Opinion
Stop fishing for red herrings and start fixing the problems
Bran Black
Business Council of Australia chief executiveWe’re not fixing some of the real problems in Australia – cost of living, housing, investment –because we keep falling for the oldest trap in the political playbook. When it comes to fixing thorny problems for Australians, in any context, we must bin the blame game.
Why is it a trap we keep falling into? Well, when there’s a painful problem confronting you, pointing the finger is easier than solving it. Unfortunately, I don’t have to search far for examples.
Forcing the supermarket giants to divest is unlikely to lead to lower prices and may cost jobs.Credit: Asanka Ratnayake
Take our rising cost of living. This real and urgent challenge has perversely led to the proposal for supermarket divestment powers. These kinds of powers would allow governments to forcibly break up large retailers. It’s a proposal that’s been dismissed by just about everyone who has taken a proper look at it for the past three decades. Why? Because expert analysis indicates that it’s most likely to increase prices.
When you break up large retailers, who are among the largest employers in Australia, you risk Australian jobs. You also have the potential to cause real harm in regional Australia, where these jobs are crucial and where the big players invest vast amounts in logistics networks that can serve remote communities.
There’s a reason you don’t find many smaller players in regional Australia – the business case doesn’t always stack up. Coles and Woolworths have the scale to serve our regions, and what’s more they keep prices at similar levels whether you’re in the city or the bush.
We’re told these retailers are the cause of our cost-of-living problem. Yet, they make less than $3 on every $100 at the checkout and that hasn’t changed much in the last few years. Grocery price increases are also broadly aligned to most other price increases by percentage across our economy.
The real issue is glaring. It’s inflation. So how do you get inflation down? You limit spending and you make your economy more efficient and productive. But that’s hard.
Another red herring that’s been slapped on the Australian table is international students – supposedly driving our housing crisis. Students make up about 4 per cent of the rental market (and, to a large degree, it’s the studio apartment market they’re interested in). Student visas are almost back to 2019 levels – a 36 per cent drop since the post-COVID influx last year.
No one is suggesting that growth in international student numbers should be entirely unfettered, but the real problem that needs to be addressed to deal with housing demand is housing supply and, especially, the failure of state planning policies. And that’s simply not being managed with sufficient urgency.
One of the big Australian problems I’m talking about with CEOs and boards every day is the difficulty in getting investors to take bets on Australia at the moment. We have been a net exporter of capital for five years in a row – the first time in over a century!
The easy option we jump to is incentives to attract investment. And these certainly play a role. But investment capital scares easily, and the real reason for a lack of investment in Australia being talked about in boardrooms is our settings on regulation, taxation, and industrial relations. Will we have the confidence to address these hard issues, or will we settle for small fry?
There are plenty of other examples of red herrings alive and well in our national debate. They’re in discussions on energy, healthcare, taxation – all the biggest and hardest problems we face.
Someone I once worked with in government said that the long way is the short way when it comes to delivering policy that fixes big issues in our society. What they meant is that if you take the (sometimes long) time to carefully work through evidenced-based policy settings, genuinely consult with stakeholders, revise your proposals based on feedback from those with on-the-ground experience and then argue your case in the public domain, you’ll have a better chance of fixing what matters to Australians.
Australian leaders have a grave responsibility to lessen the cost-of-living crisis, provide more homes for Australians and drive investment into the country. We’ve got to stop fishing for red herrings and start fixing the real issues.
If we tackle the hard reforms, I think the long way is a good place to start.
Bran Black is the chief executive of the Business Council of Australia. He was the chief of staff to former NSW premier and treasurer Dominic Perrottet. Before working in government he was a corporate lawyer.
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