There’s something Australia can do to add $45b to the economy. It involves ethics.

Australia faces a perfect storm. An economic deficit, a global pandemic, an uncertain future of work, and long-term social and environmental change around the climate crisis and reconciliation with Indigenous Australians to name but a few.

Adding to this magnitude of challenges are the low levels of trust Australians have in our leaders and our neighbours. In fact, research has found that only 54% of Australians generally trust people they interact with, and as a nation we score ‘somewhat ethical’ on the Governance Institute’s Ethics Index.  

How do we navigate the road ahead? One thing is abundantly clear: we need better ethics. That’s why we commissioned Deloitte Access Economics to find out the economic benefits of improving ethics in Australia.  

The outcome is The Ethical Advantage, a report that uses three new types of economic modelling and a review of extensive data sets and research sources to mount the case for pursuing higher levels of ethical behaviour across society. 

For the first time, the report quantifies the benefits of ethics for individuals and for the nation. The ethical advantage is in, and the findings are compelling. They include:  

A stronger economy: If Australia was to improve ethical behaviour, leading to an increase in trust, – average annual incomes would increase by approximately $1,800. This in turn would equate to a net increase in total incomes of approximately $45 billion. 

More money in Australians pockets: Improved ethics leads to higher wages, consistent with an improvement in labour and business productivity. A 10% increase in ethical behaviour is associated with up to a 6.6% in individual wages. 

Better returns for Australian businesses: Unethical behaviour leads to poorer financial outcomes for business. Increasing a firm’s performance based on ethical perceptions, can increase return on assets by approximately 7%.  

Increased human flourishing: People would benefit from improved mental and physical health. There is evidence that a 10% improvement in awareness of others’ ethical behaviour is associated with a greater understanding one’s own mental health.  

The report’s lead author and Deloitte Access Economics partner, Mr John O’Mahony, said:

“No one would seriously argue that pursuing higher levels of ethical behaviour and focus was a bad thing, but articulating the benefits of stronger ethics is more challenging.”

“Our report examines the case for improving ethics as a way of addressing these broader economic and social challenges – and the nature and extent of the benefits that would accrue to the nation if we got this right.” 

The report also identifies five inter–linked areas for improvement for Australia and its approach to ethics, supported by 30 individual initiatives: 

• Developing an Ethical Infrastructure Index  
• Elevating public discussions about ethics  
• Strengthening ethics in education  
• Embedding ethics within institutions  
• Supporting ethics in government and the regulatory framework 

The findings and recommendations demonstrate the value of The Ethics Centre’s continued contribution to Australian life. For thirty years, The Ethics Centre has aimed to elevate ethics within public debate, organisations, education programs and public policy. Executive Director of The Ethics Centre, Dr Simon Longstaff said the findings validate the impact of those activities and reveals the potential that can be unlocked with greater support.  

“The compelling moral argument that ethical behaviour binds a society and its institutions in a common good is now, thanks to Deloitte Access Economics’ research and modelling, also a compelling economic argument. Best of all, we need not be perfect – just better.”  

A copy of The Ethical Advantage can be found at this link.