Hi, I'm Ruby Jones and you're listening to seven AM. This week in Canberra, the press, unions, business leaders and politicians have all been talking about one thing, the Economic Roundtable. It's been spooked by the Government as a way to address a core problem with the economy, sluggish productivity. But what is actually on offer and will it make a
difference to the rising structural inequalities we face today. Executive Director of the Australia Institute Richard Dennis on what's happening behind closed doors in Canberra and the challenge and opportunity labor now faces. It's Friday, August twenty two, so Richard, welcome back to seven AM.
Thanks for having me on.
This week started with the Chair of the Productivity Commission, Daniel Wood giving an address to the Press Club where she laid out one of the big problems the Economic Roundtable needs to address, and that is intergenerational inequality. Can you just lay out for me how that is playing out right now? Oh?
Absolutely, I mean intergenerational inequality is a terrible problem in Australia.
We all want our kids to grow up having better lives than we have. We want them to be healthy, to get a good education, to have more options in their careers and perhaps even a bit more leisure time than some of us have managed.
The reality is for someone that left UNI ten years ago and started saving for their deposit teen years ago for their house, they're on average likely to be further away from a deposit than when they started.
That expectation that life will get better for each successive generation is Australia's generational bargain, and for many generations we have fulfilled that promise until perhaps now.
The housing market is very much stacked in favor of people that own two or more houses, and stacked against people that don't own any houses. The housing market is stacked against people whose parents can't bail them out and give them that magical deposit.
At their heart. These are productivity challenges, and by adopting a growth mindset we improve our capacity to address them.
But let's be clear, not all young people are going to miss out. Young people with rich parents are going to get into the housing market quicker because the banker Mum and dad is going to give them that head start that everyone wants. But by definition everyone can't get a head start, and when they inherit large amounts of money that their parents have accumulated thanks to superannuation tax
concessions and thanks to the capital gains tax. Yeah, there's going to be some really rich young people in the future. So that inequality is just going to get worse because of these I would argue deeply flawed structures that we've built with advice from Treasury in the Productivity Commission. For decades, growth.
Has simply fallen down the list of priorities in policymaking. This manifests not just in less economic reform, but in decisions by governments federal, state and local, to pay less attention to growth trade offs in pursuing other policy goals.
It's a terrible problem that's taken decades of neoliberalism to cause. It's decades of deregulating the labor market, it's decades of privatizing and outsourcing a whole range of essential services. Decades of enormous tax concessions for superannuation have helped older generations enormously, and now we're standing here with this sort of look of shock, going how young people ever going to catch up if their wages are growing slower than house prices.
So I just fear that we're kind of going back to the same poisoned well to get more of the bad advice that's caused the problem.
Well's talk a little bit about this week, this roundtable and all of the framing around productivity. I mean, as it kicked off, we heard from the treasurer. He talked about making the economy more productive. He said that was the best way to make everyone better off. So is there a productivity problem that needs solving?
There is And look, so productivity it means output per unit of input. The reason economists gets so excited about productivity growth is it's kind of like magic. Productivity growth says that we can get more stuff with the same amount of labor input, with the same amount of land input and the same amount of capital input. This magic
is widely discussed, but not widely understood. And unfortunately, while the concept of productivity is very important in a country like Australia, whenever someone with power would like more money, the case they make is give me more money and it will increase productivity. Right, So we have CEOs in Australia saying you need to cut the company tax rate for me so that productivity will go up, or you need to make it easier for me to sack workers
so that productivity will go up. Or we need to make artists give all their intellectual property away for free to tech giants so that productivity will go up. So it's just this lazy way of dressing up self interest as national interest.
Right, So it's clear you don't agree with the case that big business is making, but they are not the only ones at the rout and table. Also, have there been any ideas that have emerged that you think would be effective?
Oh, look, I think there are some good ideas that have been floated both in the lead up to the round table and by people at the round table. For example, how about we get rid of the enormous subsidies for diesel use by the mining industry that had save US ten billion a year that we could spend on more productive purposes. How about we put a twenty five percent tax on all gas exports, stop giving gas away for
free tax gas exports. That will encourage the gas industry to provide more and cheaper gas to Australians while putting another ten or so billion dollars into the government to go and spend on more useful things. How about we rain in the capital gains tax concessions. These are very good ideas from the ACTU and while while the housing stuff got a bit of a mention in the media, because nothing sells newspapers in Australia like scaring baby boomers about changes to capital gains tax.
So we're going to take a proposal that both negative gearing and capital gains tax should be reformed, that they should be limited to one investment property and grandfathered for existing arrangements for five years to allow people to adjust.
So sorry, I think it's exciting and important that you know, we gave a loud voice to Sally McManus to bring what I think is a more more productive agenda to the table. I don't think she'll persuade the business people in the room, but that's the point. We've got to stop giving them a veto over what we do. My hope is that by ventilating these ideas at the round table over the next year or so, we can build
some political awareness and support for doing that. So if the government convince most of the people, then in a democracy we should be able to crack on.
And do it.
Coming up, where is Labour's appetite for ambition. Richard, what are your expectations that this Economic Ground Table could deliver the kind of changes to the economy that really do benefit everyone.
