John Maynard Keynes observed that the real difficulty in progress lies not in developing new ideas, but in escaping from old ones. On Australia Day 2026, that quote sounds entirely appropriate.
We remain trapped in habits that once worked but now quietly undermine our future: short‑term populism, dependence on other nations’ industrial and manufacturing infrastructure, and a policy culture that treats national problems like household pests: spray them, move on, and hope they do not return.
If we want our children to inherit a standard of living at least as good as our own, we must move beyond management by press release and confront the structural weaknesses of Australia.
Public Policy: Reform in Name Only
Genuine reform has become a terminal case. A three‑year election cycle rewards noise over nuance, blame over building, and slogans over systems.
We need bipartisan, long‑term policy that serves the economy and the welfare of Australians. Debate and argument about the detail is healthy and welcomed, but the strategy should be bipartisan and apolitical. It seems we are moving further away from that ‘Pollyanna’ view of what is needed by the day.
Governance
Four‑year fixed federal terms would create the certainty required for capital, planning, and reform. Nations do not rebuild themselves on political marketing timetables.
Our federated system with the states and territories all having their own political and economic agendas leads to a disjointed, fragmented and inconsistent set of regulations that act as an ‘internal tariff’ adding complication, and therefore cost to doing business, innovating, and employing people. The further complexity and general incompetence of local government magnifies the complexity for little or no return.
Tax: Builders vs. Rent‑Seekers
Our tax base leans ever harder on PAYE workers while wealth slips through loopholes. The Henry Tax Review still gathers dust after more than a decade, its recommendations largely consigned to the waste basket with little or no serious consideration. We reward speculation more than production and tolerate profit shifting, particularly of international companies.
Multinational companies can, and are encouraged by the rules, to move profits made in Australia to low tax countries. Billions of dollars in profits made using Australia’s infrastructure, education, natural resources, and innovation without contributing to the development, or even maintenance of the assets they plunder are moved ‘taxless’ overseas.
Sovereign Capability
Depending on the stability of others is not strategy; it is complacency. We must replace “cockroach subsidies”, panic payments to multinationals to stay open, with disciplined investment in capabilities where Australia can genuinely compete. Agricultural and mined commodities, critical minerals, med‑tech, and renewables.
As the world fractures, defence will consume more of an already overstretched budget as we seek to ensure we can defend ourselves. In this context, the shipping of billions to a now unpredictable partner should lead to reconsideration of the budget chunk being allocated to AUKUS. Investing our own defence capability would be a catalyst to building the complexity of the economy by enabling domestic innovation and manufacturing.
When you look at the erosion of sovereign capability, and the lack of development over the past 20 years from a ‘first principles’ perspective, energy costs play a significant role. The little we are doing to re-engineer energy is too little, too slow, and too mired in vested interest.
Political Maturity
The shallowness of political discourse has been obvious for decades, but the Bondi attack, exposed how little institutional depth we have built beneath decades of prosperity. We struggle to conduct informed debate, let alone deliver constructive outcomes. The coalition bust-up during the past week, seemingly more serious than the tiff just after the election whitewash is ample demonstration of the lack of depth and maturity.
The Coalition was in a weak electoral and philosophical position before the split. Now however, the current government is without an effective, rational, or even marginally coherent opposition, which is never a good outcome.
Economics
Current expenditure patterns discourage entrepreneurship and quietly mortgage the future. Eight state‑based regulatory regimes function as internal trade barriers and sources of massive and wasteful duplication. Harmonising licensing, standards, safety rules, and a host of other factors would remove a silent and pervasive tax on productivity.
We are running a structural budget deficit. This cannot last forever, but since Covid, we seem to have just accepted that as the status quo. Prior to Covid, the argument across the federal parliament was defined by who could deliver the least deficit. Economic logic played little part in the finger pointing, but even that quasi discipline is now gone. To be fair, the deficit to GDP ratio in Australia currently around 1%, compared to the enormous debt in other countries, notably the US. However, that just means we are a little less worse off than they are.
Making change is hard. There will be winners and losers, and the losers will not be grateful. Instead they will make a lot of noise, goose up their local members, creatively make up statistics that demonstrate that the sky will fall, and generally try and scare away any change that might affect their position.
