31 January 2023

As Treasurer, I spend a lot of time in the boardrooms of Australia with corporate leaders and investors who share my optimism about the future of our economy and our country – even as we confront together what many expect to be a challenging year around the world.

Opinion piece: A powerful role for business in the new economy

Published in the Australian Financial Review

As Treasurer, I spend a lot of time in the boardrooms of Australia with corporate leaders and investors who share my optimism about the future of our economy and our country – even as we confront together what many expect to be a challenging year around the world.

Like them, I believe business has an indispensable role to play not just in strengthening our economy but strengthening our society. And that we give ourselves a much better chance of prosperity and success if the private and public sectors work together – not at cross‑purposes – to create national wealth and generate more opportunities for more people.

These are some of the convictions which fed and fuelled the essay I wrote over Christmas for The Monthly magazine about how we grow our economy by learning the lessons gleaned from three global downturns in the last 15 years.

After a lacklustre decade of wasted opportunities which delivered weak business investment, flatlining productivity, stagnant wages, and anaemic growth, I argue for a new approach to our core economic objectives: cleaner and cheaper energy; training our people to adopt and adapt to new technology; and broadening and deepening our industrial base with investment in new strengths, while we maximise our traditional advantages.

This approach is not an ‘abandonment’ of supply‑side economics, on the contrary it recognises the long‑term growth potential of our economy will be driven by what we do to expand its productive capacity.

By strengthening our economic institutions, improving our evidence base, supporting better informed and well‑functioning markets, and by working together in a more coordinated way, we can make the most of our opportunities. To strengthen our society, our economy, and our democracy simultaneously – while ensuring our public finances are deployed in areas that deliver value for money.

This approach is born out of necessity, not ideology.

The predictable hyperventilating from the usual suspects, and the quiet encouragement from surprising places, has now reinforced these beliefs.

I’m grateful for the engagement from the Financial Review across multiple articles over multiple days, even the two‑page, 2,000‑word editorial on Monday.

But despite all of this welcome debate, the main conclusions of the essay were either wrongly caricatured, deliberately ignored, or completely missed.

As the essay makes clear, I see well‑designed and well‑informed markets as a powerful and positive tool, capable of efficiently and effectively allocating resources to deliver private and public value.

Government has a leadership role to play but that doesn’t mean picking winners – it’s about finding the priorities and opportunities that capital can respond to, in ways that align our economic and national objectives.

And it’s about recognising the power of market‑based discipline to help deliver social outcomes – moving away from the “spray and pray approach” and toward investing with purpose.

Envisaging a powerful and legitimate role for business puts my thinking in concert, not conflict, with the spirit of the Hawke and a Keating period. In fact, much of it comes from conversations with Paul Keating himself, someone whose counsel and friendship I cherish.

Mine is not a rejection of that period but an embrace of its underlying motivations ‑ looking forwards to the future, upwards to economic and social mobility and aspiration, and outwards to the world.

The respectful engagement I maintain with the business community, even as we grapple with difficult policy choices, is a reflection of my faith in the private sector and its leaders, working with government where that’s appropriate and of mutual benefit.

The October Budget was a product of countless discussions with the business community about the bigger and better‑trained workforce they need to address the skills and labour shortages which are holding employers and our economy back.

Banking 99 per cent of the upward revision to revenue over the next two years was recognition of the point made repeatedly and convincingly on these pages that the profligacy of the last decade has not delivered value for money, just as that period failed to deliver the productivity we needed to grow the right way.

From the Opposition, we expect little more than the irrelevant and incoherent drivel we saw from the Shadow Treasurer on these pages this week. After all, his only memorable contribution to public policy is the energy chaos that’s made us more vulnerable to international shocks.

But from the Financial Review – we expect more.

Better markets and capital flowing to its most productive purposes, governments and businesses working together to create prosperity and opportunity, and modernising our economy to lift living standards should be substantial areas of common ground, common sense, and the common good.