Budget Blueprint 2023: Re-imagining Productivity

As a think tank that subscribes to classical liberalism, Blueprint naturally embraces meritocracy. We believe that success should be a function of hard work, talent, and free and open market-based competition. But if we are being honest, it has been a generation since Australia was a true meritocracy.

As the gap between rich and poor widens, multi-generational disadvantage becomes entrenched. This corrodes the very foundations of liberal democracy, and threatens the capacity of government to provide equality of opportunity. Equality of opportunity is one of the foundations of classical liberalism. Indeed, without it, expressions of public policy that claim it as a philosophical base are ontologically bankrupt. A paradigm shift in how we conceive macroeconomic policy is needed. To be clear, we are not arguing for equality of outcomes. Whilst attractive to those subscribing to more collectivist intellectual traditions, the reality is that true meritocracy and equality of outcomes are mutually exclusive. Rather, this Blueprint short paper proposes a number of reform ideas that seek to ‘level the starting grid’—arguing that there is a direct link between equality of opportunity and productivity. 

It should be obvious that there is a minimum standard of living and access to resources needed to have a fair opportunity to achieve success. Too many in mainstream parties of government have become numb to the existence of a permanent underclass in Australia. Drunk on populist rhetoric from ideologically confuse commentators, they rationalise that the socio-economic status of this underclass correlates to a lack of competence and skill. Real liberals should reject this narrative.

We argue that the system we currently live under can instead better be characterised as a ‘naive meritocracy.’ Naive meritocracies rely on the false assumption that extremely unequal wealth distributions primarily reflect differences in innate talent. In a naive meritocracy, extreme inequality is a fair and optimal outcome that merely demonstrates the existence of an elite class who perform and excel at orders of magnitude greater than the average person.

All sides of politics have conceded for years that Australia’s long-term slowdown in productivity growth is a serious problem. Improving our standard of living and maintaining our status as a wealthy country ultimately depends on reversing that trend—a trend that has persisted since well before the pandemic. This Blueprint short paper is by no means meant to be a comprehensive list of detailed economic policies. As part of our ‘Short Paper’ series, it is instead meant to stimulate debate by putting forth often subversive ideas and recommendations that encourage thought leadership amongst decision makers. We thus present a liberal perspective of Australia’s productivity slowdown that recognises productivity growth is dependent also on equality of opportunity.