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There is still the smell of burnt sausages in the air, mingling in many places with the smoke of bushfires – a reminder both of our volatile environment and the courage of the volunteers who defend us when it erupts in anger.
And there is still plenty of sun and beer and congratulations for being ourselves. And a subtle mixture of regret and anticipation as the summer’s languor ends and the excitement of a new year really begins.
And as we have all year to lament our shortcomings, this is a day on which we should celebrate our achievements as Australians, the things we have got right and what they can teach us so that we have even more to celebrate at future Australia Days.
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We are far from perfect, but relative to most other countries we have done very well in a turbulent world where the pace of disruptive change – as destructive as it is creative – has never been faster.
As we reflect on our successes, we should remember what has made them possible. At our best, we have embraced change, clear-eyed and open-minded, seeing the world as it is, not as it was or how we would like to be.
australia’s changing face
We have, at our best, sought to enhance individual liberty, having the confidence our fellow Australians will make the right decisions for their families, their businesses and their nation if they are given the freedom to do so.
An antipodean Rip van Winkle, roused from a sleep of half a century, would be astonished by the changes in his country.
When he went to sleep, almost all Australians looked thoroughly European. Aborigines were ignored, and Asians and Africans rarely seen.
Walking around the streets of our big cities, the most evident change is the face of Australia. No comparable developed country has such a high percentage – 27 per cent of its population born outside its borders. For example, the United States is at 13 per cent, Britain 11 per cent, Canada 19.8 per cent, France 5.8 per cent and Germany 8.7 per cent.
Fifty years ago, about half of all migrants came from the British Isles and almost all from Europe, North America and New Zealand. Nowadays the largest sources of immigrants are from Asia – outnumbering those from Europe three to one, with India and China providing a quarter of the new immigrants over the past four years.
Every day the world news is full of racial and religious conflict. European leaders lament that “multiculturalism has failed". And yet here in Australia, with far more of our number born abroad, we have created the most successful multicultural society in the world and despite the asylum seeker controversy, there remains, contrary to most developed countries, strong support for our immigration program.
We have been able to do this not simply because Australians by and large are easygoing, respectful of and interested in other cultures. But above all, unlike most other countries (the US being a notable exception), we do not regard national identity by reference to a common race, ethnicity, religion or cultural background.
Our national identity is defined by a common commitment to Australian civic values of democracy, the rule of law, respect for the rights of individual men and women, a healthy scepticism for authority and a deep intuitive sense of a fair go.
There is no individual component in our civic values unique to Australia. But the combination is distinctly Australian – for example, we are much less deferential than the British, more caring, with a stronger safety net than the Americans.
In the US, government transfer payments to those in the poorest 20 per cent are only 1.5 times as large as they are to those in the richest 20 per cent. In Australia the ratio is 12.4 times. We have a lot less “middle class welfare" than most OECD countries and the consequence is that inequality in net household incomes has increased only slightly over the past decade.
And those values are accessible to everybody because at their core is a live-and-let-live respect for others. Our approach respects cultural diversity by seeking civic integration, of which English language and a national curriculum are key elements, rather than cultural assimilation in which migrants are expected to cease to be themselves.
This diversity has immensely enriched Australia – and not just in culinary terms. The histories and culture of all the peoples of Australia are open to us all, and like insinuating threads weave themselves into the tapestry of our nation, making us not simply heirs to the culture of our own forebears but to those of our neighbours too.
All of this makes Australians ideal global citizens – which is no doubt why my old firm Goldman Sachs, like many other global businesses, hire more Australians than they could ever employ in Australia.
we have the formula for success
This is not to say the experiences of all migrant groups, including some from the Islamic world, have been entirely happy.
But at least we know we have the right formula for success – civic integration coupled with respect for and ideally curiosity in all the cultures of our people.
Those people who seek to unsettle that harmony – on either side – with hatred and vilification are not defending Australia, they are undermining it.
And it is not just the faces in the street that have changed. In the lifetimes of most Australians, the disruptive pace of change across the world has never been so intense.
China, in little more than 30 years, has gone from an almost closed, impoverished society to becoming the second, and shortly the largest, economy in the world.
Two and half billion people – more than a third of the world – are now connected to the internet and increasingly via a smart phone or tablet.
Millions of new businesses have been created – whether it is by giants such as Google (founded in 1998), Twitter (2006) and Facebook (2005), home businesses on eBay (1995) or farmers in South Africa who for the first time can get reliable, timely information on markets and sell their produce on line for a fair price.
