REMAKING THE AUSTRALIAN DREAM – ALLEGRA SPENDER

Allegra Spender was elected as a teal MP representing the electorate of Wentworth in Sydney at the 2022 federal election. Her election ended a long history of the seat being a blue ribbon Liberal constituency. As Ms Spender explained in an address to The Sydney Institute on Tuesday 29 October 2024, her election was part of a renewal of political representation which reflected voters’ disenchantment with the major parties. Reflecting her independent stance, her address also outlined new ideas to tackle economic stagnation and problems of productivity in Australia, suggesting working together would have positive outcomes needed rather than the age old opposition between the major parties.

REMAKING THE AUSTRALIAN DREAM 

ALLEGRA SPENDER

Thank you for having me. I want to start by acknowledging the land on which we meet and paying my respects to elders past and present. And thank you to The Sydney Institute for the opportunity to speak.

When I think of the Australian dream, I think of the life of my Mum, Carla Zampatti – whom some of you in this room knew. Mum was born in Italy in 1938. By the time of her birth, her father had already left for Australia, seeking a better life for his family than fascism in Europe. Mum stepped off the boat in 1950 in Fremantle, with no English and moved to Bullfinch, a mining town in outback WA.

She left school at 14, working a range of jobs – from working as a sewing machinist, as an indifferent PA (she had atrocious spelling), in a white goods store, before eventually starting her fashion business in 1965. Her career was illustrious but not straight forward – she broke up with her first husband in 1969 and had to restart her business as a single mum with a young baby when women didn’t have their own businesses. She overextended in the 1980s buying property and almost lost everything, holding on by her ingenuity and business savvy. She continued to innovate and move with the times until the day she died.

Carla Zampatti gave her children enormous opportunities, and taught us an immigrant work ethic and to take nothing for granted. I take many lessons from her life, but particularly when I think of what has been great about this country, and what we must continue to be. We must be a place, where if you work hard, whether you are a healthcare worker or the CEO, you can create a good life for you and your family, regardless of the wealth of your parents. We must be a place where ingenuity and creativity thrive, where people can create businesses and opportunity for others, where we move with the times. And we must be a place, where if misfortune hits, you are not alone.

The Australian “dream” is becoming a fantasy That Australian dream my Mum and so many of her generation lived out – coming from nothing, being able to create a better life for their kids – is starting to crack – and all Australians are feeling it. A recent survey of Australians by Redbridge found:

• Only 15 per cent of Australians believe home ownership is attainable for young people today without family assistance.
• And only around a quarter [27 per cent] are very confident their retirement will be financially secure.
• Less than 1 in 10 [8 per cent] believe the standard of living in Australia will be better for the next generation

Why does this matter?

I find these statistics, particularly the last one, deeply concerning. Because I believe, as a parent, as an Australian, very deeply in my responsibility to leave each generation better off than the last one. That is our responsibility and should be our legacy. But many are feeling it is slipping away, and while this has been exacerbated by recent high inflation, that is not the cause. The cause, I will argue today, is that for the last 15 years, we have not as a country effectively addressed the three biggest long-term economic challenges facing our country, and this inaction is starting to catchup with us.

I will argue that it is the major parties playing politics on these issues, rather than addressing them that is one of the key reasons you are seeing the increase in votes for independents and other parties. I will put forward a range of policies I believe are needed to address these. And I will continue to make the public offer to work with any party, any politician, any person who is willing to take these issues on.

The three key issues I believe we are facing are:

• Flatlining growth and productivity
• Intergenerational inequity, where young people do not have the same opportunities to build their prosperity as previous generations
• The energy transition

In the interests of time, I’ll be focussing on the first two today.

Growth and productivity

Let’s start with growth and productivity. The Nobel Laureate, Paul Krugman, famously said that “productivity isn’t everything, but in the long run it’s almost everything”. Productivity is our ability to do progressively more with less. It’s responsible for 80 per cent of real wage growth – let’s pause for a moment – real wage growth, the sustained improvement of living standards, is not driven by fighting for a bigger slice of the pie, it is about people growing the pie together. It is why stuff is better or cheaper than it was in the past.

In a time of high inflation, when increases to costs are hurting Australian families, it is the only sustainable path to lower prices and higher wages. Not cost of living relief or handouts – productivity growth is the only way to truly keep costs down. And we’ve just had the worst decade for productivity growth of the past 60 years.

