As the first light appeared above the Martin Place Cenotaph on Anzac Day 1991, my wife and I prepared to place the dawn service wreath on behalf of opposition leader John Hewson.
Looming ahead of us was the tall figure of Paul Keating, representing prime minister Bob Hawke. As Keating turned, I eagerly introduced myself as the new federal Liberal senator from Newcastle. Looking down his nose at me, he replied "Oh".
Keating's manners didn't improve in the following years. While his foreign policy pronouncements have become dated, his views on economic policy are as sharp now as when he led Australia's productivity revolution in the 1980s and 1990s.
Author Paul Kelly in The March of Patriots, said both Keating and Howard, as prime ministers, were Australia's best reformers, ruling during Australia's golden decade in the 1990s. Following "the recession we had to have", Australia experienced the most prolonged economic upswing in its history, driven initially by the mining boom. This was augmented by the Keating/Howard policies and programs that set up a modern productive Australia for an era of prosperity.
This golden age featured high growth, low unemployment, and economic reforms that improved productivity. The outcome was a considerable rise in real incomes and an improved standard of living for most Australians through the 1990s and up to the Global Financial Crisis in 2008.
In John Howard's last term, this productivity revolution began to fade, and then plunged during the revolving door of seven prime ministers that followed between 2007 and 2023.
Those 16 years of erratic economic policy agenda halved productivity growth from 2.2 per cent to 1.1 per cent. This was Australia's worst result in 60 years. Inaugural Productivity Commission (PC) chair Gary Banks believes this has occurred because Australia became stuck in reverse on energy, industrial relations, tax and other critical policies.
Banks was responding to the release of the PC's massive 1000-page five-year review in March 2023. The report predicted that the inexorable rise of big government driven by an ageing society would crowd out private enterprise, drag down growth and increase the tax burden unless the nation lifted productivity.
It directly challenges policymakers to raise their game on skilled migration, business taxes, the clean energy transition, industrial relations, and the take-up of digital technology.
The PC's 71 recommendations cover 29 reform directives and provide a five-point policy roadmap for a more productive Australia. This includes skilling the workforce for the jobs of the future; harnessing data and making the most of digital technology; creating more competitive markets; making government services more efficient, and reaching net-zero emissions at the lowest costs.
Moreover, the report concludes that, if the country fails to improve its poor productivity over the coming decade, Australians will work two hours more a week and earn 40 per cent less.
Australia's Chamber of Commerce and Industry chief executive Andrew McKellar said lifting productivity was the only way we would be able to afford the healthcare, education, and disability support programs that Australians expect. Professor Banks, while sceptical of the likelihood of significant reform, urged the Treasurer to lead a national debate on the PC findings as Keating and Peter Costello did.
Treasurer Jim Chalmers confirmed Banks's fears when he recently commented on the PC report in the following way: "Now no government is expected to pick up and run with every recommendation of the PC. I wish to emphasise that there is more than one way to satisfy our objectives for productivity. There are multiple pathways, and not all are in the report. Some of the PC's recommendations are contrary to Labor's values and priorities."
The PC has delivered a message to the government that it doesn't want to hear.
However, if productivity and Australia's standard of living are to rise, the PC findings must be taken seriously and acted upon. This calls for the government to put its economic house in order, particularly in areas the Albanese government has sought to favour, such as industrial relations and the care sector.
The PC finds in these areas of the economy that the government is adopting policies that will further diminish productivity.
It seems what the federal government desperately needs at this time is former prime minister Paul Keating's political courage and advocacy of essential economic reforms, which he displayed when he was in power three decades ago.
They are sorely needed in this decade, as Australia's plunging national productivity threatens to deliver a poorer and diminished Australia to the next generation.
Newcastle East's Dr John Tierney AM BEc is a former Hunter-based Liberal federal senator
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