Can our new deal plan bust the recession?

Comment by Peter Roberts

Australia is in a recession and there is no point in a blame game – the only thing that matters is how do we get out of it?

Our crowd-sourced new deal plan for manufacturing has been received by those tasked by the Prime Minister with charting a way forward post Covid-19, and I am told favorably received.

But the world is full of good ideas, the question is always in the implementation.

The situation we find ourselves in is probably the worst we have been as a nation when faced by such challenges in recent times.

Government finances are in a very poor state with debt ballooning under the Coalition and the previous Labor government, and even before Covid-19 the income base had been eroded such that it was failing to keep up with expenditure.

Yet the institutions we collectively fund through our taxes are weak.

Education is in a parlous state with the VET system hamstrung and our tertiary sector a degree factory dependent on extracting cash from foreign customers, formally known as students.

Our innovation system is failing too.

We once aspired to move up the ranks of innovative nations and achieve the three per cent of GDP devoted to R&D seen in the most successful countries such as Swede, Korea and Israel.

We reached a mediocre two per cent of GDP a half dozen years ago, but since then it has fallen and in 019 was 1.79 per cent of GDP.

And in the last year business expenditure on R&D (BERD) fell by 10 per cent, to 0.9 per cent.

These are only some of the fundamental issues readers tackled in their submissions to the new deal plan, and they require fundamental reform by the nation’s governments.

During the GFC we saw some of that fundamental reform with a commitment to lifelong education from kindergarten onwards, a shift to renewables, and an investment in an all-fibre communications network which is the backbone of a modern, advanced economy.

It is far too early to pass judgement on the National Covid-19 Coordination Commission process and what will ultimately be approved as national policy by Cabinet and the Prime Minister.

There is talk of a focus on increasing gas supplies and reducing prices.

While gas is a fossil fuel with a finite future our energy policies that have given energy-rich Australia the same energy prices as the most energy-poor Asian nations must be fundamentally reformed.

The other thing we have learned is there may be cash to subsidise home renovations and new home buying, again a short term issue.

Yes construction has been driving the economy and is sliding into a deep hole – but do we really need to be investing more of our national wealth in unproductive real estate?

The national kitty is bare, and we have to husband our spending for those things that build a stronger future, not paper over the cracks in the edifice of Australia as a wealthy nation whose wealth is created by mining and home renovation.

That can only mean value-adding and there is no more value-adding sector available to us to stimulate than skills and technology-rich manufacturing.

I am confident that the advice going to the National Covid-19 commission does focus on the fundamental issues that will change Australia from a low-innovation, low-skills and low wage path by embracing reform, including to the fortunes of SME manufacturing.

Only time will tell when comes out of the process.

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