There is a structural shift towards services that is partly to explain for the shift. The growth of the care economy is a big part of the story, with this sector now absorbing 15 per cent of the workforce, up from 10 per cent a decade or so ago. But even other sectors of the economy have stalling or falling productivity. The capital investment which enables much of our productivity growth is simply not there. R&D investment is a third lower than the OECD. Foreign investment has flatlined for years and is now falling. We invest more capital overseas than we attract to Australia.

Without productivity growth, we can’t sustainably grow our living standards. And we are just not doing enough to address it.

Intergenerational equity

Younger people are missing the milestones of previous generations. Housing affordability is a primary driver of all this. Sydney has the second most unaffordable housing in the world. It didn’t used to be like this – in 1996 the ratio of house prices to income was about half what it is now. But the cost of housing has increased by four times in the last 25 years, while wages have only doubled, making it near impossible for people just relying on the sweat of their brow to keep pace with the requirements for a deposit. Rents are too high for young people to move out and too high for people to save as much as they would like for a home deposit. They prioritise their careers to help them get into homes, which delays relationships and marriages and having kids – sometimes permanently. We just recorded our lowest birth rate on record – 1.5 per woman – a drop of a quarter since 2008 and well below the replacement rate of 2.1.

Our declining birth rate has economic implications, but much more, it reflects our children do not feel confident in raising families in the way they have in the past. And when I speak to young individuals and couples in Wentworth, the pressures of housing, tax, childcare costs are real and present. Meanwhile, young people are earning less, worth less, and taxed more, than older, wealthier people. From 2004 to 2016 the wealth of older Australians increased by 50 per cent, while for those under the age of 35 it has barely moved. The current cost of living crisis just exacerbates this, affecting those renting or with big mortgages and low savings even more.

This isn’t because younger generations haven’t tried or worked hard – the “smashed avocado” trope is a myth. They are the most educated generation we have ever had. The 25-34 year old cohort are spending about $1,300 less a year in today’s dollars on non-essential goods and services compared to 1989. Young people know they are falling behind. They are less hopeful than previous generations. And older generations are worried their children won’t enjoy the lives they want them to.

Where did it all go wrong?

So how did we get into this mess? Like so many Australians I am sick and tired of the political blame shifting and finger pointing of the major parties. Sit in parliament and you would think, depending on who was speaking, that all the problems are entirely the making of one major party, or the other major party. And the truth is they are both lying, because they are both responsible The problems I have outlined – like productivity growth slowing since 2014, house prices outstripping wages since 2001 – are not recent problems. They have all been building for at least 20 years, in some cases longer. Labor and the Coalition have shared government over this time, both federally and across states. They have both promised that only they will deliver the change this country needs, and they have both failed, and blamed each other for the failures.

The quick fixes, the silver bullets they have announced, haven’t worked. And policy differentiation just for the sake of it – the pendulum style politics – means we throw out about half of all good ideas and spend more time concentrating on unwinding the work of previous governments instead of getting on with the job at hand. I was talking to a party member recently about occupational licensing – an area that is consistently identified as an opportunity for reform – for helping people get their qualifications recognised quickly, and increasing the scope of practice for different groups. Though it is an area that can be controversial with different occupational associations. I suggested why didn’t the major parties come together and agree on these reforms together and present a united front. The party member laughed at me, and said somewhat indulgently – “That’s not how it works.”

The two-party system has shifted the measure of success from making the country better, to winning for winning’s sake. And people are sick of the lack of vision and ambition that this mindset brings to the table. I count myself among the fed-up and frustrated. We have a wonderful country, one that I am incredibly proud of, but we are facing enormous challenges, and I can’t bear to sit aside and watch us failing to protect it. Which is why – last week – I laid down an offer to work with anyone and everyone in the parliament who wants to get results on the issues that matter. We won’t and don’t have to agree on all things. But if you are interested in evidence-based solutions to these problems then my door is always open.

The road ahead for people who want to make this difference will be tough. But let me lay out my vision for how we can do better.

If we’re serious about growth, we need to do four things: we need to simplify doing business, ramp up innovation, make our tax dollars deliver and reform our tax system. None of this is easy, but it is necessary.

