Albanese’s guru talkfest won’t make you richer – he’s chosen the wrong people

Looking at the list of experts who will be at Anthony Albanese’s three-day productivity love-in next month, my heart sank.

Not that people such as Productivity Commission chair Danielle Wood or tax guru Ken Henry aren’t worth listening to or that the ACTU and the Business Council of Australia are inherently disappointing.

It’s still called a lightbulb moment 150 years later for good reason.

Far from it. These people and organisations know their stuff – about tax, the budget and politics.

I could almost certainly write today what they will say. What they will argue. And what they will complain about.

Given their profile, getting their views is not a problem. Henry had a roomful of people (including this correspondent) at the National Press Club this month, his views beamed live across the country.

And we already know that tax will suck up a lot of the oxygen of those couched around the cabinet table, ignoring what has driven productivity over the past two centuries.

As much as I love tax reform( and who doesn’t) it’s not tax that will lift living standards and our ability to pay for goods and services – it will be technology.

It has been inventions that have dramatically improved our lives since the industrial revolution. It is technology that has driven productivity and helped make us richer than at any point in history.

So my question is – why won’t the nation’s chief scientist, Tony Haymett, be sitting at that cabinet table for three days?

Why isn’t there a seat for the CSIRO, which has given us life-changing and productivity-enhancing inventions as Wi-Fi, solar hot water, gene shears, polymer banknotes and permanent-crease clothing?

Where is the expert in AI or cancer therapy or environmental trends or agricultural science?

Alexander Graham Bell, inventor of the telephone, opens long-distance service between New York and Chicago in 1892.

Scott Farquhar, co-founder and former chief executive of Atlassian, will be there as the lone voice of the technological future. He’ll be sitting next to three former or current state treasurers who will tell us all about the fiscal problems they face.

If you were to list the most important developments that have made the world more productive, would tax reform even get a look in? (Perhaps the creation of income tax to help Britain fight Napoleon might get a mention.)

The telephone, the internal combustion engine and the lightbulb are three of the most transformative pieces of technology in humanity’s development.

The phone allowed us to communicate quickly. The internal combustion engine enabled us to move goods and people really quickly. And the lightbulb – the creation of cheap light – meant we could work when we wanted to.

These three pivotal productivity enhancements weren’t driven by tax reform. They were driven by ingenuity, by the circumstances faced by their creators, by the need to improve the lives of everyone.

What’s also important – and more than a little disheartening – is that all three came into being between 1876 and 1879. Three inventions that underpin today’s society are approaching their 150th birthdays.

That’s why there is so much interest in AI at present. This is an invention that could utterly change our lives.

As US Federal Reserve governor Lisa Cook noted in a speech last week, AI is a general-purpose technology (a transformative invention like the steam engine and electricity).

“AI is poised to alter the contours of the global economy. AI is transforming the economy, including by accelerating how quickly we generate ideas and making workers more efficient,” she noted.

It’s ideas that make the world, the economy and productivity go round.

That’s not to say tax doesn’t matter. If you impose huge imposts on businesses or individuals, then you distort the economy in a way that is unlikely to be productive. If you don’t raise revenue, then say goodbye to roads, hospitals, a judicial system and defence networks.

Governments often build incentives into the tax system for a major policy aim. That’s the whole reason, for instance, that superannuation is taxed lightly and why excises on cigarettes and alcohol are so high.

The idea put up by the Labor-aligned McKell Institute this week, to increase the capital gains tax concession on new apartment builds (and reduce it for investors who simply buy an existing detached house), is another example of how the tax system can help.

However, it’s aimed at acting as an incentive for investors to build more homes – not to build those homes more productively.

Apart from, perhaps, some incentives directly aimed at research and development, inventions and productivity-enhancing breakthroughs are rarely driven by the tax system.

Terrible events and diseases drive change (Alexander Fleming’s penicillin discovery was transformed into a useable medicine by Howard Florey and German-born Ernst Chain, but it was only World War II that made it cheap and mass-produced lifesaver).

Penicillin has saved an estimated 500 million lives. In terms of productivity improvement, this single medicine has done more than any tax concession to improve our lives and our economy.

Yet when you look around the cabinet table next month, don’t expect to see anyone carrying out health-related research.

We can hope that some of the specialists who get to sit in on certain parts of the roundtable might pique the interest of those who will ultimately have a say over what policies get supported.

But I wouldn’t bet on it. When all you have is a hammer, everything looks like a nail.

Those invited to Albanese’s shindig are policy wonks. Every problem deserves a “policy” solution.

If Albanese and Jim Chalmers really want solutions, they have to think differently. And that starts with the invitee list to the roundtable.

Shane Wright is a senior economics correspondent and regular columnist.

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