Lee Kwan Yew, then the PM of Singapore observed that Australians risked becoming the white trash of Asia in about 1978. The comment contributed to the significant changes made by the Hawke and Keating governments, but since then, with the single exception of the introduction of the GST by the coalition on July 1, 2000, there has been no further progress. Meanwhile the world has changed, but we remain stuck in the 20th century.
Transparency
The promised culture of openness by the current government as part of their election platform for the 2022 election never arrived. The NACC, set up to ‘honour’ the election pledge, exists without teeth. FOI processes now resemble obstacle courses as anything that might be debated is redacted, assuming you can get a request filled without a court order. Government transparency has become a slogan, not a practice.
Gambling Reform
Every poll tells us that a huge majority of Australians are in favour of a complete ban on gambling advertising. It was promised, then abandoned. Advertising continues, while sporting bodies and state treasuries collect their share of a misery dividend. The fact that we cannot excise such a blight on the national face because the vested interests are too strong, and cash strapped states need the revenue is a national disgrace.
Housing
Housing is a wicked problem born of long neglect. Any meaningful reform will create losers who will complain loudly. The memory of the changes proposed in the 2019 election still paralyses political courage. Meanwhile, a generation drifts further from ownership and stability.
Infrastructure and the Future of Work
We cannot build a nation on slogans. We must invest in productive assets that will generate returns over time by acting as the foundations of commercial activity.
Energy
The renewable transition is not optional. We either invest in transmission, storage, and firming, or we continue our slow slide toward industrial irrelevance. Mobile capital will not invest when the key manufacturing input, energy, is not internationally competitive, and stable. Australia is a net exporter of energy delivered via huge reserves of gas and coal. Added to that is the potential of renewables to deliver globally competitive energy for manufacturing, and initial value adding of current commodity exports. The political ‘food‑fights’ over the last 20 years introduced uncertainty. That delays and erodes the competitiveness of both domestic private investment, and the needed international capital inflows.
Education
Education is foundational infrastructure. From primary school through to post graduate and trade certification, we desperately need to invest to provide a base for future prosperity. The recent loading of university costs onto student, is incredibly stupid, short sighted, and destructive. Treating international students, who are filling a significant funding gap in universities, as a housing policy instrument is economic self‑harm and diplomatic short‑sightedness. We amputate revenue, talent, and long‑term regional influence in one clumsy gesture to appease a noisy minority.
Universities must also abandon twentieth‑century teaching models. The future belongs to those who can govern machine reasoning, not merely memorise outputs. The need to teach kids how to think, rather than to remember has never been more fundamental.
Industrial Complexity
Australia now ranks around 102 on the global complexity index, nestled uncomfortably between industrial giants Senegal and Yemen. That is not a badge of honour.
We need trades, technicians, managers, and engineers again. Complexity depends on energy certainty, skills depth, and management capability. Right now, all three remain constrained.
How Enterprises Must Respond
While governments stumble, enterprises cannot wait.
Digitise everything.
Search is no longer a box on Google. It is a behaviour across Instagram, TikTok, ChatGPT, Reddit, and LinkedIn, amongst others. Businesses must structure their messaging for conversational discovery, not keyword games.
Platforms are building ecosystems that punish exits. Businesses must capture leads inside ecosystems using automated, conversational engagement rather than fighting algorithms designed to manage behaviour. I suspect the digital world will coalesce into a small number of ecosystems with high and expensive barriers to exit.
Like it or not, the world is now digital, and rapidly evolving in unpredictable ways (despite my prediction above) beyond knowing that tomorrow will be different to today. Resilience, awareness of externalities and a willingness to embrace change have become mandatory, and being digitised enables that.
Conversely, this need to digitise to survive also means that there will be a rebirth of the importance of brands, what they stand for and deliver to customers. Being differentiated in ways that create genuine value for customers in a niche your brand ‘owns’ will evolve into a driver of success greater than it ever has been.
The power of one to one communication, referrals, and deep personal relationships will a hugely valuable discriminator amongst this sea of Digital ‘sameness’.
The Age of AI is here.
AI has flooded the world with plausible nonsense, as well as astonishing potential for productivity gains. Building AI capability into all facets of an organisation is essential to survival, but it will not happen by decree or osmosis, it takes that magic and rare ingredient: leadership.
