MATTERS OF PUBLIC IMPORTANCE
Senator SHARMA (New South Wales) (17:16): One of my first jobs as a graduate when I joined the Department of Foreign Affairs and Trade in the year 2000 was to take a notable South Korean economist who was visiting around Australia to learn about the secrets of Australia's economic success, to talk to some of our economic officials and the architects of our large-scale economic reforms of the eighties and nineties and to meet with ministers.
I tell this story because back then Australia was an economic model that was looked at to be studied and replicated around the world. We had gone from being a laggard at the back of the pack in the sixties, seventies and eighties amongst advanced nations to one of the fastest-growing economies in the nineties and 2000s. People wanted to know how Australia had managed to lift the speed rate of our economic growth without triggering inflation and what the economic reforms we had undertaken were.
Although that was a quarter of a century ago now, a lot has changed since then. We have gone from being a model to be emulated to a cautionary tale. No-one comes to Australia to learn about our economic model anymore.
If you look at the figures—I don't know which figures Senator Mulholland was quoting from, but I think they were from another universe. In the OECD, living standards have gone up by five per cent since 2022. That is the OECD average.
Living standards in Australia have gone down by seven per cent since 2022. The economy per person, real GDP per capita, has gone backwards in nine out of the last 12 quarters. These figures are irrefutable.
They're not subject to some sort of debate. Labor might herald its cost-of-living relief measures, but the truth is they are bandaids on an open wound. If you think about what this means for us longer term, it's deeply alarming.
The Australian political and economic model, our political economy, has been built on the assumption of rising living standards generation to generation. If you look at Australia in the postwar era, living standards doubled basically every 35 years, every generation. That was underpinned by average long-term growth in real GDP per capita of two per cent.
What that meant was that each generation had more opportunities, access to better health care, access to better homes, more education, more training, more vacation, more leisure time and they were able to invest more in their own children. That's the generational compact at work—the idea that you will leave the world and your successors a better hand than you were dealt.
That generational compact is at risk of unravelling in Australia today. If you look at our long-term growth rates, even if you take the RBA's optimistic forecast that productivity growth will average 0.7 per cent per year over the next two decades—that is very optimistic because, at the moment, productivity is declining—at that pace of productivity increase, it's going to take 3½ generations, basically 100 years, for living standards to double.
That means your children aren't going to be noticeably or materially better off. Your grandchildren aren't going to be either. Perhaps your great-grandchildren will be.
That's going to have huge consequences for Australia because, in an economy that is no longer growing, that is stagnant, like the Australian economy has been, what politics becomes about is a contest for limited resources. It becomes a contest to redistribute the burdens and benefits of the tax and transfer system. That's increasingly the sort of politics we see from the Labor government—attacking classes of alleged 'haves' and giving to classes of alleged 'have-nots'.
Whether it's people with self-managed superannuation funds, the elderly or people who own assets, these are the sorts of people Labor is targeting. It's not with a view to making the economy grow faster but with a view to rewarding people who are screaming about being left behind in a stagnant economy. That is the recipe for political populism.
It's the recipe for zero-sum politics. It heralds a future that we've never before seen in Australia. Rather than focusing on redistribution and patching up the holes in the ship of Australia, I would urge the Labor government to heed some of the advice they were given at the economic summit—to constrain government spending, look to boost productivity, undertake tax reform and get our economy moving again—because the future of our children depends on it.