Saving Australia from a damaging productivity backlash

How do we avoid the productivity trap that Alan Kohler so graphically illustrated yesterday (The paradox of productivity, June 9)? When a society is caught in this trap people work harder but their jobs are less secure, their pay is squeezed and all the productivity rewards go elsewhere -- usually to the employers.

First of all, that system has been embraced in the US but is unsustainable and unless it is reversed in America the end game is ‘Warrenism’. US Senator Elizabeth Warren has a chance of toppling Hilary Clinton for the US Democratic Party nomination for 2016 and then becoming the next US President. Her agenda is to attack Wall Street, corporate America and globalisation as they have never been attacked before.

Like all ‘revolutions’ there will be pain on all sides but current trends will be reversed (Politicians should heed the might of the ravaged middle class, April 29). And if she fails and nothing is done then rest assured that by 2020 there will be an even stronger push because the US swing of rewards away from workers to the corporate sector is unsustainable.

So how do we avoid going down the US path? Let’s start with the public sector. Government bodies have to do things smarter -- not so they shed vast numbers of people but so they can provide more and better services. We have two shining examples and I am sure there are more.

First -- come election time, state politicians nationwide promise more police stations and more police on the beat to get more votes. But the police mess gets worse because that’s not the solution.

In Victoria there is a rare beast: a police commissioner who did not really want the job but is brilliant at the task and is prepared to tell the truth even though it may mean he will lose his job. And so Victorian Police commissioner Ken Lay set out how a modern police force should work -- including better use of technology, retired police on old cases and harnessing volunteers in social areas.

It was a brilliant blue print. The politicians on both sides of parliament were horrified because there is an election due in November and they wanted to gain votes by promising more police on the beat and a few extra police stations. They can’t do that now.

The police union was also horrified because it meant doing things differently. What Ken Lay realised was that to get more money for police he would have to take it from schools or hospitals so he used his existing money smarter.

Medical and education bodies are still screaming that they each want money taken off the other. They need a Ken Lay plan to use their existing money and resources so they can either handle more students or patients or give them better service.

In health, the equivalent of Ken Lay is the Barwon model using Global Health technology and systems. The base of the technology and systems is not expensive systems that never deliver but rather simple PC and iPad systems that slash document duplication (How to save our sick health system without GST hikes, May 21).

In the Coalition, the only minister who understands the problem in the private sector and has an action plan is small business minister Bruce Billson. His plan is to make the Taxation Commission obey the law in classifying independent contractors (a very difficult task) and to extend consumer protection laws to small enterprises dealing with large organisations. The vested interests fighting Billson are very powerful.

In companies, retirees want more income and there are all sorts of board governance rules that make risk-taking for growth less attractive. Someone has to take a lead and start growing again and sell that growth to shareholders.

But to fund growth, money has to be diverted from dividends or buybacks. Telstra is in an ideal position because it does not have to reduce dividends to grow. Telstra’s August profit statement could be the start of a nation-changing event, if they have the courage (Thodey's Telstra plans have huge implications for shareholders, May 23).