Support for reform has faded, but business can still pick up the pace.
The business sector---more specifically, the large resources companies - played a key role in economic reform. During the 1970s and 1980s, they maintained large teams of policy people on staff, who made seminal submissions to virtually every inquiry, study or investigation. They funded a host of independent analyses from universities, think-tanks and consultancies. They provided leadership and backbone to the many business groups that then promoted reform. They gave courage and political support to politicians, and their leaders participated directly in the debate.
This no longer happens. The policy teams are largely gone. The financial support for independent research has declined and in many cases has been shifted to anti-market groups. Business groups, with some exceptions, have gone quiet and politicians receive little public support from business for further reform.
This does not mean that business has gone into hibernation. As a result of deregulation and market-based reform, companies have been on a treadmill of internal reform to increase efficiency. Indeed, the pace of change has been unprecedented. Companies have understandably shifted their focus from changing the economy to changing themselves.
To a degree, this is to be welcomed. Few businesses have taken full advantage of the scope for internal reform and the opportunities that are allowed under the present regulatory framework. And therefore, even on a public-benefit basis, the best return for their effort lies with internal reform.
There are other reasons for the shift in focus from economic to internal reform. First, many of the big-ticket reforms that affect the private sector have been done, with the big exception of reform of the labor markets, which remains incomplete. Second, the remaining reforms are, in the main, outside the expertise and operation of the business sector, such as higher education, public hospitals, and welfare. While private hospitals and universities exist and could expand, the public sector will remain the dominant funder and provider. Third, companies and industries have become more global and therefore less focused on Australia and its reform needs. Fourth, corporations are increasingly unwilling to risk what is left of their reputations to promote market-based reform. Corporations, in large part because of their role in promoting and implementing market-based reform, have been subject to a concerted campaign of "brand-mail" by the opponents of reform.
A recent example of this campaigning is the RepuTex Index, which provides a public soapbox for anti-market advocacy groups such as Greenpeace, the ACTU and the Ethics Network, to shame and blame corporations. Of course, the excesses of the dot-com bubble, many cases of corporate fraud and other examples of managerial capitalism run riot have not helped the standing of the sector in the public's eye. Finally, business leaders, like politicians, have become lazy, content to reap the benefits of past reforms while not pushing for more. If this continues, Australia's capacity to compete and prosper will also begin to wane.
What it means is that a key source of support for reform has waned. This has contributed to the pace of reform slowing at the national level and going into reverse at the state level. However, the main fault lies not with business but with short-sighted politicians and the excessive power given to fringe political parties.
Nevertheless, business support for economic reform can be mobilised. First, reform of the Business Council of Australia (BCA) is needed. The BCA is potentially an important institution as it brings together the big corporations across all sectors. During the 1980s and early 1990s, its contribution to reform was profound. It lost its way in the mid-1990s when it was restructured to allow select chief executives to speak on behalf of the corporate sector as a whole. Because its members were not willing to put their own companies' reputations on the line for the greater good, the BCA has since avoided taking a stand on most tough issues and has gone quiet on reform. This can be changed by emulating the structure and personnel of the New Zealand Business Roundtable, which has kept the torch of reform burning despite a hostile government. The ascendancy of Hugh Morgan to the presidency of the BCA is a very positive sign.
Second, even though companies have gone global and the "branch office" mentality reigns, global corporations can be persuaded to invest in public-interest issues in Australia. After all, they did so in a big way in the 1980s. For example, while the multinationals have cut policy staff in Australia, they have expanded these resources in the region, often in Singapore. These companies need to be convinced that investing in policy change in Australia is worth their while.
Third, businesses should recognise that good corporate citizenship does not just mean giving money to charity (worthy though it is). It also means helping make the case for reform. Reform is, after all, not only good for shareholders but for society as a whole.