Crumbling institutions, lack of trust and unease about our future were the key themes of CEDA 2020 Economic and Political Overview in Brisbane #EPO2020. This year the normally quiet and lazy summer holidays were ablaze with bushfires, climate politics polarised Twitter and our political leaders were caught up in scandal and unethical behaviour. The Government might be saying all is well, a surplus is in the bag, but to the average person, it doesn’t feel like it is all going to be ok.
Michael Blythe Chief Economist and Managing Director, Commonwealth Bank opened the event and illustrated why Australian’s are feeling uncertain about the future.
Australia has been riding a long wave of economic prosperity, low unemployment and stability. This prosperity has driven up the cost of living, precipitated a housing boom, casualisation of the workforce and stagnant wage growth. We may not be in a recession yet but the average ‘quiet-Australian’ is uncertain about the future.
Domestic consumption is an important indicator it represents 56 percent of Australian GDP (see graph above). When we stay home and save money this impacts our bottom line. Globally, growth is also slowing, Coronavirus is adding strain to already troubled trade policy and climate change is disrupting traditional industries.
For me, the graph pictured above illustrates the disillusion I felt at the start of this year. Uncertainty about Australia’s economy, the lack of leadership or ethics as displayed by the Sports rorts affair, the increasing influence of big business in policy setting, the nastiness on Twitter, all contributed to my loss of trust.
The Edelman presentation at CEDA on trust indicators generated a great deal of debate striking a chord with most in attendance. Edelman 2020 Trust Barometer survey found that despite a strong global economy and near full employment, none of the four societal institutions that the study measures—government, business, NGOs and media—is trusted. Australians are amongst the most cynical in the group of developed nations and China was far more trusting of their institutions than Australia. The survey found people would like to see increased collaboration and bipartisanship, stronger leadership, and more transparent and ethical behaviour displayed across all institutions.
People base their trust on competence (delivering on promises) and ethical behaviour (doing the right thing, social license). Edelman global surveys found Australians are more confident about our business leader’s ability to be efficient and relatively trustworthy than our government. Business leaders are increasingly stepping over a line and into the policy space. A recent example of this is BHP’s announcement that it will aim for carbon neutrality by 2050, at a time when political leaders seem to be incapable of charting a clear policy direction. For many, this is an erosion of our democratic process and for others it represents the market rising to the challenge and driving change.
Peter Van Onselen warned that while Australia might be comfortable in our sleepy backwater, we should be conscious of the changing global tide. Democracy will face many new challenges over the next decade and we should not be complacent about its importance to our society.
Think global act local
For all the pessimism there was also plenty of optimism. We are not in recession, there is plenty of scope for innovation and Australian’s are inherently cynical of the status quo. Chaos at the macro level can be tempered at the micro. Build trust with your team, behave ethically and continue to deliver to your community. Consider delivering smaller scale projects with local governments while the large scale infrastructure boom is consuming the available pool of skilled Australian’s. Local governments are calling out for services, bridges, potholes, and buildings all need to be fixed. In America, novel approaches to building brand equity and social license are being trialed. Have a look at Domino Pizza’s ‘Paving for Pizza’ a great piece of brand building https://www.pavingforpizza.com/ Closer to home the CEO Sleepout is a good example building trust and understanding at the community level https://ab.co/2P0JxMf
Graphs sourced from CEDA 2020 Economic Outlook file:///C:/Users/61433/Desktop/CEDA-EPO-2020-Final.pdf
Edelman 2020 Trust Barometer https://www.edelman.com/trustbarometer