Introduction – a growing political divide

In my 10 years in politics in Australia, I’ve seen a series of political 
earthquakes upending establishment politics not just in my country, but 
across the developed world. 

The epicentre of these earthquakes is a growing divide between the inner 
cities on the one hand and the suburbs and regions on the other. 

So-called ‘flyover’ towns or ‘drive by’ suburbs are reshaping politics.

A long-term shift of university educated voters to the left and nonuniversity educated to the right is realigning political geography.

I’ve seen these shifts at a very personal level.

Growing up in a farming family outside the tiny timber milling rural town of 
Nimmitabel near the Snowy Mountains in Southern NSW, I absorbed the 
beliefs and values of rural Australia from a young age.

Nimmitabel sits high on the edge of a large basalt treeless plain called the 
Monaro. 

Its landscape is etched deep in the souls of people – windswept, cold and 
tinged brown much of the year by harsh frosts and occasional snow in 
winter and sun-drenched Australian summers. 

But it’s also starkly beautiful as you gaze across the sweeping plains 
towards snow covered mountains to the west and the rugged coastal range 
to the east. 

Since the first non-indigenous settlers from Scotland, Ireland and Northern 
England, this was a community valuing self-reliance, hard work, tight knit 
family, small business, traditional community with a very strong sense of 
place. 

There was always a scepticism of big business and big government. But that 
didn’t mean universal support for conservative politics – the labour 
movement had deep roots in regional Australia.

My family began farming sheep and cattle in the area in the 1830s and 
passed these values through six generations until today.

Because my parents were strong believers in the enabling power of 
education, I was fortunate to study economics and law at Sydney University 
then postgraduate economics at Oxford before working at global 
management consulting firm McKinsey.

There could be few contrasts sharper than working in the harsh Monaro 
environment alongside highly skilled but relatively unschooled stockmen 
and horsemen versus working as a partner McKinsey. 

At McKinsey much of my work was in primary industries agriculture and 
resources, including working with the New Zealand dairy farmers in the late 
1990s.

My work meant mediating between elite global world of food
multinationals and people who worked with their hands every day. 

People who identified deeply with the place where they lived and worked. 
At that time those two worlds could at least work together and could even 
learn from each other. 

But today, I’m not so sure. Global capital is creating a new set of demands. 
ESG and DEI are demanding a new sense of virtue that is far removed from 
the world outside of university campuses and boardrooms.

The latest political earthquake

This political divide was tested a few short weeks ago in Australia. 

Australians were asked to vote on a proposed constitutional change to 
entrench a new indigenous-only body in the constitution called ‘The 
Voice’. 

A powerful, well-funded and vocal coalition supported The Voice.

Big business, government bureaucracies, state premiers, most media 
commentators, celebrities, sporting codes, cultural institutions, professional 
associations, religious leaders and universities combined in an elite wall of 
consensus never seen before.

Against this mighty coalition was suburban and regional Australia with 
limited resources, limited institutional power and very limited time to deal 
with this issue.
 
With the support of a small, committed group of campaign leaders – many 
of whom are here this week - suburban and regional Australia said no and 
the proposal failed. Every state said no. Towns like Nimmitabel voted 
almost 80% against The Voice. By contrast our elite metropolitan centres
voted a strong yes.

The referendum highlighted how universities and their metropolitan alumni 
now have different values, different objectives and different beliefs to the 
rest of the country.

The decline of mass media and emergence of niche media is certainly part 
of this. As is the rapid growth of the knowledge economy alongside the 
decline of shared religious belief.

Staying true to our values

Whatever the cause, this growing cultural divide is encouraging some to 
advocate a shift away from conservative economic policies.
I think this is a big mistake.

First, the bulk of these suburban and regional households are highly 
aspirational.

Second, our most successful regional and suburban economies are globally 
competitive, outward looking and driven by strong local enterprise and 
local leadership. 

Finally, a stable democracy needs to be underpinned by individuals and 
families who work hard to get ahead, who want to keep more of what they 
earn, who want to own their own home and who are deeply suspicious of 
activist agendas. 

People only preserve what they believe is worth preserving. Take away 
hope and aspiration and you take away the will to preserve.

An emerging economic crisis

All of this says that we need national and local economies that enable 
opportunity and social mobility. 

That means a fast growing, productive economy with low inflation and 
rising real wages.

The current circumstances in Australia, like many developed countries, do 
not meet that test, testing Australians’ optimism for a better future.

Many Australians believe they are shut out of wealth accumulation by 
complex regulations and tax regimes, inflexible workplaces and an elite 
class of peak bodies, corporations, governments, that take a world view 
disconnected from everyday lives.

Households are buckling under rising living cost pressures, as the 
purchasing power disappears from their pay packets.

In Australia, as we've seen globally, the top end of town is largely protected
by enormous gains in home values as housing supply has failed to keep up 
with demand. 

The consequence is a top of town that is disengaged from the hardship that 
sees dual-income families queueing in line at foodbanks. 

Most of our leaders were cheering for identity politics in our constitution
while ignoring the enormous pressure that double digit increases in the 
price of almost everything have wreaked on family budgets and quality of 
life.

At the heart of this is the end of the era of cheap money and low inflation. 
Inflation changes politics, including the overdue death of the flawed idea 
that governments can just keep spending with few consequences.
Inflation is the thief in the night for aspiration.

It takes from households and giving the proceeds to rapacious 
governments.

Diverging economic realities will only deepen the divide between our 
communities. To bridge the cultural and economic gap – we need to reembrace an agenda that supports individuals who take responsibility, 
offering the opportunity build prosperity for those who seek it and remove 
regulatory barriers to people’s enterprising instincts. 

The pathway forward 

In election after election we see this aspirational constituency looking for a 
champion.

But pandemic responses favoured big government. And that means we 
have to rebuild our muscle memory with a back-to-basics economic agenda:

• Supporting small business and entrepreneurship, backed by an 
innovative and safe financial system;

• Delivering an incentive-based tax system, cutting the compliance 
burden and supporting workplace participation;

• Supporting more work, not more welfare;

• Containing the growth in government spending and 

• Getting the basics right where government does have a role to play: 

reliable affordable energy, well targeted critical infrastructure and
accessible home ownership, and an education system that puts 
outcomes first.

The solutions to the economic challenges we face are equally helpful to 
combat the cultural politics that are dividing our cities from our regions. 

• Less red tape doesn’t just free up resources for investment – it 
means less control for bureaucrats and activists to pressure 
businesses into adopting political causes that ignore their customers. 

• Lower taxes do not just boost families hip pockets – it means less 
wasteful spending for government programs that indoctrinate our 
children, promote hostile ideologies and buy off crony capitalists.

• Flexible workplaces do not just make it easier to get people into 
jobs – it means the freedom and flexibility for individuals to live the 
life they aspire to live.

Conclusion – finding shared values

This has been a wonderful conference so far. 

I think we are in furious agreement about the importance of a future that 
preserves the very best of what has lead to our extraordinary success. 

But asking the people of countries like ours to come with us on that 
journey, means giving them a reason to believe in that journey. 

Economic hope and opportunity is a very good reason to believe in that 
journey.

ENDS.