The findings from the latest Director Sentiment Index highlight the vital role of directors in driving policy and reform outcomes, writes John Brogden.
Last month Australia’s 45th Parliament sat for the first time in Canberra, tasked with delivering good governance for our nation. It does so in a fractious domestic and global political environment. At the same time the community, directors and business are hungry for long-term policy and reforms. Juxtaposed is their lack of confidence in the ability of government to deliver.
Following the recent election, the Australian Institute of Company Directors (AICD) asked our diverse membership for views on the priorities for government and the nation. In a concerning result, 85 per cent of directors rate the quality of Australia’s public policy as poor. It’s tempting to place the blame for this solely on our politicians. But in the face of such overwhelming sentiment, shifting this dial demands a contribution from us all.
As the voice of excellence in governance, the AICD believes that all stakeholders have a role to play in driving policy and reform outcomes. Business has a vital role to play and for business leaders, this means taking a more public role in promoting issues and reforms. Too often these contributions risk being viewed as part of the partisan political debate.
A strong voice on policy, however, is not a partisan position. Prosecuting a case for reform isn’t easy. There will always be short-term winners and losers, and fair and balanced policy requires hard work. Many voices are needed to deliver better policy debate and more long-term thinking. Sectional interests need to give way to a view of the bigger picture, and public confidence built into the long-term gains to be achieved. Our national interest requires leadership from political leaders as well as business and community voices.
The results also present a challenge to our incoming elected representatives, to show that they can work together to put the community’s interests first. In a parliament that has never seen so many minor parties and independents, confidence in long-term thinking and policy is low.
Australian directors have said a move away from short-termism is the key to boosting growth, but they hold grave doubts about the new parliament’s ability to deliver necessary reform. Poor quality policy debate, potential parliamentary roadblocks and falling confidence in government understanding of business are common concerns.
This tells us that in boardrooms around the country – from large listed companies to local not-for-profits and small private enterprises – there is concern that politicians are too focused on the short-term and not delivering the long-term vision that Australia requires.
Earlier this year the AICD released an agenda for national reform called Blueprint for Growth. Infrastructure investment was one of our reform themes and has the potential to be an issue on which business, the community and all sides of politics could unite. The creation of long-lived productive assets can reduce the cost of living and lift national prosperity over the long term, generating economic returns.
But government should not and cannot be expected to carry this work alone. The corporate sector needs to play its part by shrugging off the short-termism that has infected too much business decision-making.
Australian businesses need to be willing to take risks and invest for the future. And importantly, business leaders must also hear the community’s calls for a higher standard of ethics and accountability.
Anti-big business sentiment has never been so strong. Changing the public mood will take more than better messaging from industry. Australia needs strong and successful businesses. But a successful business is not only about profits. It is also about contribution to the community, and the good governance needed to drive high standards of conduct and accountability.
As our new parliament takes its place in the nation’s capital, Australian business leaders must be active in making the case for long-term policy to drive the nation’s growth.
Vacating the field is not an acceptable option, and won’t help shift the short-termism in policy debate. Shifting the dial on the quality of public policy debate is a task too big, and too important, to leave to politicians alone.
A version of this article first appeared in the Australian Financial Review.
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