Friendly pet shop parrots keep squawking about the need for a new economic reform program, but their effort is a cacophony; they can't agree on what reform is. In the absence of any such agreement, it is entirely unreasonable to expect governments to implement reform.
Some parrots want to fix the federation, assigning major spending responsibilities to a single level of government. This idea has been around since 1990, when Bob Hawke established the predecessor to the Council of Australian Governments, and some progress has been made. But no one really wants the states to run all school education, government and non-government. Nor is there support for the federal government to run hospitals.
Others argue for the outright abolition of the states, as if that would obtain anything more than single-digit support in a referendum. Why not include in the same referendum the scrapping of the Senate, as some parrots advocate? It would have the same prospect of success.
Or we could try comprehensive tax reform, which, with the federal budget already in deep deficit, would result in millions of Australians being made worse off. Expecting the federal government to increase the GST to finance a tax cut for multinational corporations constitutes what Malcolm Turnbull describes as the "go into the study, get out the service revolver and blow your brains out" option.
Here are four economic reforms that could be implemented quite readily, and would enjoy strong community support.
First, the competition laws should be rewritten to deal with increasing market concentration, the enemy of competitive markets. At present, the Australian Competition and Consumer Commission can reject a merger or acquisition only if it is anti-competitive and is clearly against the national interest. Consequently, failing businesses can be acquired by healthier businesses to prevent them going under, even where the acquisition is anti-competitive. This has happened with small banks.
The law could be amended to shift the onus onto the applicants. It would provide that a merger or acquisition must be rejected where it lessens competition and the ACCC is not satisfied it is in the national interest.
Second, based on the principle of doing no harm, privatisation of public assets must not proceed in circumstances where the government enacts regulations to insulate the privatised entity from competition. Chair of the ACCC, Rod Sims, has declared Australia's experience with privatisation a failure, as governments have introduced anti-competitive regulations to maximise sale proceeds while users are require to pay inflated prices for the services provided by the privatised entity.
Third, an update of the previous Labor government's white paper on Australia in the Asian century should be prepared. In addition to Australia's strengths identified by the white paper – agribusiness, higher education and tourism – new opportunities are opening up for the provision of health and aged-care services, particularly in China.
While free-trade agreements with Asian neighbours can reduce barriers to trade, active government support for small and medium-sized businesses to enter those markets would accelerate Australia's transition from the end of the mining boom. Such support can be inexpensive, and could include an expanded capacity for the Export Finance and Insurance Corporation to co-finance small and medium-sized business entry into the Asian market through online electronic distribution platforms such as Alibaba.
Finally, just as we have in the Reserve Bank an independent monetary authority with a charter to stabilise the macroeconomy by keeping inflation and unemployment at acceptable levels, we should also have an independent fiscal authority with a similar charter that works co-operatively with the monetary authority. The independent fiscal authority would develop a list of productivity-raising infrastructure projects – small and large – that had passed rigorous cost-benefit tests. The Reserve Bank or the government would make a funding allocation to the fiscal authority, which would proceed with selected infrastructure projects as and when warranted by prevailing macroeconomic conditions. In this way, the weight of macroeconomic stabilisation would not rest so heavily upon the monetary authority, which, with interest rates already at record lows, has little available ammunition for use in a future economic downturn.
If this idea seems controversial, so did the idea 30 years ago of an independent authority conducting monetary policy. Now, all advanced countries run an independent monetary policy.
If a federal government is to implement a new economic reform program, the onus is on the pet shop parrots to attain some level of harmony in their squawking. They achieved this in the 1980s, successfully informing the Hawke-Keating economic reform program. Now, in the 21st century, their effort is entirely discordant, reducing their squawks to a noisy irritant.