Last October the then president of the Business Council of Australia, Tony Shepherd, and its chief executive Jennifer Westacott, went to a two-day conference of the US Business Council in Palo Alto, California.
It was bristling with Fortune 500 CEOs, and the networking was unparalleled, but the thing that left the greatest impression on the two Aussies was that the role of government wasn’t discussed once over two days. The conference was all about innovation and what the businesses themselves should do to improve it.
Two months earlier, on July 31st, Shepherd and Westacott had grandly led the publication of the BCA’s latest magnum opus, the ‘Action Plan for Enduring Prosperity’, which contained 93 recommendations, 92 of which involved telling a government -- usually the Australian government -- to do something.
It might have been called the ‘Aorta Report’, as in, ‘Aorta Do Something’.
It’s perhaps fair to say Tony Shepherd and Jennifer Westacott were a little chastened as they flew home from California. Since 1983 the BCA has had a rich and proud history of sternly lecturing Australian governments and getting nowhere. Maybe it was time to try something different.
Actually the 2013 Action Plan did have one concrete result: Action No. 2 on the list was for a commission of audit to examine government expenditure and efficiency. The incoming Coalition government did just that and Tony Shepherd himself got the gig, although we’ll never know, of course, whether he and the BCA had suggested what they knew was already going to happen.
Anyway, the Commission of Audit happened and that trip to Palo Alto helped inform both its report and the new Treasurer’s first budget. Right or wrong, Shepherd and Westacott had come back persuaded that government intervention, and especially subsidies, was not the way to go.
Not that they wished they could recall and pulp the Action Plan for Enduring Prosperity and its 92 calls for government action, but a different approach, they felt, was needed.
Joe Hockey was only too happy to accept the call for no more subsidies, of course, and great swathes of industry handouts and government support bodies were abolished, saving billions.
And while Tony Shepherd was busy implementing Action No. 2, Jennifer Westacott commissioned McKinsey & Co to produce a new study of Australia’s competitiveness that would be focused on individual sectors. That report was presented this week by the Business Council’s new president, Catherine Livingstone, and formed the basis of her first speech.
The paper that has resulted from McKinsey’s work is called ‘Building Australia’s Comparative Advantages’, marking a welcome return to BCA reports of the gerund (“building”). The No. 1 action point in this latest effort -- and the report’s core -- is this:
“Rethinking the role of government in driving growth, moving to a facilitation and coordination role rather than subsidies or direct intervention. Governments should be facilitating competitive industry sectors by taking a sector view of the economy and prioritising all decisions and reforms to promote Australia’s comparative advantages.”
Oh, and there’s one more sentence: “Additionally, governments should be enabling innovation by fostering entrepreneurship and collaboration and thus dynamic growth and facilitating skills and capabilities.”
This is Australia, after all, and we can’t have a business recommendation that makes no plea at all for the Government to Do Something.
The 123 members of the BCA don’t pay their annual fees in order for the directors and staff to lecture them! No way. They pay the fees so the BCA can lecture the government -- to do more, and do less, both at the same time.
So the essence of this week’s trumpet blast from the BCA is a relatively subtle and simple shift: facilitation and co-ordination is wanted rather than subsidies or intervention -- plus an additional suggestion that the, err, government, take a sectoral approach to “prioritising policy action”, with urgent action needed for “mining and LNG, agriculture and food production, and energy sectors”.
Not, you understand, because these are weak, but because they are strong and relatively competitive. In fact McKinsey found that the only industry in which Australia has a competitive edge is agriculture. The BCA’s new approach is about building on our strengths, but not, mind you, picking winners.
One suspects that the BCA has a little trouble working out whether it’s a think tank or a lobby group.
“A bit of both,” is probably how they would describe themselves, but the trouble with that is that the lobbying is a bit confused -- not direct enough, and without a clear ringing message -- and the research is often a bit biased towards an outcome.