Authenticity and evidence of humanity now carries commercial value as bulwarks against the tsunami of AI generated slop assaulting us from all directions
The problem is that the slop improves daily. Branding, as noted, will become more important, not less. Unfortunately, branding demands patience, discipline, and faith: three qualities accountants, lawyers, and engineers who run corporations rarely demonstrate. Those representing the customer must step up an ensure that investment choices are made that enable long term commercial sustainability
Australia and Geopolitical Reality
The American writer and philosopher H.L. Mencken wrote in the Baltimore Evening Sun on July 26, 1920:
“As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”
It took 103 years, but Menken, were he still alive, would have seen his prediction come true. Perhaps he was looking down as President Trump berated rationality generally, and Europeans specifically in Davos last week.
Australia, like much of the world, has largely bent the knee to the Trump administration. With limited exceptions, such as recognising the rights of Palestinians to have a place of their own. We have accepted the chaotic and inconsistent behaviour of our long-term alliance, trading and defence partner because we cannot change it, and are wary of the consequences of any level of disagreement. Our options are limited. Middle powers cannot reshape empires, but they can preserve self‑respect and build sovereignty. This position was effectively articulated by Canadian PM Mark Carney in Davos, just before Trump delivered his incomprehensible bucket of drivel
Short‑term discomfort from speaking plainly costs less than long‑term erosion of national confidence.
Meanwhile, our chief trading partner, China, is in a race for world dominance with the US. It seems they are standing back, recognising the wisdom of never interfering with a rival while they are busy screwing up. However, being the meat in the sandwich is never comfortable.
Climate Change: The Moral Failure
Kevin Rudd proclaimed ‘Climate change is the great moral challenge of our generation’ in 2007. This came at the tail end of 30 years of scientific evidence and advice to governments from Fraser onwards that we were going to have a problem, and the sooner it was tackled the better it would be. Climate change is not Australia’s scientific failure; it is another failure of governance. To be fair, Australian politicians are in good company from around the world on that score.
We have never lacked information. We have lacked resolve. We have treated climate policy as a political inconvenience rather than an intergenerational responsibility. Each government has acknowledged the problem in principle, then diluted it in practice. Targets were framed as aspirations, not obligations. Timelines became negotiating tools, and responsibility was endlessly deferred. The result is a policy culture that behaves as though physics is negotiable.
Climate change exposes a deeper problem: our inability to act collectively when the benefits are long‑term and the costs are immediate. It reveals how easily leadership collapses into tactical marketing when sacrifice becomes visible.
Indigenous Australia
Australia Day cannot pass without recognising the unresolved deficit in Indigenous living standards. Of nineteen ‘Closing the Gap’ targets, only four remain on track. It is a national disgrace that one group of Australians does not enjoy the living standards of the rest of us, finds themselves incarcerated at multiples of their share of the population, and are denied basic services. Clearly the efforts that have cost billions are ineffective, but we seem not to recognise that fact, and try some different strategies.
To many, today is ‘Invasion day’, and while I disagree with that interpretation as a reason to change the name or date of the public holiday, I do accept the generational pain that came as a result.
Conclusion: The Real Deficit
Australia’s true deficit is not fiscal. It is moral.
We avoid honest conversations about trade‑offs, replace leadership with performance, and substitute courage with political choreography.
Reform will remain theatre until we demand better from those who claim to represent us, and the systems that generate political leadership are fundamentally reformed. I expect that reformation is in the very early stages of development. Our grandchildren will not have an institutionalised two party system, but one made up of independent members, and loose groupings of them that evolve to face the challenges of the day. One thing the writers of the constitution did give us that has, and will continue to deliver stability, is the compulsory preferential voting system
Meanwhile, amongst the economic and political carnage, we have what is becoming the usual summer bushfires, while at the other end of the country, the place is under water. In those times, Australians find that working together, pulling for the common good pays off, and we do it automatically. Why would you want to live anywhere else?
Yes, have a beer. Throw another snag on the barbie. But between mouthfuls, we should be considering the country we are leaving behind, and setting out to address in our own small ways the challenges our descendants will face, as we progressively pop off.
Escaping old ideas is hard. But if any country can do it, Australia can.
Happy Australia Day.
Header Image by Nano Banana
