The Spice Must Flow
Sunday Scaries #49: A long but marginally productive rant about productivity
A beginning is a very delicate time. Know then, that it is the year 2025. The Western World is ruled by the Padishah Emperor Donald J Trump, a paedophile. In this time, the most precious substance in Australia... is the spice: productivity. The spice extends work. The spice expands profits. The spice is vital to economic growth. The Treasury and its economic advisors, whom the spice has mutated over 4 decades, use the spice as a buzzword. The spice exists in only one place in the entire country. A desolate, dry boardroom with a vast roundtable. Hidden away within the corners of this boardroom are a people known as the Trade Unionists, who have long held a prophecy... that a man would come, a messiah, who would lead them to true freedom. The Lisan al Ghaib, Jim Chalmers.
You may or may not have heard, but the Prime Minister gave a speech just after the big re-election win. He had two grand announcements for the country to set out his second term vision: he was appointing a new departmental secretary to the Department of Prime Minister and Cabinet AND Jim Chalmers would be chairing a productivity roundtable summit of business, industry, and union leaders to try and sort out economic reform… that’s apparently all our Prime Minister has got planned for the next three years apparently. Truly, he is the Kwisatz Haderach.
Why a productivity roundtable of all things to centre your second term on? Wasn’t really mentioned much in the election, after all. Well, dear reader, that’s because the word productivity is a comfortable cognate for the word “reform”, and that’s a word Australians usually are suspicious of. A Government can change whatever it likes about the fundamental conditions of society by linking it to an emotional and imaginative construct of society growing ever richer or our work ever easier simply by changing the rules.
And to the Treasury, which really has this current government wrapped around its finger? Productivity is the spice melange, the sole reason for their existence. In fact, I am pretty sure that Peter Costello is unable to die for as long as the spice sustains him, and so is currently spending his time being paraded around Langton Crescent in a hovering perspex box filled with orange gas interrogating Chalmers about his political machinations.
To satiate this ceaseless demand for productivity reform, we have a standing Productivity Commission charged with producing reports and reform ideas. We have Senate subcommittees, tax green papers prepared by MPs, reports by pre-eminent economists, and specially commissioned Prime Ministerial policy reviews (like the Henry Tax Review). External to government, we even have a plethora of think-tanks and policy wonks whose job it is to salivate over the concept of adjusting Centrelink indexation. None of this is enough apparently, because we need ANOTHER summit. Never mind that the Henry Tax Review (one of the most sorely requested unfinished policy programmes in Australian history) literally came out of the last Labor Government’s “visionary meeting of the minds between business and unions”: the Rudd 2020 Summit.
To give us a hint of what is on the table, Treasury are helpfully leaking (“by accident”) PDFs which embarrass the government slightly. Whether Chalmers wanted them to soften the blow of falling short of 1.2 million homes, I know not, but he can’t have been too displeased with the prediction that the budget would remain in structural deficit without significant tax changes and/or spending cuts. That’s all he needs to go to the electorate with tax reform, one of the biggest chunks of the productivity reform agenda. Because tax acts as an incentive to do certain things (or not do certain things) in a certain way, it’s one of the most significant areas of economic fiddling.
Take land taxes as an example. A land value tax (already implemented by various states including NSW and Victoria) works by getting people to pay an amount each year on the basis of the value of unimproved land that they own. This works to defeat “land-banking”, whereby developers buy up a parcel of land and do nothing with it in order to artificially inflate prices by creating scarcity. Coordinating a nation-wide implementation of land value taxes, would free up more unused land across the nation or incentivise owners to do more with a given parcel of land, like put more density on it (land productivity!). It would also mean that high house prices would to some extent actually fund the expansion of new housing: though land value taxes target unimproved value, entire sections of major cities are valued much more for location than dwelling quality.
I want tax reform on the agenda desperately, and in fact I want much more than the Henry review. I want the Mineral Rent Resources Tax, I want the Corporate Superprofits Tax, I want an inheritance tax or indeed a Wealth Tax! I still want a damn Carbon Tax! I’m tax mad!! I’m even okay with raising GST to 15% provided we use the “Progressive GST” model worked out by Ros Dixon and Richard Holden which kind of acts as a UBI to offset the worst part of the GST: the lack of accounting for total income while taxing basically necessary consumption. In fact, you know what? Labor has been missing a big idea for about two decades now, so here is both The Most Popular Policy Of All Time and a ready made campaign for the unpopular corollaries… all for free!