Making it simpler to do business

We should aim to be the best place in the world to start and grow a business. We have what we need – high education, rule of law, abundant resources. Business is not the enemy. Business is the source of our greatest opportunities. But talk to any business owner and they will tell you the one thing government can do for them is to cut red tape – either industry-specific bureaucracy and regulations or industrial relations. Business people are focused on their customers, their staff and their suppliers – and rightly so – not on monitoring the swathes of regulation coming out of Canberra and Macquarie St.

I remember the accountants at the medium NFP I ran telling me one year that I should know all the pieces of legislation our organisation was subject to. I asked them to give me a list. They gave me a list of over 15 major pieces – from the fair work act, to the corporations act, to a variety of 19 awards and sector-specific regulations. And I asked them, what on earth am I practically meant to do with this? They had no answer except employ a bunch of consultants to digest these acts and tell me how they applied. No use at all to me. Every government promises cutting red tape agendas and taskforces, but they don’t deliver. But the need is there in every sector.

Government is wasting people’s time and precious resources. Medical researchers spend a quarter of their time writing grant applications, childcare workers are spending less time with the kids as they spend on paperwork, and clean energy companies are waiting seven years for a wind farm approval. We need every government agency to be proactively thinking about the cumulative impact of the regulation it imposes and ensuring that our regulatory goals are being achieved with the least-possible impact.

Services NSW has shown us the customer-centric mentality we need – now we need the Commonwealth to apply that same of sense accountability via executives charged with this responsibility. Our industrial relations system may be well-intentioned but, in practice, it is an archaic shambles which is no longer fit for purpose. Instead of being there to carefully calibrate how we safely deliver wage and productivity growth, it is an ideological zero-sum game.

The government has brought in IR changes that have made it harder to employ people, to deliver productivity and therefore wage growth. And they have done this at the worst possible time as well, when we have high inflation and low unemployment. We need to remember that reducing flexibility can reduce jobs for workers – as analysis showed when businesses shifted from workers to capital when employment became less flexible.

I know businesses who won’t let workers take on additional shifts, or to take on higher duties, because they don’t want to fall foul of byzantine award rules or to be accused of wage theft. That hurts workers and businesses – for no good reason. I spoke to a business owner just last week who dismissed a worker for bullying – only having to pay them off to avoid an unfair dismissal case. They were trying to protect their other workers and had followed all the right steps. But their lawyer said the uncertainty of legal proceedings was just not worth it. Who is being protected when employees who bully and harass their co-workers get a payout for being sacked?

In the short term, we should start by giving small businesses more relief from an IR system that was designed for conglomerates. We need to simplify awards, and be looking for opportunities for employers and employees to work together in support of greater flexibility in return for greater wages. But, in the long term, we have to modernise or replace the Fair Work Act.

The second key priority needs to be ramping up innovation

E61 has shown that productivity is driven by dynamic, young firms. I have many of those trailblazing firms in my electorate. But those firms tell me their ability to deliver innovation is hampered by a lack of access to capital and contracts. Capital investment in Australian startups is just one-third of the US and half of the UK, and our super funds commitment to venture is shrinking. One of the innovative AI firms in my electorate is selling to a quarter of the UK hospitals, but only a fraction of that in Australia. A lot of innovative companies I speak to don’t want government grants, they want a level playing field to bid for government work.

It is time to strengthen the early-stage capital markets here, including reforming your super, to deliver startup growth and innovation. Government needs to be a better customer of our innovators, and award at least 30 per cent of its contracts to small or young firms.

The third priority must be making our tax dollar work better for us

Labor has been keen to take the credit for two large surpluses – but the fact is that the Budget is in structural deficit and will stay there for years to come. Neither side has a plan to deal with this. Most of the community don’t want higher taxes and neither do I – they want our tax dollars to work better by improved productivity in the public sector.

In my twenties, I worked in change management in a big public hospital, working out how to improve quality of care and patient experience, while simultaneously reducing costs or holding budgets constant. It taught me we can do better with our public resources. Infrastructure is a good place to start.

The Commonwealth spends $10 billion a year but doesn’t always do the basic due diligence to ensure that the benefits outweigh the costs, that money was spent appropriately, that lessons are learnt from future projects. Which means huge amounts of public money is wasted on white elephants like the Suburban Rail Loop. And this is happening at a time when we actually need those construction companies, tradies and labourers to be building homes and easing pressures on renters and buyers.

