It has been some three years since we posed a simple question: to what extent (if any) does ethics affect the economy?

The team we asked to answer that question was led by the economist, John O’Mahony of Deloitte Access Economics. After a year spent analysing the data, the answer was in. The quality of a nation’s ethical infrastructure has a massive impact on the economy. For Australia, a mere 10% improvement in ethics – across the nation – would produce an uplift on GDP of $45 billion per annum. Yes, that’s right, a decade later the accrued benefit would be $450 billion – and growing!

Some things are too good to be true. This is not one of them.

The massive economic impact is a product of a very simple formula: increased ethics=increased trust=lower costs and higher productivity. Increasing trust is the key. Not least because without it, every case for reform will either fall short or fail … no matter how compelling. Ordinary Australians going about their lives simply will not allow reform when they believe that the benefits and especially the burdens of change will be unfairly distributed. So it is that the incredible potential of our nation is held hostage to factors that are entirely within our control.

We invest billions in physical and technical infrastructure in the hope that it will lead to improvement in our lives. We invest almost nothing in the one form of infrastructure that determines how well these other investments will perform. That is, we invest precious little in our ethical infrastructure.

My first reaction to receiving the Deloitte Access Economics report was to try to engage with the Federal Government of the day. I thought that whatever one might think about ‘ethics’ as a concept, there could be no ignoring the economics. I was wrong. The message came back that the government was “positively not interested” in discussing the findings or their implications. I have met with rejection and (more often) indifference on many occasions over the past thirty years. This ranks at the top of my list of negative responses.

The Ethics Centre has always been resolutely apolitical. So, we cast around to find someone in the then Federal Opposition who might engage with the findings. And that is where the current Treasurer, Dr Jim Chalmers, comes in. He took the findings very seriously – so much so that he issued a further challenge to identify what specific measures would increase ethics by 10% and thus, produce the estimated economic uplift. That led to a second piece of work by Deloitte Access Economics – and nine months later, we received the second report. It is that report that has brought forth the current proposal to establish the world-first Australian Institute for Applied Ethics.

The proposed Institute will have two core functions: first, it will be a source of independent advice. Legal issues are referred to the Australian Law Reform Commission. Economic issues are sent to the Productivity Commission. As things stand, there is nowhere to refer the major ethical issues of our times. Second, the Institute will work with existing initiatives and institutions to improve the quality of decision making in all sectors of life and work in Australia. It is important to note here that the Institute will neither replace or displace what is already working well. The task will be to ‘amplify’ existing efforts. And where there is a gap, the Institute will stimulate the development of missing or broken ethical infrastructure.

Above all, such an Institute needs to be independent. That is why we are seeking to replicate the funding model that led to the establishment of the Grattan Institute – by establishing a capital base with a mixture of funds from the private sector and a one-off grant of $33.3 million from the Federal Government.

The economic case for making such an investment is undeniable. The research shows that better ethics will support higher wages and improved performance for companies. Better ethics also helps to alleviate cost of living pressures by challenging predatory pricing practices – and other conduct that is not controlled in a market dominated by oligopolies and consumers who find it hard to ‘shop around’.

But what most excites The Ethics Centre, and our founding partners at the University of NSW and the University of Sydney, is the chance for Australia to realise its potential to become one of the most just and prosperous democracies that the world has ever known. With our natural resources, vast reserves of clean energy and remarkable, diverse population – we have everything to gain … and nothing to lose by aspiring to be just a little bit better tomorrow than we have been today.

And that is why something truly remarkable has happened. ACOSS, the ACTU, BCA and AICD have all come together in a rare moment of accord. Support is growing across the Federal Parliament. Australians from all walks of life – are adding their names in support of an idea whose time has come.

All we need now is our national government to make an investment in a better Australia.


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