Oh, this summit is not an ambitious summit, to be clear. As someone who's been interested in the things for decades, I've got pretty low expectations about what will come out of the summit. But I'm more focused on what's gone into the summit. We now admit we have a productivity problem. We've now got quite competing arguments for what we should do about that. The Business Council think their members should
get a big tax cut. The ACTU think maybe we should start taxing gas and stopping fossil fuel subsidies and
reiin in housing tax concessions. They are two quite different views, and it's rare in Australia for us to hear quite different views about what would be good for the economy because the Labor Party is stuck so close to the Coalition on so much of the sort of big economic narrative that most Australians have just never heard that there might be benefits from increasing taxes and spending more money on nice things. I mean, imagine if we had a tax on gas exports and made childcare free for all
this tin families. I don't think there's an economist in the country that would disagree that taxing gas and helping more families participate in the workforce would be great for the economy. But those kind of ideas don't usually come out of our very conservative election campaigns. Those sort of ideas don't get much airplay in our major newspapers or our public broadcaster. So you know, the reality is Labour took a pretty thin agenda to the twenty twenty five election.
It's hard to see it taking more than more than a year, probably less time to actually implement the policies they took to the election.
At this moment in time, then there does seem to be a big golf between the kind of ambition that could exist and this particular summit. So does it seem to you like there is any kind of genuine appetite within the government for more fundamental change?
Oh?
Look, publicly, no, Privately yes, of course. I mean I think the best example here is it in the Labour's first term they were adamant for two years they wouldn't change the Stage three tax cuts, and then they shifted eighty billion dollars from high income owners to low and middle income owners. That's fantastic. I'm glad they did that,
and so we're voters. It's one of the most visible things they did, and according to polling we did at Australia Institute, it's one of the most popular things they did. So yeah, I think that at the moment, the loudest message coming from the Prime Minister is very much as steady as she goes. You know, we've got our election agenda to implement. That's what we'll be focusing on. But
we're open to suggestions. So I think it's safe to say the Prime Minister is not out there kind of whipping up a frenzy of people saying, yeah, let's do big things. But democracy, being as it is, politics hates
a vacuum. So I'm optimistic that once they get through the small range of reforms they took to the election, we've got a good two years to have bigger debates about, yeah, should we stop giving gas away for free to Sevron and BP, or should we reiin in tax concessions so people who owned twenty or more houses or really radical things like that.
And I suppose as these conversations about policy are happening, it's in the context of millennials becoming a bigger voting block than baby boomers. So there is now something that's sake for the government if there is not meaningful change, particularly on intergenerational inequality.
Oh.
Absolutely, And I think there's a real challenge but indeed a real opportunity for Labor here. It's dangerous for Labor to keep ignoring millennial voters. Here in Canberra, the Seed of Bean was once one of the safest seats in the country. It's now held still by Labor, you know, but the margin fell from like fourteen percent to half of percent. Similarly, in the Seed of Fremantle, again fell from double digit margin to less than one percent now.
So I think it would be heroic of Labor to assume that young voters will be happy with the status quo. And similarly, the fact that the Liberals did so badly at the last election, given that I think there's no chance the Liberals can win the next election, it's going to be hard for Labor to say, please, don't put pressure on us to be ambitious, because if you ask us to be ambitious, those nasty Liberals might win and
you'll get less than you want, not more. I think it's been really helpful for Labor to be able to kind of control younger voters and control progressive voters by saying, if you ask for too much, you'll get even less than you want, so back off. For me, what's important is not how many seats Labour won at the last election,
but how many of the Liberals lost. The Liberals are not a viable threat to Labor at the next election, so in turn, Labor have really got no excuse for not being more progressive on housing, on climate, on inequality, on a whole range of issues.
Well, Writard, thank you so much for your taid.
Thank you.
Richard. Dennis's new book is called Dead Center, How Political Pragmatism Is Killing Us. It's out now. Also in the news today Benjamin Netanya, who has continued his public attacks on Anthony Alberanzi despite Australian Jewish groups calling on the Israeli Prime Minister to deal with disputes privately. The Executive Council of Australian Jewelry this week said Nettanya, Who's labeling of Albanese as weak was inflammatory, and provocative and was
affecting Australia's Jewish community. But in a new interview Benjamin Nettana, who again called Anthony Albanesi week and said his record is for ever tarnished by the weakness that he showed in the face of these hamas. Terrorist monsters. And state premiers say they were caught off guard when Mark Butler
announced changes to the National Disability Insurance Scheme. This week, Disability and NDAs Minister Mark Butler announced a program called Thriving Kids, which is designed to divert children under nine with autism and developmental delays from the NDIS. The federal government has confirmed two billion dollars for the scheme and
says states are expected to kick in. Victorian Premier Jacinta Allen said she was not told about the changes ahead of Butler's announcement, a sentiment backed up by ministers from several states. Seven Am is a daily show from Solstice Media. It's made by Atticus Bastow, Christenate, Daniel James, Sarah mcvee, Travis Evans, Zonfecho and me Ruby Jones at The music is by Ned Beckley and Josh Hogan of ombloc Audio. See you next week,