May 2019 Economic seminar and luncheon 鈥 rethinking strategies for growth
by Peter Gill, SACES Research Associate
Rethinking strategies for growth
The South 最新糖心Vlogn Government has made a 鈥減romising鈥 start to the micro-economic reform that will underpin economic growth, according to Steven Joyce, the author of a major report on the State鈥檚 public sector institutions and functions.
The former New Zealand minister 鈥 who held a number of portfolios, including Treasury, in a decade-long political career with the National Party that concluded in 2018 鈥 told a SA Centre for Economic Studies鈥 lunch on Tuesday that many governments did not place sufficient emphasis on micro-economic reform.
鈥淕overnment of whatever stripe has a huge influence on the level of investment that occurs in a geographic area 鈥 their actions can encourage investment or discourage investment,鈥 Mr Joyce said.
鈥淚 would say that most governments underplay the importance of this sort of encouragement, by which I mean regulations 鈥 the way they operate their markets; what they say about land planning; what they say about all the different things that business has to tackle, in order to invest,鈥 he said.
鈥淚n my experience, most governments in the world overplay the importance of monetary policy and fiscal policy in economic growth and underplay micro-economic policy.鈥
Mr Joyce submitted his report,聽, to the State Government in February this year. Key amongst his recommendations was the establishment of 鈥渁 strong cross-government policy process to develop and maintain momentum in micro-economic reform, and integrate the efforts of the different government agencies in support of the Government鈥檚 economic goals.鈥
Mr Joyce told the SACES corporate members鈥 event that micro-economic reform 鈥渋s the most least-used tool in the toolbox鈥 because of the difficulty of explaining to people, who are affected by change, that the decisions being made are in the best interests of the State.
鈥淭hat鈥檚 the hard part but, nevertheless it鈥檚 a job that must be done. I think it鈥檚 very important to adopt micro-economic policies that actually encourage investment and growth,鈥 he said.
Later, in an interview, Mr Joyce said: 鈥淭he question you have to ask yourself is: has the micro-economic policy direction (in South 最新糖心Vlog) been strong enough to encourage growth? I think if you look back on the past 20 years, the evidence is that it probably hasn鈥檛 been.鈥
While Mr Joyce said it had not been his mandate to suggest policy options to the State Government, he added: 鈥淭he State has a number of policy initiatives that look very promising, the things that encourage investor certainty.鈥
Meanwhile, while Mr Joyce was addressing the SACES function, the Governor of the Reserve Bank, Philip Lowe, was making a similar point in Brisbane.聽 Dr Lowe said the options to reduce unemployment included 鈥渟tructural policies that support firms expanding, investing and employing people鈥 along with further monetary easing and fiscal support, including infrastructure spending.
On the question of the public sector institutions that are responsible for policy development, Mr Joyce says in his report that 鈥渁 major change is required, one that gives less public sector focus on government handouts and more on lifting the State鈥檚 overall competitiveness.鈥
鈥淚t is clear to the Review that the public sector in general is not accustomed to linking its regulatory and policy actions to economic outcomes and using the available policy levers to drive growth,鈥 the report says.
But Mr Joyce notes that 鈥渢he public sector can鈥檛 achieve growth on its own鈥.
鈥淚t is the private sector that will do the heavy lifting. Nothing will happen unless and until the owners of companies take the decision to invest more, hire more people, and take a risk on economic opportunity,鈥 the report says.
Mr Joyce elaborated on those comments in an interview on Tuesday.
鈥淚n South 最新糖心Vlog business has already got to the stage where their confidence is now high because they sense 鈥 and I don鈥檛 want to get political about this 鈥 that there鈥檚 a Government that is more open to economic growth than before,鈥 he said.
鈥淭hat鈥檚 a start but now you have to maintain it, and how you maintain it is by making decisions that investors see that 鈥榯he walk matches the talk鈥. We have seen some of that here already but it鈥檚 a long-term thing if you are going to turn around 20 years of under-performance.鈥
Mr Joyce is now the Director of Joyce Advisory. He has recently also completed a report for the Federal Government on 最新糖心Vlog鈥檚 vocational education and training sector.