“We live in one of the most bountiful societies in the world. But the contributions of ordinary Australians to our national life do not match the share of national prosperity they receive. The greatest division between Australians is not where we’re from or who we love or how we pray or even how we view the world… it is the extraordinary gap between staggering wealth and gut-wrenching poverty. Economic inequality and poverty are the primary threats to our social cohesion.
To that end, we must safeguard the Fair Society we have cultivated in this country by introducing taxes to make sure that the asset piles of our most fortunate do not grow out of control. We also need to take back control of our natural resources, so that Australia’s resource inheritance can belong to all of us and be safeguarded for our children. The current model, where mining companies take what they like and we get nothing back, has placed us behind countries like Norway or even Qatar which use their mineral inheritance to pad their sovereign wealth funds.
But the ultimate goal is this: to recognise that the nature of work and wealth has changed so drastically that our egalitarian system is no longer fit for purpose. A progressive income tax still has a place in our policy, but it is no longer the cure-all to economic excess. The funding of world-class public services should not come from the ordinary Australians who already give their labour to make this economy function. It will take many years and several Parliaments, but our Government is setting a clear aim. Our guiding star shall be to work towards a society where the tax free threshold is the average income, so that the average earner does not pay a cent in income tax. We will build this in stages, starting by ending the double taxation of our young Australians just trying to start out. They are already subject to one form of compulsory payment to the government based on their earnings, they do not need another… our first step is to create a system whereby no Australian is required to pay income tax until they have paid down their HECS debt.”
Now the above is probably far too radical for a Labor government which is scared of its own shoelaces, but I think the emphasis on social cohesion and protecting the Australian Way is the way to sell that kind of thing. Besides, you’re literally making the majority of the population tax exempt… I don’t understand how that could ever be not electorally worth whatever smear campaign you get for it. Granted, I don’t even know if the numbers stack up on all of those tax changes without significantly raising the income tax rates after the average income (which we should totally do btw). But I cannot be arsed doing the calculations, so let’s do some more spitballs where numbers are less of a factor: legal reforms.
Firstly, coming out with a big swing and hoping the unions are already cooking this up: if you want to target workers in particular, then how about a transformative progressive reform that is proven to have actually improved not only worker satisfaction, but net labour productivity as well? A Four Day Work Week proposal should be the first thing that the ACTU slaps onto the roundtable, and the Albanese Government would be stupid not to run with it because it would just be wildly popular. If big business kick up a stink? Well, my dear Labor Government, Negotiations 101: highball. Shoot for the stars in the hopes of hitting the moon. You let the Unions lead with the radical commie stuff so the top end of town can talk them down to some smaller (but still meaningful) wins for workers.
Land and environmental reform should be high up on the list too, says Millie Muroi, and she’s so right that I will literally just direct you to her piece here. We need to get better at not only speedy approvals for housing and industrial projects, but getting the environmental conservation balance right. The NSW Gov’s Pattern Book Designs are a great start on this score. Needless to say, overexploitation and unsustainable practices lead to diminishing returns on our natural resources and potentially cause health threats which lead to diminished labour productivity and increased government spending on healthcare… put in a less evil Neoliberal way, cotton growers in Queensland need to stop sucking all the damn water in the country and causing fish kills in SA and NSW. I’ll also add, I’d like to see another swing at Native Title reform to make it easier for an Aboriginal group to get through a claim. Big Business whinge about legal fees all the time, but I can’t imagine it’s easy for a land council to spend several years in the Federal Court.
Obviously something else that should be on the agenda is AI. It will get talked about a great deal, I’m sure. Someone will probably craft a press release with AI during the roundtable and it will be a crazy big deal in the media for all of five seconds. But will we get meaningful regulation: an Artificial Intelligence Act 2025 (Cth)? No, because that would require anyone to have any bloody clue what they were doing about it other than the full Butlerian Commandment that “thou shalt not create a machine in the likeness of a human mind”. Anyone who has an actually considered and cogent opinion on what to do about Artificial Intelligence is going to dominate policy wonk circles for the next decade, but if such a person existed they would undoubtedly fail to have their ideas implemented because it would almost certainly require going to war with Big Tech, who would win handily.
