Australia has been tagged the “dumb blonde” of the world. It’s attractive, but shallow – a kind of Pacific Paris Hilton, “living every day as if it’s your birthday” from inherited, unearned resource riches.
More sober commentators, such as Peter Hartcher in The Sweet Spot, attribute Australia’s prosperity to “deliberate acts of nation building”.
Hartcher says it’s not the resources boom – which in 2011 added a handy but not overwhelming 13 percent to national income – or China that kept Australia from recession.
Instead, he points to the ambitious re-booting policy reforms of the 1980s and 90s – tearing down tariff walls, floating the dollar, independent monetary policy, compulsory superannuation, competition and deregulation programs, along with more flexible labour markets.
These gutsy reforms progressively annealed a brittle national economy and supercharged productivity in the process.
Unfortunately, the dividend from the 80s and 90s reforms is dwindling, which is why Australia’s now sagging productivity levels are back in the news.
Growth in Australia’s multi-factor productivity (the one that accounts for both labour and capital) has slumped drastically since the turn of the century and has been negative for the past three years.
Nobel laureate Paul Krugman has declared, “productivity isn’t everything, but in the long run it is almost everything”.
This is particularly the case for countries (including Australia) that are moving into demographic sour spots caused by the high cost of servicing ageing populations with high expectations.
The classic remedies to declining productivity are:
- Skills and training programs
- A competition policy repecharge, focusing on taxis, newsagents, pharmacies
- Labour market flexibility that better balances John Howard’s Work Choices and Julia Gillard’s Fair Work legislation
- More infrastructure investment into transport, ports, energy, etc
- And, from business groups, tax reform.
The missing element is urban policy. We need to better understand that cities and productivity are indivisible.
Well designed and managed cities can help Australia grow faster while maintaining a low rate of inflation.
A cities-based productivity agenda can help repeat the double bounty of the 80s and 90s reforms – increasing real wages within a framework of falling unit labour costs and higher capital returns within a less volatile marketplace.
Many Asian countries are employing the urban accelerator as a premeditated public policy lever to fast-track economic power and mass prosperity.
It’s why the current Asian renaissance is so tellingly a story of stunningly swift urbanisation – an Adelaide every six days.
So, where is Australia’s urban productivity agenda?
In truth, we’ve journeyed to the Everest base camp of cities policy on several occasions.
Up go the tents and prayer flags. Out come the discussion papers, pilot programs and multilateral forums.
And yet, in no time we’re retreating down the valley to cosier, more comfortable lotus-eating flat lands.
The modest result is all too often the “bridges over puddles and roads to nowhere” derided by Infrastructure Australia chairman, Rod Eddington.
It’s ironic that a country that beat the rest of the world to so many big picture policy reforms in the 80s has been so spineless on cities.
The double irony is that Australia is intensely urban. More than 80 percent of GDP is generated in cities and the immigration growth that fuels urban progress accounts for “four out of 10 dollars in growth in Australian national income in the last generation”, according to Hartcher.
Here’s the irony trifecta. The current generation of pollies are on the nose because people feel poor. They don’t see the comparative GDP stats. They feel the congestion, the child care and hospital waiting lists, the housing affordability squeeze, the scarcity of retirement and aged care facilities.
People don’t believe politicians care about these issues – issues that are fundamentally about the way we design and manage liveable, competitive and productive cities.
Cities are the Achilles heel of risk averse, focus group-driven policy-makers.
The community is so fed up it can be mobilised to demand action.
Next month, we’ll outline the Property Council’s social media campaign to do so in 2012.
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Humans are now an urban species.
For the first time in history, more than half the planet makes its home in cities – by 2030, two thirds of us will.
That’s because cities furnish humans with monumental evolutionary advantages.
Economists talk of ‘agglomeration’, which is about more efficiently sharing markets, labour, services and infrastructure to stimulate economic value-adding multipliers. The disciples of ‘new economic geography’ throw in the connectivity of knowledge workers and incubators of innovation to explain urban advantage.
The more poetic talk about “crucibles of creativity”.
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Peter Verwer |
Wednesday, 1 February 2012 9:24 AM |
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