It’s not just infrastructure, of course. But we need a shift in mindset from inputs to outputs. If we can’t take easy decisions on infrastructure, how will we ever take hard decisions in healthcare? I will be introducing a private members bill on this basis.

Tax reform needs to underpin our future

As well as debating how we spend tax, we need to better debate how we raise it. I have been calling for the abolition of stamp duty since 2022 and welcome the Housing Minister and others getting on board. State governments know it’s an awful tax – it penalises people who move home, who downsize and who get divorced; it raises insurance premiums; and it stops about 300,000 people in NSW owning their own homes – but the states simply can’t give up the revenue. The Commonwealth should step in and provide interim support.

The tax system needs to be deployed to drive more capital investment, unlocking the productivity gains that catalyse lower prices for consumers and higher wages for staff. It needs to simplify or seek to eliminate distorting taxes on businesses, such as payroll tax. We could fund this through taxes on economic rents such as in resources and prices on negative externalities, like the harms of social media, as well as looking at consumption tax. There’s a lot of technical discussion about the best way to do this – such as company tax cuts vs investment allowances – and I will be putting forward options for debate in my Green Paper.

We also need institutional change, through a tax reform commission that can provide policymakers with credible, tested options, and a tax reform process in the next parliament.

Intergenerational inequity

On intergenerational equity – how do we ensure that our young people have the same chances of prosperity as previous generations? By looking at tax and housing. We need to lower income taxes on working people. We are already too reliant on income taxes and growing more reliant over time – meaning younger, working people are bearing more of the tax burden even while they shrink as a proportion of the population. And this is only set to increase without significant reform, as the ratio of working aged people to older people shifts from six 40 years ago, to under four now, to under three in another 20 or so years.

With our current structure, you can have two households earning $100,000 a year: one working and one retired. The working household will pay on average twice the tax despite the retired one likely being significantly wealthier. This clearly is not sustainable. To reduce taxes on working people – to reduce income as we must, we need to reduce tax concessions over time and be prepared to consider additional consumption taxes.

The other important lever is housing. It is urgent. It is the biggest cost of living challenge we are facing – and the one the political class is most responsible for stuffing up for the last 20 years. It is the one that goes deepest to the heart of who we want to be as a country – including to Menzies’ vision for this country – and how we are failing our children. The political wedging needs to stop. The whole parliament needs to come together and back a wide range of policies. Because there are good ideas coming from different sides, and there is an opportunity to start a long-term recovery of housing affordability.

We have to increase supply and lower construction costs across a diverse range of housing. We need to support those who are locked out of secure housing. And we need to make renting work better for renters and families. This matters to the country but also to my seat of Wentworth. Our kids don’t feel they can ever afford to live near where they grew up. Our aged care homes struggle as much with recruiting people as some rural areas because housing is so expensive.

I am pushing for increased construction worker migration, sharper incentives for zoning reform and approvals, learning from the experience of Auckland, a slow down on government mega projects that crowd out house building, a construction regulator that drives lawfulness and productivity, and longer-term, more flexible rental contracts that give renters certainty.

The Coalition needs to stop fighting housing targets – but rather work out how to deliver them. Targets create accountability and 1.2m homes isn’t even enough. The blocking of build to rent and shared equity by the Coalition and the Greens is wrong. These deal with specific and important barriers to increasing supply and widening home ownership. Just because they are someone else’s idea does not justify blocking them.

Labor needs to show they are serious about dealing with the CFMEU by supporting a new construction regulator. We won’t unlock supply until we improve construction productivity which has declined by 18 per cent in the last ten years. It’s clear – after four royal commissions – simply appointing an administrator will not clean up this industry which clearly needs special treatment, but nor will deregistering the union as the Coalition proposes.

We need to be clear that the ABCC wasn’t the silver bullet – the productivity declines we have seen in the industry happened under it too – but doing nothing is not an option here. We all need to back Labor incentives for the states to fix planning and I welcome the Coalition incentives to put in local infrastructure. Both can lower construction costs. We should all back reviewing negative gearing and CGT, but not until supply is back where it needs to be. Everyone needs to back replacing stamp duty.

