Regulation for a richer society

Following Tiananmen, China was in turmoil. A conservative faction within the Politburo believed that national solidarity would be compromised unless the program of economic reforms Deng Xiaoping had implemented in the 1980s was reversed. Then, in 1992, Deng came out of retirement to make his final public contribution. Deng was 87 years of age when he embarked on a tour of southern China, which captured the nation’s attention. Deng used the limelight to proclaim that development was the “absolute principal” and suggested that the program of economic reforms should continue for a hundred years. As legend goes, at one event covered by the media in Shenzhen, Deng symbolically planted a banyan tree and proclaimed: “To get rich is beautiful.” The CCP subsequently chose to back economic growth in order to maintain social stability and cement its legitimacy. Economic growth has averaged 10 percent annually in the 30 years following Deng’s economic reforms. Millions have been lifted from poverty and many others have accumulated extraordinary wealth. There have, however, been many adverse consequences of China’s recent focus on rapid, unconstrained economic development. Wealth inequality has led to serious social divisions. Profit has overwhelmed workplace safety considerations. Environmental degradation is so dire that the health of the population is severely compromised. I recently travelled to Qingdao, a thriving city of almost 10 million people. A busy industrial centre and seaport, Qingdao is an economic powerhouse. Continuous rapid development is impossible to ignore, and evidence of significant individual wealth is a common sight. I walked along Qingdao Harbour most evenings. The skyline was an exciting array of colours, the streets were full of movement – but it was impossible to see the stars, so thick was the smog that enveloped the city. I struggled to recall a moment during my trip when it had been possible to see the stars. Do children growing up in Qingdao today have the chance to experience such a simple pleasure? At a charity event recently, an Australian business owner spoke to me of the burden of regulation. He was building a factory and had been continually frustrated at the stringent safety requirements he was obliged to meet at a significant cost. It was a familiar refrain. Other countries, such as China, do not have to deal with health and safety regulations, he lamented. When I countered that over 70,000 people were killed in workplace accidents in China last year, he immediately responded: “Yes, but they have hope.” Globalisation has put businesses in all countries on a competitive footing but competition should not imply a race to the bottom. Envy that lower wages and non-existent regulatory frameworks exist elsewhere is the product of narrow thinking. The costs to the health, safety and wellbeing of free, lightly-regulated markets are real and difficult to reverse. What hopes do we hold for our own children? I expect that many Australian parents would hope for good health and the opportunity to enjoy a decent education, and a well-paid fulfilling, secure job. Most parents would hope that their children have the chance to look to the stars and dream. Our regulatory system should be designed with these goals in mind. Not all regulation is bad – some is necessary to protect our environment and protect us against unsafe work environments. We cannot lament the lives lost due to the now infamous pink batts scheme but in the next breath complain that regulation has a debilitating effect on our businesses. The cost of inadequate regulation is paid by business owners and workers – but also by consumers. An anecdote in Julia Gillard’s My Story describes exchange at COAG in 2012, when Queensland Premier Campbell Newman complained at regulations imposed on his local kebab store which prescribed the correct way to handle meat and the temperature required when the meat was on the spit. Newman used this example to justify plans to cut regulation in Queensland. “That would be all fine,” responded ACT Chief Minister Katy Gallagher, “until the first salmonella outbreak.” In Australia, we should remove all outdated or unnecessarily regulation because it discourages people to apply their creativity and skills to a business context. Balance is crucial but the nature and extent of our regulation should be informed by the opportunities we hope to shape for our children. We should not look at lower wages or unregulated workplaces elsewhere as an example to follow. Each nation will progress in a manner and timing appropriate to the local context and conditions. Our regulatory framework should ultimately be informed by what we value and the sort of society we wish to shape. Andrew Hunter is chair of Australian Fabians fabians.org.au @AndrewHunter