Last but not least on the agenda, we will have the classics from Big Business: simplify or remove regulations, especially ones that lead to businesses getting sued… such as awards or workplace health and safety regulations. Needless to say that if your business model requires you to cut corners or take risks with the wellbeing of your workers, sorry not sorry, that’s a skill issue and you need to just get better at making money. But regulatory simplification (by this I mean consolidating rules, removing duplicates, and putting the rules in one place etc…) is a worthwhile exercise, and means that making the opening or running of a business easier doesn’t need to come at the expense of weakening the laws. A government-owned-and-operated AI tool to help the private sector navigate what is required of it from a regulatory perspective could not only be helpful for business and beneficial for the economy, but also allow for wider adherence to even stronger regulations.
But if we really wanted to de-regulate anything, how about we force it to be on pro-worker terms? If you really want to run a business while avoiding the Fair Work Act entirely, how about a new Cooperatives Act with its own set of simplified rules to incentivise the use of this fairly old corporate structure. A workers co-operative, after all, is the natural culmination of the neoliberal obsession with stock options and business equity as “giving the employee a stake in the business to incentivise performance”, so surely it’s worth a go from a productivity reform perspective. I’d like to see better financial productivity by furnishing our capital markets with building societies and credit unions, to act as smaller lenders with more democratic accountability and ethical control that can direct funds to real projects rather than increasingly complicated financial instruments.
Beyond that, we could have Works Councils on Boards of publicly listed companies, a concept common in Europe and particularly in Germany and Denmark. That way, the Boards (and shareholders generally) can get direct access to shop floor knowledge without it being passed through middle-managers. You’ll almost certainly get better information and make better commercial decisions that way.
You see how easy it is to come up with ideas for what directions we could take our national economy in which don’t involve complete surrender to corporate interests? Well, bear that in mind over the next few months. When the roundtable does finally happen, it will turn into an absolute free-for-all as moneyed interests hack and claw their way into positions of influence over government policy with threats of bankrolling ad campaigns. The brunt of difficult reform to get the economy going will inevitably lie with the Australian worker, mark my words.
On multiple levels, our economic policy exists in the sands of the 1984 Dune film. We are stranded on Arrakis, the pawns of power games between the Great Houses of the Lansraad (the Squattocracy and their associated mining and agricultural mega corporations) to turn this country into a desert while squeezing every last bit of water and spice productivity out of us mere Fremen. But it is not quite the Villeneuve Dune, with its modern touches, fancy CGI, and Hans Zimmer score that will define the franchise’s aesthetic forevermore as Peter Jackson did with Lord of the Rings. No, our current imagining of productivity is still the overacted and kitsch 80s crap: all just a bunch of Hawke-Keating style deregulate, privatise, and de-unionise (the original gaslight gatekeep girlboss).
The obsession with another productivity reformer in the Keating mould has become messianic, as though the Australian Capitalist Settlement can be saved by Just One More Quirked Up White Boy. We want a lot from this Messiah. We want productivity harnessing new technologies, but also a tough line AI’s potential threat to our working future. Moreover, we want environmental reform to protect our rapidly dwindling natural habitats, but also an expansion of housing and green industrial projects.
But ultimately, productivity as a fancy economic buzzword overcomes the mind-killing fear of Tall Poppy Syndrome and manages to capture the public imagination for one simple reason only: it means getting more while working less. At least, it should, seeing as how an economy only exists by and for the people of a society. I am suspicious that we will get anything meaningful out of this roundtable, but I live in hope of being proven wrong. I am confident of one thing though: the success of any productivity reform lives and dies with whether it meaningfully engages with and enables Australians to better function at work. Restructuring the economy to squeeze more value out of workers rather than improving their conditions to enhance focus, their skills to enhance performance, and their tools to enhance quality? That is an effort doomed to fail.