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The Sweet Spot: How Australia Made its own luck – and could now throw it all away


Australia has long been regarded as “the lucky country”, rich in resources it was all so easy for Australians to become rich.

A recent book challenges this simplistic view of Australia’s wealth originating merely from its endowment of natural resources. The Sweet Spot: How Australia made its own luck and could now throw it all away is a highly readable account of how our neighbour overcame a harsh history of convict settlement, intolerance through a racist immigration policy, and a highly protected economy to become one of the more open, prosperous and developed nations in the world.

Peter Hartcher, the author of the book and a reporter with the Sydney Morning Herald notes the magnitude of Australian prosperity, namely that the country surpassed the USA for income per capita in 2008, did not register with most Australians.

Hartcher suggests this was because, curious as this may sound to New Zealanders Australians have an inferiority complex which led them to seek sporting success as a consolation prize as I mentioned in my previous post. Surpassing the USA for income per capita did not register with Australians, Hartcher cheekily proposes, because there was no medal ceremony.

He also presents Australia as a “sweet spot” of policy and good governance.
The country is open for business with a relatively low taxation compliance burden (a company tax return only took 109 hours to complete in 2010 which was the fifth shortest in the OECD).

Australia’s economic efficiency is married with the built in Aussie virtue of a ‘fair go’ manifested in the early arrival of worker protections such as the 40 hour work week and regulations stipulating safer conditions for those doing dangerous work.

Hartcher contends Australia is neither free-market Hong Kong nor socialist France (a binary choice The Wall Street Journal proposed Australia had to make this decade) and is all the better for it.

Hartcher observes it is relatively easy to conduct business but human development and the standard of living are both high, and there is a good opportunity for social mobility.

Julia Gillard and Tony Abbott in the opinion of Peter Hartcher are populist politicians and have represented a divergence from the bipartisan political consensus around growth and fairness and now appeal to the worst prejudices of the electorate.

He cites the new opposition to immigration by both leaders and the failure of either to communicate clearly their policies on climate change (in the case of Abbott he changed his approach since being elected and has now repealed Australia’s carbon tax).

Some of Hartcher’s conclusions may be controversial (he considers Kevin Rudd’s large fiscal stimulus plan to have “generated a critical mass of positive psychology” although this did leave Australia’s government indebted and it is not clear besides juicing the economy if nation building projects had any substantial wider benefit of their own).

Overall, I thoroughly enjoyed the book which gave me a much better understanding of the Australian story. It is sure to inform even close observers of ‘Straya about what makes our neighbour tick.


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