker 2: a year, probably less time to actually implement the policies
Speaker 2: they took to the election.
Speaker 1: At this moment in time, then there does seem to
Speaker 1: be a big golf between the kind of ambition that
Speaker 1: could exist and this particular summit. So does it seem
Speaker 1: to you like there is any kind of genuine appetite
Speaker 1: within the government for more fundamental change?
Speaker 3: Oh?
Speaker 2: Look, publicly, no, Privately yes, of course. I mean I
Speaker 2: think the best example here is it in the Labour's
Speaker 2: first term they were adamant for two years they wouldn't
Speaker 2: change the Stage three tax cuts, and then they shifted
Speaker 2: eighty billion dollars from high income owners to low and
Speaker 2: middle income owners. That's fantastic. I'm glad they did that,
Speaker 2: and so we're voters. It's one of the most visible
Speaker 2: things they did, and according to polling we did at
Speaker 2: Australia Institute, it's one of the most popular things they did.
Speaker 2: So yeah, I think that at the moment, the loudest
Speaker 2: message coming from the Prime Minister is very much as
Speaker 2: steady as she goes. You know, we've got our election
Speaker 2: agenda to implement. That's what we'll be focusing on. But
Speaker 2: we're open to suggestions. So I think it's safe to
Speaker 2: say the Prime Minister is not out there kind of
Speaker 2: whipping up a frenzy of people saying, yeah, let's do
Speaker 2: big things. But democracy, being as it is, politics hates
Speaker 2: a vacuum. So I'm optimistic that once they get through
Speaker 2: the small range of reforms they took to the election,
Speaker 2: we've got a good two years to have bigger debates about, yeah,
Speaker 2: should we stop giving gas away for free to Sevron
Speaker 2: and BP, or should we reiin in tax concessions so
Speaker 2: people who owned twenty or more houses or really radical
Speaker 2: things like that.
Speaker 1: And I suppose as these conversations about policy are happening,
Speaker 1: it's in the context of millennials becoming a bigger voting
Speaker 1: block than baby boomers. So there is now something that's
Speaker 1: sake for the government if there is not meaningful change,
Speaker 1: particularly on intergenerational inequality.
Speaker 3: Oh.
Speaker 2: Absolutely, And I think there's a real challenge but indeed
Speaker 2: a real opportunity for Labor here. It's dangerous for Labor
Speaker 2: to keep ignoring millennial voters. Here in Canberra, the Seed
Speaker 2: of Bean was once one of the safest seats in
Speaker 2: the country. It's now held still by Labor, you know,
Speaker 2: but the margin fell from like fourteen percent to half
Speaker 2: of percent. Similarly, in the Seed of Fremantle, again fell
Speaker 2: from double digit margin to less than one percent now.
Speaker 2: So I think it would be heroic of Labor to
Speaker 2: assume that young voters will be happy with the status quo.
Speaker 2: And similarly, the fact that the Liberals did so badly
Speaker 2: at the last election, given that I think there's no
Speaker 2: chance the Liberals can win the next election, it's going
Speaker 2: to be hard for Labor to say, please, don't put
Speaker 2: pressure on us to be ambitious, because if you ask
Speaker 2: us to be ambitious, those nasty Liberals might win and
Speaker 2: you'll get less than you want, not more. I think
Speaker 2: it's been really helpful for Labor to be able to
Speaker 2: kind of control younger voters and control progressive voters by saying,
Speaker 2: if you ask for too much, you'll get even less
Speaker 2: than you want, so back off. For me, what's important
Speaker 2: is not how many seats Labour won at the last election,
Speaker 2: but how many of the Liberals lost. The Liberals are
Speaker 2: not a viable threat to Labor at the next election,
Speaker 2: so in turn, Labor have really got no excuse for
Speaker 2: not being more progressive on housing, on climate, on inequality,
Speaker 2: on a whole range of issues.
Speaker 1: Well, Writard, thank you so much for your taid.
Speaker 2: Thank you.
Speaker 1: Richard. Dennis's new book is called Dead Center, How Political
Speaker 1: Pragmatism Is Killing Us. It's out now. Also in the
Speaker 1: news today Benjamin Netanya, who has continued his public attacks
Speaker 1: on Anthony Alberanzi despite Australian Jewish groups calling on the
Speaker 1: Israeli Prime Minister to deal with disputes privately. The Executive
Speaker 1: Council of Australian Jewelry this week said Nettanya, Who's labeling
Speaker 1: of Albanese as weak was inflammatory, and provocative and was
Speaker 1: affecting Australia's Jewish community. But in a new interview Benjamin Nettana,
Speaker 1: who again called Anthony Albanesi week and said his record
Speaker 1: is for ever tarnished by the weakness that he showed
Speaker 1: in the face of these hamas. Terrorist monsters. And state
Speaker 1: premiers say they were caught off guard when Mark Butler
Speaker 1: announced changes to the National Disability Insurance Scheme. This week,
Speaker 1: Disability and NDAs Minister Mark Butler announced a program called
Speaker 1: Thriving Kids, which is designed to divert children under nine
Speaker 1: with autism and developmental delays from the NDIS. The federal
Speaker 1: government has confirmed two billion dollars for the scheme and
Speaker 1: says states are expected to kick in. Victorian Premier Jacinta
Speaker 1: Allen said she was not told about the changes ahead
Speaker 1: of Butler's announcement, a sentiment backed up by ministers from
Speaker 1: several states. Seven Am is a daily show from Solstice Media.
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Speaker 1: See you next week,