A rising tide would float his boat, but Chalmers has storms to navigate

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Ken Henry’s comments on the Intergenerational Report last week were widely reported: basically, young people were getting screwed.

But what he had actually come on the radio to talk about was NSW biodiversity laws. They weren’t working, he said, for a simple reason: other things always took priority. Forestry, mining, planning – these laws always came above the environment. If the environment was to have a chance, the environment had to come first. To summarise this simple but profound point: we have been doing things in precisely the wrong way. We have been focused on the opposite of what we should have been focusing on.

To summarise this simple but profound point: we have been doing things in precisely the wrong way.Credit: Jim Pavlidis

As it happens, this is probably an even better summary of the main lesson of the Intergenerational Report than the rest of what Henry had to say.

Intergenerational reports are odd things. Their predictions are wrong, the facts are largely known already. What is most important about them is their sleight of hand: they seem to be about the future, but are actually about the present. Politicians don’t like saying bad things about the present – somebody will get offended, they may have to act. The future, in contrast, is easy to be mean about. This means politicians can be blunter than they usually are. When a report asserts that, unless we change the way we do things, everything is going to get worse, the message is really about the here and now: the way we are doing things is bad.

That extends, obviously enough, to the way we think and talk about things. The single most interesting part of the whole intergenerational festival was Jim Chalmers’ statement on Wednesday, repeated on Thursday, that too often we talk about productivity as though it is only about industrial relations (and sometimes tax). These were important levers, “but so is energy policy, so is policy about human capital”.

This sounds bland. It is actually radical. Once you get used to things being a certain way, it can be hard to remember they don’t need to be that way.

Anyone following policy debates over recent decades has become accustomed to two themes: every policy is justified in economic terms, and every economic debate becomes tied to IR and tax. Our sense both of what matters in society, and how governments can influence that, has narrowed.

Narrowness is only one problem with that debate. Arguably, the subject of its narrow focus has been entirely wrong-headed. Last week’s most cutting comment came from Greg Jericho at the Centre for Future Work, observing that past intergenerational reports have largely been used to argue for more flexible industrial relations, and that the “era of the intergenerational report has, in effect, been the era of productivity failure.” In other words, we’ve been putting precisely the wrong thing first.

Chalmers is, in essence, attempting to shift the foundations of our national policy debate – no small task. There is, it should be said, an element of political convenience here. It is no surprise that a government uninterested in immediate large-scale tax reform and wishing to more strictly regulate industrial relations is loudly saying, “These aren’t the most important areas!”

And it is also true that at an actual doing level – as opposed to just talking about things – there is still plenty of reason to be sceptical about this government’s ambitions. Last week’s suggestions that it was interested in “bite-sized chunks” of tax reform seemed to confirm the sense this is not so much a government biding its time before beginning to sprint as a government that has reached the pace it intends to maintain.

It is possible, though, that “Is this fast enough?” is not quite the right question to be asking. It is worth noting how much of politics lately has been dominated by policy discussions. In the past two weeks we’ve seen housing, water, the budget, schools and visas all canvassed in reasonably significant ways. And what is really fascinating about all this – as the ABC’s Laura Tingle observed immediately after the report’s release– is the way different areas are beginning to fit together.

One of the most interesting features of the Intergenerational Report came in its discussion of homeownership. Older people who don’t own homes spend more on housing (via rent) and have less wealth. This puts more pressure on the aged pension and superannuation. This begins to shift the discussion of housing from a simple binary – who owns and who doesn’t – to the impact falling ownership has on all of us.

Last Wednesday, Chalmers and frontbencher Andrew Leigh launched a process looking at competition. Australia is a ridiculously concentrated market – not just in banks and airlines but in too many other areas, like beer. This, in turn, has an impact on productivity, as well as taxes; we’re not collecting enough from companies making massive profits. It also affects wages. Wages will also be dealt with in the industrial relations debate that will kick off in earnest this Thursday. Meanwhile, the government – which has an aged care process under way – is interested in how well competition (or lack thereof) has served people dependent on the care industries.

It is entirely possible this will not be enough – that at some point large, dramatic options will be needed, especially on tax, where there is no pretending our revenue shortfall away. But it is also possible that this approach will work, at least for a time, and that making lots of moves in lots of different areas that overlap will cause far larger shifts than we realise now. Increased focus on these areas is not necessarily good for the government because those changes may be good or bad. Whether brilliant or disastrous – or merely mediocre – we should not miss them simply because we have become accustomed to looking in other directions.

Sean Kelly is author of The Game: A Portrait of Scott Morrison, a regular columnist and a former adviser to Julia Gillard and Kevin Rudd.

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