Henry, Ken: Public policy and economic reform

Henry, Ken

Public policy resilience and the reform narrative‘, ANU News, 18 September 2014

A lecture delivered at the Crawford School of Public Policy, ANU, 16 September 2014. The lecture focuses on two questions: how should one assess the wealth of a nation; and what are its policy determinants?

Henry argues that Australia’s historic reliance on exports is hampering policy innovation. He re-examines the bases of international competitiveness and identifies policy failure in relation to the mining boom, climate change and finding Australia’s place in the Asian Century. We need, among other things, to be comfortable about ‘picking winners’ which will contribute to our international competitiveness.

An internationally competitive Australia would be a place in which political activity is predictable, with policy based on sound theory and robust evidence. It would, therefore, be a place in which government policy avoids short-termism and has no taste for protecting vested interest; a place in which governments have the intellectual capacity and political courage to articulate a compelling vision of what could be.

An internationally competitive Australia would be a good place to do business. It would be a place that provides access to labour with the right skills, and to deep and liquid capital markets that are sophisticated and robust. It would be a place in which those developing regional and global value chains expect to find world-class partners, with a sophisticated understanding of Asian languages, cultures and institutions. It would be a place that offers its people a high quality education, and rewarding jobs and careers. It would be a place in which “grassroots dynamism” flourishes; in which intellectual development is encouraged; and in which science, innovation and effort is rewarded.

In more abstract terms, Australia’s international competitiveness should be assessed according to the richness of the set of opportunities it offers the people who live in it, and those who could live in it in generations to come.

But international competitiveness, even conceptualised in the more sophisticated manner for which I have argued here, does not represent the ultimate goal of public policy. That has to be stated at an even higher, even more abstract, level. In this address I have emphasised the responsibility of public policy in the nurturing of national endowments. The public policy of Australia should be directed to ensuring that all Australians, including those not yet born, are endowed with the capabilities that afford them the opportunity to choose a life of value. That is the measure of the wealth of Australia and also of the sources of its wealth.

Commentary on the speech in Fairfax media, Crikey and the Australian Financial Review. Another version.

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