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CEDA State of the Nation: Recovering Confidence in Economic Growth in Australian Communities-Part I

June 29, 2018

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On 25 and 26 June 2018, the Committee for Economic Development of Australia (CEDA) held its State of  the  Nation conference in Canberra. Consistent with CEDA’s agenda for driving topical policy discussion, this year’s conference theme was ‘building economic and social resilience’. CEDA’s research shows that there is a ‘disconnect’ between Australia’s economic performance and individual perceptions of prosperity. A forthcoming boom in infrastructure may help to turn those attitudes around. However, examples from regional areas of Australia provide a model for how business success, community development and migration can all combine to enhance the lives of everyone in the community.

Fragomen is proud of its close engagement with CEDA as a national Trustee member, and of the quality of policy research it conducts as well as the energized and robust discussions it generates. For over 35 years, it has been a key thought leader in many areas of policy, including its seminal collection of papers on immigration, Migration: The Economic Debate, published in late 2016.

 In Part 1 of this two-part blog post, I look at key takeaways from the CEDA conference. In Part 2, I will discuss how migration can help business success and overall community development.

The economic disconnect and attitudes to growth and development in Australia

Federal Treasurer The Hon. Scott Morrison MP delivered the welcoming keynote address to CEDA’s flagship annual conference. Fresh from shepherding a package of tax reform through parliament the previous week, the Treasurer’s speech focused on Australia’s prolonged period of economic growth. The Treasurer cited Thomson Reuters figures to demonstrate that, at 3%, Australia’s current rate of GDP growth is higher than the fast-recovering USA, as well as the OECD average.

However, it seems this messaging may not be getting through to all Australians. At the conference, CEDA launched its latest Community Pulse report, presenting the results of its survey into community perceptions of the benefits of this sustained economic development. Respondents overwhelmingly identified corporations and shareholders, but not themselves, as having benefitted from the quarter-century of growth. As per the report, only ’five percent of people believe they are have gained a lot’, while ’74 percent of people believe large corporations have gained a lot’.

The results demonstrate that despite Australia’s economy doubling in size over the last 26 years without recession, there is a ‘disconnect’ between macroeconomic growth and individual experiences of personal financial well-being. This may partly be due to how any current economic upturn seems to be flowing to job creation and a reduction in unemployment: for the majority of people who are already in work, wage growth remains flat and underemployment remains a problem.  There is hope, however, with CEDA’s 2018 Economic and Political Overview indicating that the Australian economy is again showing signs of buoyancy following the wake of the mining boom, and that prevailing global trends are also turning back to Australia’s favour.

The survey results also suggest a drift away from community participation in economic debate. The Hawke, Keating and Howard governments were able to undertake wholesale structural changes to the Australian economy as a result of sustained engagement with the Australian community in a national dialogue about the need for macroeconomic reform. Today, many respondents to the CEDA survey seem to disassociate themselves from corporate financial success, even when macroeconomic structures mean that they are very likely shareholders in corporate profits through their superannuation fund.

This disengagement is important because it weakens the cognitive link between corporate success and personal prosperity. People tend not to appreciate the benefits of enhanced international trade, business profits and innovation if there is no discernable improvement in their financial means. In turn, this places undue political pressure on visa programs designed to meet skills shortages and facilitate global mobility, due to a conceptualisation of the economy, the labour market, and infrastructure capacity as zero-sum propositions.

Infrastructure: Key to Changing Australian Community Attitudes Towards Economic Development  

The panacea for this cynicism may just come from the scale and number of planned infrastructure projects. At State of the Nation, the outgoing head of Infrastructure Australia, Philip Davies, spoke of the long-term pipeline of projects aimed at easing infrastructure pressures and remodeling Australia’s cities away from a 20th century layout primed for manufacturing output, towards the clustering of activity hubs in a 21st century knowledge economy. As the Leader of the Opposition The Hon Bill Shorten MP pointed out in his keynote address, infrastructure projects engage members of the Australian community in multiple ways. Infrastructure projects and their long supply chains are, of course, significant sources of employment. The scale of planned infrastructure activity is such that it should also be a key driver of wages growth and reskilling of Australians across the economy in the medium term. Infrastructure (both physical such as new train lines; and social such as the National Broadband Network and increasingly interconnected health services) also improves quality of life for all in the Australian community.

CEDA’s research shows that members of the Australian community are struggling to see the correlation between macroeconomic performance and their personal financial circumstances. This creates an imperative for both government and business to get better at demonstrating the benefits of international trade, business profitability, innovation, and the visa programs that support these ends. 

Learn more about Simon Haag and our Australia practice. 

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