NewsBite

A growing pie generates more fairness than grievance slices

Journalists don’t think in economically rational ways and politicians lack the advocacy skills of Keating and Costello.

Can modern politics increase individual prosperity in a media environment that focuses heavily on individual grievance and minority identity at the expense of the wider good and sees expanding government spending as the solution to all problems?

In the 1980s, Labor treasurer Paul Keating used to coach influential political and economics journalists in the Canberra press gallery about how reform would lift the living standards of ordinary Australians. Keating was an advocate for an idea that dominated the Hawke, Keating and Howard years: that reforms that lift the tide of economic growth are more important than a myopic focus on slicing the economic pie equally. Growing the pie was the thing.

Today, young voters are ­focused less on what they can do to lift their own economic performances — saving, for example — than what governments can do to redistribute the wealth of others. This is the fairness and equality mantra that dominates left-wing political parties worldwide.

When Keating’s prime ministership ended in 1996, new Liberal PM John Howard appointed ­another fierce advocate for growth to the Treasury portfolio: Peter Costello.

The success of their reforms was often a problem for Labor. Former opposition leader Kim Beazley admitted as much when discussing income distribution figures from the National Centre for Economic Modelling showing that, in the Howard years, the bottom 10 per cent of wage earners achieved higher income rises in percentage terms than the top 10 per cent.

This was proof growth and productivity improvements are an antidote to income inequality.

All that came to a screeching halt with the global financial crisis in 2008-09. A worldwide reaction by the young of the Occupy Wall Street movement blamed greed in the banking system for the precarious position of the poor in the US, Greece, Italy, Spain and Portugal.

While the crisis was confined to the northern hemisphere, Labor treasurer Wayne Swan, never a supporter of Keating’s economic reforms, cranked up the class war with a couple of silly essays, one citing Bruce Springsteen’s working-class themes. This was despite Springsteen having a personal ­fortune of several hundred million dollars. Swan was wealthy himself. This paper reported in 2012 that he could retire on a parliamentary pension the equivalent of a $5.6 million super package, not to mention his multiple properties.

The equality mantra has become a problem for two reasons: envy betters no one’s personal situation and the left-wing media has embraced the fairness debate uncritically. Intergenerational envy has ironically been made worse by the wage stagnation left behind by enormous deficits from the post-GFC fiscal pump-priming recommended by the International Monetary Fund. Quantitative easing — the printing of money — only made the rich much richer as the US sharemarket doubled and property prices soared.

It will be the young across the world who will pay dearly as they fall further behind their competitors in the newly industrialising world of East Asia, where saving and working hard are the norm and where tax rates are low and government a smaller share of the economy.

It did not have to be this way for Australia, as the little South Pacific tiger economy of New Zealand has shown. NZ National Party former prime minister John Key and treasurer Bill English did not throw billions at the GFC in the way Kevin Rudd and Swan did. The result?

NZ has recorded an average growth rate of over 3 per cent in much of the past seven years compared with 2 per cent here. Our gross debt has soared to more than half a trillion dollars while NZ debt is falling. NZ has dramatically reduced personal and business tax rates while personal rates in Australia seem impossible to shift in the era of media focus on ­individual losers. Never mind that more than half Australia’s workers pay no net tax after benefits.

And then there is the problem of welfare, which is consuming more than $150 billion a year here, but has been successfully reformed in NZ. Last week we heard Australia spends $300,00 a minute on welfare. Yet the ABC and Fairfax Media have campaigned against moves to reform welfare here.

Reflect on the ABC’s reaction to suggestions we import NZ’s drug testing of welfare recipients. Any parent of an addicted child will know exactly why that is a good idea.

Or think about the fact that migration patterns between Australia and New Zealand have reversed. Today, more Australians are heading to NZ than Kiwis coming here.

Yet in the era of First-World envy politics, NZ’s Nationals reaped no political dividend for their economic miracle, losing to an old-style socialist leader in Labor’s ­Jacinda Ardern. Like Labor here, she preaches the fairness mantra relentlessly. We will soon see what envy politics does to the NZ ­economy.

Shorten will no doubt follow Ardern down that road, unless the Coalition government can string together a coherent narrative about why growth is better than envy, and why lifting the many is better than tearing down the few. It will get no help from most of the media.

Much of the media last week ­ignored a Productivity Commission report mapping out potentially large gains to be had in reforming health and education. Why? This is a subject The Australian has campaigned on for 15 years, trying to kickstart a new round of reforms to underwrite improved lifestyles.

Modern journalists find it hard to think in economically rational ways and modern politicians lack the advocacy skills with media of Keating and Costello. It would be good if journalism education courses at our universities focused more on economics and less on the environment and social equity.

The smashed avocado generation needs economic reform far more than my generation did. Envy and redistribution will not cut it. Big gains in lifestyle do not come by hurting a few thousand million-dollar salary earners. They come from raising the productivity of tens of millions of workers.

Why can’t politicians and journalists understand that ordinary workers are the big beneficiaries of bank profitability through their superannuation? Why is it impossible to explain that coal is our nation’s single biggest export earner, underpinning all our living standards? Why can’t news directors at the ABC ensure young journalists understand not every call for more government spending is worth supporting?

Just in the past week, why can’t the media focus on Australian Workers Union donations to GetUp!, an organisation campaigning against the existence of the coal industry that employs so many of the union’s members?

Could it be the “look over there” distraction of the leak to the Australian Federal Police from the Minister for Industrial Relations, Michaelia Cash’s office is simply a Labor ploy to distract the public’s gaze from scrutiny of a donation against the interests of AWU members? Don’t journalists justifying betraying confidential sources in this matter just reveal their own political allegiances?

Chris Mitchell

Chris Mitchell began his career in late 1973 in Brisbane on the afternoon daily, The Telegraph. He worked on the Townsville Daily Bulletin, the Daily Telegraph Sydney and the Australian Financial Review before joining The Australian in 1984. He was appointed editor of The Australian in 1992 and editor in chief of Queensland Newspapers in 1995. He returned to Sydney as editor in chief of The Australian in 2002 and held that position until his retirement in December 2015.

Add your comment to this story

To join the conversation, please Don't have an account? Register

Join the conversation, you are commenting as Logout

Original URL: https://www.theaustralian.com.au/business/media/opinion/a-growing-pie-generates-more-fairness-than-grievance-slices/news-story/3101f60178d558d7d8b2fc896b51514a