Flat White

Frydenberg is wrong, Australia is in economic decline

29 March 2022

2:00 PM

29 March 2022

2:00 PM

The economy is not bounding ahead as declared by the Treasurer, it is stagnant – probably even in decline.

There may be large sales and tax revenue, which makes the government budget look good, but these are essentially from big mines with overseas contracts. Small businesses and the average citizen do not see the economy bounding – they see a lack of customers and short hours. They also see increasing costs and stagnant or declining income and wages.

Australia’s method of measuring the performance of the economy, and even our method of determining the economics of business, is incorrect. We use outdated measures such as misleading employment figures, incorrect definitions, and GDP – which does not measure any productive work performance.

Our standard of living is falling and has been for a long time. The only method capable of holding up good economic figures has been the importation of labour via immigration. The pie may get larger, but the proportion of the pie for each individual continues to decrease. Even worse, Australia’s pie isn’t getting any bigger.

Recent events have shown that we are at the mercy of not only overseas suppliers, but of the foreign takeover of everything in Australia – from businesses to politics.

It is well past time when we stopped the rot and started to pay attention. We need to re-invigorate local business. We need to manufacture essentials from iron and steel to create machinery, electronics, clothing, and defence industries. We need to ensure that our farmers can produce the food we need and have this distributed to all Australians. We should be looking to be independent of the world’s instabilities, a situation which has been in decline for at least fifty years. The standard concept of modern economics – that countries should produce those things at which they are most suited and trade for all other items – does not work when businesses become international and politics interferes with normal business practices.

We should start by getting the government out of the way and let the natural order generated by a capitalist economy perform correctly. The first area in which this should be done is wage control. All businesses are different. They are different in size, different in the profits they can generate, and different in where they are located. One size should not fit all. Wage rates established by tribunals, unions, and big corporations ignore the needs of the individual worker and the individual employer. Many workers would be happy to negotiate with their boss. The employer would soon be able to determine what has to be offered to attract and retain staff and this may well be different for each separate business.

Tribunals, legislated awards, and collective bargaining between large unions and corporations are counterproductive. They suit lazy politicians, power-hungry unions, big businesses with comparatively few employees, and the public service – which has no performance measures to justify their wage increases.

Governments should deregulate most business activities. Work should be performed to meet particular standards and anyone who can perform work to meet those standards should be allowed to perform it. Licenses, which are often a license to print money with no competition, should be withdrawn and competency certifications should replace them. There should be no restriction on anyone sitting for those competency certificates.

All regulations that result in small businesses becoming uneconomical, but favour large business, should be scrapped. If the government insists on specific standards, then they should publicise, explain them, and pay for the necessary inspections. Inspectors should give advice to ensure that the standards can be achieved. Prosecutions for these failures, which should be associated only with safety and health, should be a last resort for those who refuse to comply.

Governments should be removed entirely from decisions related to the operation of a business, and should be kept out of offering special support for particular businesses. If a business is viable (and that is a decision of the proprietor), then it will survive on its merits. Governments should not provide special concessions or services, externalities, for any business.

There are, however, areas in which governments should be involved, even in our capitalist democracy. They should be obliged to provide essential services, for every citizen and permanent resident, either directly, or by regulating private business, at competitive costs. These should include basic health care, low-cost energy, water, sewage, roads, rail, refuse collection, and disposal.

This is a basis for re-establishing a competitive economy, in which all citizens can participate on an even footing. People were never equal, in talents or resources, but at least the government can establish a situation that gives equality of opportunity.

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