NEWS

Thursday, 08 December 2016

NICK CATER writes in the 2016 Federal Young Liberal Policy Journal, which includes articles by Senator the Hon. Eric Abetz and Senator James Paterson

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Should a think tank that models itself on the principles of Sir Robert Menzies declare itself to be pro-business?

That’s the water cooler topic at the Menzies Research Centre right now as we ponder how to tackle the nagging challenge of economic growth.

Governments, contrary to popular opinion, cannot drive economic growth, although they can hold it back by over-regulation and excessive tax.

Growth comes from the private sector and is driven by individuals and corporations who take risks and seek rewards.

“No Act of Parliament can make a nation prosperous,” said Menzies. “No regulations can get rid of human error or, of their own force, create prosperity. For, in a democracy,  it is the energetic citizen who produces wealth…

“The greatest function of a democratic government is to create a climate in which enterprise flourish and productivity will increase.”

As an institution that believes in economic progress, therefore, the MRC adores successful businesses. Successful businesses increase economic activity, pay wages and pay taxes. They provide custom for suppliers, create jobs and expand opportunity.

In a Liberal view of the world, the private interests of shareholders and the broader public interest are naturally aligned.

Yet there is subtle difference between a pro-business think tank and business advocacy organisations like the Business Council of Australia, the Australian Chamber of Commerce and Industry and the Minerals Council.

It is not the MRC’s job to represent the interests of banks, miners, manufacturers or, for that matter, butchers, bakers and candlestick makers.

In advocating for lower taxes and the removal of unnecessary regulation, the MRC wants to make it easier to do business, but that’s not to say that good public policy satisfies every business.

Take competition policy, for example. At a gathering of public-spirited business leaders an argument in favour of strong competition policy is likely to produce sage nods. Back in the privacy of the boardroom, however, it is likely to be a different story. Competition is all very well, but no business wants competitors.

A construction company that colludes with a union to buy industrial peace and squeeze competitors would not have been particularly thrilled with the MRC’s recent report, Building a Better Future: Restoring order and competition in the building industry. While the report does not suggest there is any moral equivalence between a thuggish, un-principled union like the CFMEU and a building company that plays within the rules as they stand to protect the investment of their shareholders, we argue that a lack of competition has hindered productivity growth and artificially inflated the price of major construction projects by 30 per cent or more.

Any government or think tank that pursues good enterprise policy must resist any measure that reduces economic freedom, however loud the cries from particular sectors.

Menzies made the point eloquently in the 1950s in the midst of a fractious debate about trade with Japan. The Labor Party was opposed to the proposed Commerce Agreement, arguing that it would hurt Australian workers and dilute the White Australia policy.

Manufacturers hated the notion of free trade with Japan too, and argued forcefully for carve-outs and tariff protection. Menzies would have none of it.

“What is the duty of the Government?” he asked in a radio broadcast to the nation. "Is it to please the affected local manufacturer and sacrifice a substantial share of our wool market, or is it to preserve our export markets in the interest of the entire nation, including the great mass of manufacturers whose success is affected by every increase in the national income?

“No Government could hope to solve it merely by giving way to special pressures within its own boundaries. The longer I live in public affairs the more satisfied I am that political leadership does not require the kind of mind which is blown about by every wind, but requires in full measure those very qualities of work and thought and determination and enterprise which we like to believe are the characteristic of the best elements in our nation and our people.”

It is the kind of clarity we need today in considering the proper relationship between Liberals and business.

The Editor of the FYL Policy Journal is Liam Staltari. 

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