Good Government: The Forever Challenge

Political governance has been less than ideal around the world in recent years, with, of course, some encouraging exceptions. Dictatorships, autocracies and even lifetime heads of government have grown in number, as they did in the 1930s. Trade wars, slanging matches and sabre-rattling have increased.

These developments have occurred in fast-growing economies, and particularly in slow-growing ones.

So, just what are the elements of good governance? The list below is a start.

What any well-run nation needs

1. Safety (from external or internal threats or anarchy)
2. Cohesive, secular society (free of religious, ethnic, or other discrimination)
3. Democratic government (perhaps with compulsory voting)
4. A mostly happy and caring society (with welfare for the needy)
5. A healthy, well-educated and increasingly cultured population
6. A proud, unique and fun-loving nation (but free of jingoism)
7. Continual reform (social, economic and political)
8. Full employment (5% or less unemployment)
9. Rising standard of living (averaging 2% per annum or more)
10. Low inflation (less than 3%)
11. Fair interest rates (to depositors and borrowers alike, around 5% real)
12. Productivity growth (around 2% per annum)
13. A strong exchange rate
14. Balanced government budgets (and low national debt, at less than 35% of GDP)
15. A positive current account with the world (paying our own way)

Australia can tick around half of these boxes.

However, it should be of some concern that our economic growth has halved over the past six decades, from a heady 5% p.a. to an average of 2.5% p.a. in the 2020s, as we see in the following chart.

So, what are the causes of this boiling-frog syndrome decline? Complacency usually sets in with an advanced economy such as ours. This is typically true of the Western world at large.

Is this trend concerning? Yes, but it is not immediately critical. What should our federal governments, whoever they are, do over the longer term? A dozen ideas are listed below.

Some challenges for our Federal Government

1. More social literacy: in economic, financial and digital age issues
2. Senate reform: improving representation and bills-rejection problems
3. Balanced budgets over electoral terms: the first rule of good government
4. Tax reform: including GST and emphasis on spending rather than wages and profits
5. IR reform: that understands work and workers in the New Age
6. Innovation: IP and productivity, and how to get them
7. Embracing the digital era: for international competitiveness
8. Privatisation: of low-productivity government activities
9. Long-range vision: especially regarding our role in the Asian region
10. Reducing subsidies going to yesterday’s industries that won’t survive
11. Rational energy policy: including carbon reduction, renewables (and perhaps nuclear power?)
12. Developing the top part of our continent (especially the top third)

To finish on a more optimistic note, the two exhibits below should make us comfortable – but hopefully not complacent. We do have reasons to smile, and our standard of living is expected to keep climbing.

Why Australia can still smile

1. We have one of the highest standards of living in the world
2. We have several of the world’s Top 10 most liveable cities
3. We are mostly a confident nation (in terms of Consumer Sentiment)
4. We are part of the world’s fastest growing mega-region, Asia
5. Our population growth is faster than the world’s average
6. Inequality in Australia rarely leads to widespread violence and we face minimal terrorist threats
7. Our unemployment is among the OECD’s lowest, despite not being at ‘full’ employment
8. We are creating over three times more jobs than we are losing most years
9. Our national debt is still among the lowest in the OECD as a percentage of GDP
10. We are the lowest-taxed nation among the wealthy OECD countries.
11. Our deficits are chronic but low within the OECD, and fixable.
12. Our interest rates are at record lows (which is good news for borrowers)