The parliament has finally recognised housing is a problem. We will be judged on whether we throw all our efforts to make a difference, or whether, like with climate, we try to score political points. That is how our communities will judge us.

Conclusion

The policies I have outlined are not comprehensive and I’m sure they can be strengthened through collaboration and further consultation. But they would represent real progress – and a different way of doing politics.

I am one of two independents from this term of parliament to address The Sydney Institute so I want to thank you for the opportunity to explain my approach as a community independent to politics and legislation. You’ll notice from that the ideas I put forward come from both the right and from the left, but if you think that this makes me sympathetic to Labor values then I suggest you don’t know me that well.

I am a small “l” liberal that believes in the freedom of the individual and the power of business and the creativity of the private sector that can deliver the best outcomes for the economy. But I also believe in the power of good institutions to enable the environments for people to thrive, much like my mum did, and to preserve the equality of opportunity.

I am deeply concerned by Labors connections with the union movement that have shaped an excessive touch, particularly on IR, and hurt the interests of business. And I believe that now is absolutely the time for greater fiscal discipline not less. That is the lens I approach each individual piece of legislation. But in the end, I make my final decisions based on evidence, not by ideology. And this is reflected by how I vote in parliament.

Last week, I was asked by a constituent about this – and whether I was truly independent. At first, he seemed a bit sceptical. I explained my voting record – the one that I control – is that when the Coalition has put forward a vote, I’ve supported it 56 per cent of the time. When Labor did, it was 50 per cent. And when the Greens did, it was 49 per cent. He said that sounded pretty independent. Keep doing what you’re doing. And I will. Because as an independent, I’m free to work with both sides for what’s right. And I’m free to stand up against what’s not. That’s something most MPs can’t say.

This freedom is important to me as I don’t believe the Liberal Party of today is the same as the Liberal Party of my father – or my grandfather. I wish they would focus more on the big issues our country faces. The Liberal Party won’t make progress on productivity and growth when they vote against sensible, considered, and pro-business amendments to Labor’s Industrial relations reforms – simply because they’ve been put forward by the Crossbench. They won’t make progress on intergenerational equity if they continue to take a small target approach to tax reform, won’t commit to housing targets because of a fear they won’t meet them and yet won’t pass sensible legislation just because Labor proposed it. They won’t make progress on climate change and the energy transition if they ignore the evidence, blocks progress and has opposed market based solutions that the business community support and talk about winding back targets that give business the certainty to invest.

While it pains me to say it – I think we can achieve greater gender balance in parliament through the independent movement than the Liberal Party who have just preselected 17 men for 18 seats in Queensland. I know that I can have more of an impact from the Crossbench – representing my community, shaping the bigger picture, and disrupting the duopoly. I’ve seen would-be reformers on both sides of politics come and go in the past 20 years. They try to buck the trend – but ultimately succumb to party politics and internal pressures.

Saying anything that’s not approved by the party leader’s office is too big a risk. Even if your community agrees with you. Some of the same people who tell me I should join the Liberal Party say I’m taking a risk by looking at tax reform. “Best play it safe,” they say – “you don’t want to get wedged.” But after you’ve engaged with real people in the community – rather than just lobbyists and political consultants – it really doesn’t feel like that.

A few weeks ago, on a wet evening in Wentworth, I brought together 120 people from my community to talk tax – just tax. We sat around in small groups, discussing the trade-offs of where we can lower or raise taxes – and the compromises that might be needed to make real reform stick. It wasn’t scary. It was inspiring. It shows that politics can be done differently, and that engaging community can be the start of reform, not the tick box at the end when you know what you want. And while we don’t know what the next parliament will bring, I can tell you that independents aren’t being elected to just play it safe.

We’re being elected to change the game. By listening to the evidence, negotiating and compromising. Backing a good idea, whatever the source. People across the country are responding to this. People in Wentworth, people in Pittwater. They are excited by it. They feel represented – for the first time in a long time. Because our legacy as a generation of representatives will be judged on our ability to deal with the three biggest economic issues facing our country

• Growth and productivity
• Intergenerational equity
• And the energy transition.

These are the issues facing the country, that matter for the long term, not just the next news or election cycle. And these are the issues that I will pursue in parliament so long as Wentworth continues to elect me, whatever form of government we may get.