And while
The global economy has never been as big or as connected, and the same technologies that have made it so have also given individuals a voice they have never had before. The opinion leaders, the editorial gate keepers, are seeing the news and opinion swirl around them in an online world to which, thanks to social media, billions of people can now directly contribute.
And just as the individual’s power to communicate has been immeasurably enhanced by technology, so too has his power to destroy. The lethal power available to the individual soldier or terrorist or indeed madman has never been greater, whether it is in the hills of Afghanistan or the classrooms of Connecticut.
The convergence of developing countries with the developed world, supercharged by the internet’s annihilation of geography, has meant more and more industries and jobs in high wage-developed countries such as Australia are subject to competition from countries that are invariably lower wage but less often lower skilled.
We could have responded to this competition in the way our parents and grandparents did – by throwing up higher and higher tariff walls and diverting more taxes from efficient, competitive sectors to support failing industries.
With some notable exceptions, we have not done that. Over the past 30 years the Australian economy has been transformed, in almost every way for the better.
One of the most protected, rigid, over-regulated and volatile economies in the OECD at the end of the 1970s is now one of the most open, flexible and free.
This remains the case even after the best efforts of
During the past 21 years, our GDP has doubled and per capita incomes increased by 50 per cent. This is not simply due to the resources boom. Productivity and hence GDP grew faster before the resources boom.
And of the three bullets our economy is said to have dodged since 1991, two preceded the resources boom – the 1997 Asian currency crisis and the tech wreck of 2000.
Only during the GFC can it be claimed resources helped rescue us, and here credit must be shared with the reforms of years past which enabled rapid monetary easing, a well-supervised and prudently managed banking sector and a floating exchange rate.
And those reforms have enabled us to absorb the positive economic shock of the boom without anything remotely resembling the inflation and industrial disputation that has attended every similar boom in the past.
the keys to prosperity remain the same
The challenge for the future is how, in an increasingly competitive, volatile and unpredictable world, do we maintain an Australia with high wages, with a generous safety net, a society in which everyone has the freedom, not just in theory, to realise their dreams?
The answers lie in being smarter, better educated, higher skilled, more flexible and innovative and so better able not simply to fend off the challenges in a more competitive and uncertain world but to take advantage of the immeasurably greater opportunities it offers. Assuming this resources boom (unlike all its predecessors) will never end is utterly naïve.
We should ask ourselves, as we watch the fireworks, why it is our highly educated nation, with a non-deferential culture, does not generate much more of its GDP from its own innovations, its own intellectual property?
The keys to prosperity have not changed. Our greatest assets are not under the ground, but walking on top of it. Governments can ensure we continue to prosper by enabling and freeing enterprise, rather than restricting it.
The more uncertain the environment, the more valuable is flexibility, which gives you the ability to change direction quickly as circumstances change and to take advantage quickly as new opportunities arise.
Despite promising a “one in, one out" rule for new regulations, the Rudd/Gillard governments have dramatically increased the level of regulation, not simply with new taxes but with additional regulation for almost all enterprises (including not-for-profits) of every description.
And not just additional regulation – newspapers and the entire non-broadcast media will come under new government regulation if the Gillard government has its way.
The Productivity Commission has estimated cutting unnecessary red tape could generate an extra $12 billion a year in GDP. The Coalition has pledged to cut that cost by at least $1 billion for each year it is in office.
Regulations not only add to the cost of doing business, they make it harder and slower to start businesses, to change the direction of businesses, to construct anything from a house to a mine. In short, red tape – whether it is filling in forms for Canberra or limiting the ability of employers to bargain with employees – impedes innovation and hobbles our economy when it needs to be most free.
And just as the clock has been turned back, lessons forgotten, on regulation, especially of workplaces, so too has the government moved back, as Rudd promised, to the very centre of the economy as it seeks to construct a government-owned telecommunications monopoly and pay Telstra and Optus billions of dollars not to compete with it.
And so it is no surprise productivity growth has stalled. Last August, the Economist Intelligence Unit ranked Australia as 50th out of 51 surveyed countries for productivity growth – we were ahead only of Botswana.
So as we celebrate this Australia Day and toast our success, we must remember that it is economic freedom that has delivered our prosperity and ask how long that prosperity will last if Australia continues down the road where the government seeks more and more control of the economy whether by regulation, picking winners or building its own monopolies.
And many of us will, I hope, resolve that 2013 will be a year of more freedom.
The Australian Financial Review