How often we hear the cry from the business lobby for a reduction in regulation in Australia? So called ‘red tape’ and ‘green tape’ can have the unintended consequence over time of stifling business endeavour.
I am currently in Italy and between regular ministrations of pasta and Peroni and the occasional glass of Chianti, my observations are that although as a first world country it has its inevitable accompaniment of regulation, it is remarkable how much of the Italian economy comes from self-employment and small enterprise. It is a country with an aspirational culture aimed at self- employment and personal enterprise rather than service through employment.
According to the 2014 OECD Labour Force Statistics we know that self-employment as a percentage of civilian employment in Italy was 25 per cent, whereas in Australia it was only 10.3 per cent. Female self-employment as a percentage of female civilian employment was a dismal 8.1 per cent in Australia; in Italy it was 18.2 per cent. For males, in Australia 12.2% were self-employed compared with almost a third, 29.9 per cent, of Italian men.
Not that Italy doesn’t have its own economic challenges, however it seems to me that when faced with increasing unemployment it should be incumbent on governments to allow greater flexibility in order to encourage individuals to have a go in private enterprise. It would also help erode the unhelpful dynamic of economic debate in Australia – business versus labour – when, in fact, we are all in it together. At least that is how I run my business.
Government regulation is obviously necessary in many circumstances to address a particular perceived evil or shortcoming. The problem is that contemporary governments, transfixed by opinion polls, often react with knee jerk regulatory responses to keep peace with the electorate. The ‘what’s the government going to do about it’ line sung like a chorus every time something goes wrong in society has become a familiar refrain. The problem is we can’t insist on the government regulating everything and everyone, and achieve sufficient economic freedom to encourage private enterprise at the same time. The challenge is to separate regulation that is genuinely required from what we can rid ourselves of or simplify. Yes, regulation is necessary but it should not be at the cost of crushing our spirit of enterprise nor reigning in the power of the free market.
It would be encouraging if we changed our refrain from ‘what is the the government going to do about it’ to ‘what are we going to do about it’.
The people of South Australia need a government that will act as a champion of the private sector. It is pointless lamenting the loss of jobs as business after business fails, while at the same time ignoring the potency of self-employment and small and medium enterprise. It is essential to have within the ranks of government ministers those who have successfully run businesses in the private sector. How else will a government have the ability to recognise what is required for businesses to succeed and flourish? How else will it form the vanguard to lead us to economic recovery?
Our current government has now been in charge of our state for 13 years. By the 2018 election it will be 16 years. The Premier has admitted that unemployment will rise between now and the next election. Business SA predicts that there may well be an increase to double digit figures. We are the worst performing state economically not only on the mainland but including Tasmania which like South Australia has had its set backs, and which traditionally used to win the unwanted race for the worst performer. No longer, as South Australia has regrettably seized even that mantle.
So the next election will be about jobs and how to create them. It would be encouraging if we changed our refrain from ‘what is the the government going to do about it’ to ‘what are we going to do about it’. That said, the state needs a government that will get out of the way of private enterprise by untying unnecessary administrative tape currently stifling business endeavour, and facilitating, not impeding, the advance of small business. We need a greater emphasis on the importance of having a go; of the aspirational culture that once made South Australia a leader of business and progress.
One should never lose hope. A look across the border to NSW gives cause for encouragement. Not that long ago, it was staggering economically and losing the race against Victoria and, for that matter, the other states. Today it is a world-beater. A change of government and a change of attitude and within a few short years it is top of the economic league tables.
New Zealand serves as another example. Our island neighbour has well and truly thrown off its past economic malaise and the government of John Key has harnessed the power of business to lead in its recovery. Lessons learnt from other jurisdictions are a pointer as to how we may achieve economic prosperity and a reduction in unemployment in the future. It is not too late for South Australia but attitudes must change.
Morry Bailes is the managing partner at Tindall Gask Bentley Lawyers, Member of the Executive of the Law Council of Australia and immediate past President of the Law Society of SA. The opinions expressed in this column are his own.
His column appears every second Thursday.
Disclosure: Morry Bailes is a member of the Liberal Party.
