Westfarmer’s chief, Richard Goyder, has today declared that Australia needs to go for growth to spur “real job creation”. From The Australian:
Backing Joe Hockey’s call for the world’s 20 biggest economies to set a global growth target, Wesfarmers chief executive and B20 Australia chairman Richard Goyder said Australia needed growth above 2.5 per cent.
“To get real job creation we are going to have to grow faster than that . . . There’s no doubt (that growth should be higher)”…
“Business is the key part of that. You don’t get GDP growth through high taxes. You don’t get GDP growth in the long run through growth in governments. You get it through letting the private sector take risks and invest. That’s how you get jobs.”
While expanding the reach of government is likely to be detrimental to growth, Goyder’s solution of “letting the private sector take risks and invest” is a little simplistic.
As noted yesterday, Australia’s economy has become increasingly uncompetitive because there has been next to no economic reform in Australia for a decade, and in every sector of the economy we have an effective duopoly or oligopoly at work. Moreover, the nation’s obsession with housing has starved the economy of productive investment, reducing competitiveness and raising cost of living pressures in the process.
The solution calls for a wide spread program of micro-economic (structural) reform aimed at breaking down barriers to competition (including in the land market), as well changing the tax system so that it rewards productive investment.
Simply handing the reins to big business will merely reinforce the existing oligopolist structure, lowering the economy’s growth potential.
