Deeds, not rhetoric, needed

The government in power must be constructive and improve the lives of its citizens through projects rather than cheap talk.

In unstable times of rapid social and technological change it’s easy to feel protective of what we have. Over the last three decades of uninterrupted economic growth many of us were able to accumulate a modest amount of wealth — often taking the shape of a home. Now we read everywhere that automation, digitalisation and continued population growth might put our wealth at risk.

We don’t want to lose our good fortune and many wish for a strong state to mitigate these risks. It’s not the first time in history that support for autocratic parties and leaders rises in such times. Right now, the votes for fringe parties on both sides of politics is as high as it was during the Second World War.

The two main parties must minimise insecurities and stabilise society if they don’t want to lose more votes to the third parties. If economic growth reaches the middle class, housing is getting more affordable and traffic congestion is eased, voters will have less appetite for small fringe parties offering extreme solutions.

We must understand certain societal changes (more knowledge work jobs, less blue-collar jobs, digitalisation, automation, more artificial intelligence) as an opportunity for Australia rather than a threat to our way of life.

If we see these changes as a threat, divisive fringe parties will have an easy job instrumentalising our (very reasonable) concerns about our future prosperity. It is easy for such divisive voices to dream up dystopian stories of social demise and job losses due to automation or migration. Populist parties in opposition don’t have to run the country though. For them, complaining and telling horror stories is enough. It’s an easy job.

Once you run a government, things become much more complex. The government in power must be constructive and must ­improve the lives of its citizens through projects rather than through cheap talk.

Let’s help the government and brainstorm three constructive types of government intervention that could improve our lives. This list is in no way complete, but all three ideas are pro-business, benefit all of Australia rather than only the elites. Best of all, they are all centred around construction and infrastructure which are industries dominated by middle-class workers. Considering that credit is very cheap these days, I think we ran out of excuses to not heavily invest into infrastructure over the coming decade.

The first type of government intervention can help to make housing more affordable. In boom times property developers serve not only the important social function of providing housing but they are also highly profitable. Because Australia has been growing rapidly the private developers focused on the most lucrative locations in the inner cities (skyscrapers) and on the urban fringe (house and land packages). There are plenty of attractive development options in the regions and in the middle suburbs of the large cities that are currently untapped. I don’t see why the federal government shouldn’t act on a massive scale as a developer and step into these gaps. The state as a large-scale real estate developer can help to channel population and job growth into the regions and the underserviced areas of the city — and make a profit while they are at it. At the same time a state-run real estate developer could counteract impacts of gentrification and (socio-economic) segregation by channelling relevant housing into relevant suburbs. Such a state developer would need to work across various levels of government to ensure the proposed developments serve the right societal function.

The second government intervention is concerned with infrastructure. The traffic systems in our big cities need to be upgraded to deal with the population growth that occurred over the last decade. Improved traffic links to regional cities will ensure that the urban economic growth spreads more easily. Even though the NBN rollout isn’t completed yet, we must already invest in 5G infrastructure. Cities across Asia are outpacing Australia in 5G. Digital infrastructure enables workers to work from home for at least a day or two per week which takes load off the traffic system. More importantly international businesses factor in internet speed when deciding on where to invest in. The digital infrastructure in Australia seriously needs to be turbocharged. For public spending to be most efficient, infrastructure spending must be depoliticised. A government handling that task will always be looked upon generously by voters.

The third priority is a result of the investments in housing and infrastructure and concerns the stagnating Australian middle class. Over the last five years Australia added plenty of high-skilled and plenty of low-skilled jobs while essentially no middle-skilled jobs were added. The reason we didn’t lose middle-skilled jobs in Australia was the booming construction industry. The construction boom in turn was driven by migration. This means anybody who suggests we slow down our migrant intake even slightly must at the same time offer ways to grow the construction sector. Many workers in the Australian middle-class find themselves in the awkward position that they like the idea of lower migration, which would lead to a loss of middle-skilled jobs if their wish came through. Regardless of how many migrants the government allows into Australia, a public housing and infrastructure boom will massively benefit the Australian middle class by creating huge demand for middle-skilled construction jobs.

I think our government must heavily step up investment in public infrastructure and should seriously consider acting as a residential developer more frequently to better channel population flows. As a bonus an infrastructure-obsessed government would solve the ongoing challenge for our nation to prove to potential investors and a pool of highly skilled international talent that Australia is a desirable destination to invest and to work in.

Most importantly, a government that manages to connect disadvantaged regional cities (and city fringes) to the economic opportunities in the big cities, improves traffic flows, and creates visible projects tackling housing affordability will shut out the loud and unhelpful voices of populists who are great at complaining but do nothing in terms of nation building.

Simon Kuestenmacher is director of research at The Demographics Group

[e-mail]