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Seven lessons for Australia’s economic and political debate from the World Cup

If you chose to measure modern philosophical periods by certain events, perhaps the World Cup is a useful starting point. Four years between events, a month long extravaganza of historic significance, a tournament yielding a certain outcome, the participation of 207 nations – big and small – outnumbering the United Nations and most of all, a celebration, a joyous expression of human ability and emotion.

Imagine if we started measuring changes in terms such as: ‘since the last World Cup’. Changes such as – since the last World Cup (2010), Australia’s population has grown 1.2 million, our economy is 11% bigger, over 577,000 more people are in work, life expectancy has increased by over a year, we’ve had three Prime Ministers, two Governors General and Glenn Stevens is still running the Reserve Bank.

At least this type of thinking in the twitter-age would implore thinkers to focus on and plan for the medium term. It was give individuals a more easily explained reference point than the forward estimates. It may even harness the multitude of ideas regarding what’s next for our nation – not just in footballing terms but also for economic and political reform.

So as the most recent iteration of the World Cup reached its close and as the philosophical epicentre of world football moved from Camp Nou in Barcelona to Allianz Arena in Munich, it might be useful to reflect on what trends emerged and what can be learnt for Australia’s governments, businesses and commentators from last month’s festivities.

 

1.    Invest at a time of strength and invest in your people

In 2002, Germany was the second best team in the world. No mean feat. It had reached the World Cup final and only succumbed to a powerful Brazilian side led by the great Ronaldo. Yet, despite it’s high ranking Die Nationalmannschaft was ageing and signs of decline had emerged.

So the DFB (German Football Association) overhauled youth football with some parallels to education reforms we’ve seen in Australia over the past five or so years. They decided to search for talent across the spectrum, focusing on the development of more technically proficient homegrown players. Germany implemented a standardized national program (critics of the National Curriculum please note) that started teaching the same skills to 6-year-olds, in 366 areas all over the country. Run in every town, coaches now have to get a licence from UEFA (yes, quality standards). By age 8, as training continues, scouts watch for kids good enough for club academies. Every professional club team in the first and second divisions of the Bundesliga now funds its own soccer high school (here note the role of industry partnerships and skills investments). Over this period, the amount that professional club teams spent on youth development almost doubled, to about 85m a year. As for results? (Super) Mario Götze, the scorer of the World Cup Final goal, was discovered through this program.

Relatively speaking, Australia’s economic aggregates show us in a good position much like Germany could have argued when it finished second in 2002. For the first time, we have a triple AAA credit rating from each of the major ratings agencies, the longest streak of uninterrupted growth (without recession) of any advanced economy, low unemployment, low public debt and growing retirement savings.

However, strong results on current scoreboards do not guarantee the future. More pertinently they do not serve to justify neglect for investments in human capital today. And they make the Government’s plans to cut funding from health and education, make university education harder to access, saddle apprentices with debt and undermine quality in childcare even more misplaced. Productive investments in our people, just as Germany did with their decade long plan to win the World Cup will yield benefits. Investing in future capacity at a time of present strength secures future success.

Australia v Spain: Group B - 2014 FIFA World Cup Brazil

2.    When you lie, you do so knowing that history will catch you up

Spain won the 2008 European championship, the 2010 World Cup and the 2012 European championship. That Vicente Del Bosque led side will go down as one of history’s greats. They were knocked in the first round in Brazil. Why? Because they kept lying to themselves that their style of football was not in decline even though their results in big games in the lead up to the World Cup was less than impressive. England, Italy and Portugal were all guilty of the same.

Why does this matter for Australia? In recent times, our political debate (aided by interest groups, the media and the Government itself) has developed a brazen capacity to distort facts in a way that diminishes our prospects over the long run. Case in point is the apparent justification for repealing the carbon price. Apparently the carbon price, cost too much, killed jobs and didn’t even work. It would be bad enough if these were contentious points. It’s worse when you realize they are bald-faced lies.

240,800 jobs were created while the carbon price was in place. The carbon price raised revenue at a time when the Treasurer relentless justified his cuts on the basis of falling revenue, the market capitalisation of Australian businesses (including emissions-intensive businesses) increased by 31 per cent over this period and in the two years since the carbon price was announced the economy grew 6.6 per cent.

The biggest deception is the claim that the carbon price failed to curb emissions. This is repeated so often in the hope that soon it will take a “let them eat cake” character (forever attributed to Marie Antoinette even though historians agree that she never said it.)

Anyway, the carbon price worked. A report this week by economists at ANU found that Australia cut carbon dioxide emissions from its electricity sector by as much as 17 million tonnes because of the carbon price and would have curbed more had industry expected the price to be permanent.

We can continue to lie about important reforms (and this was an example of an important ‘reform’) but we do so knowing that we’re only kidding ourselves in the long run. 

 

3.    Complacency kills…

In many ways, Brazil’s economy is similar to Australia’s. Blessed with natural resources, a functioning financial sector, a large workforce and a stable period of responsible democratic government, Brazil’s economy is now bigger than the rest of South America combined. Like Australia, its mining sector has meant that China is its biggest export destination.

Brazil also has gifted footballers. This is why we were all so excited for the return of joga bonito (“the beautiful game”) to Brazil ahead of the tournament. The early signs were good too – Brazil had demolished Spain and it’s own ‘tiki-taka’ (short passing) football at the Confederations Cup in 2013. Alas, we all know what happened to Brazil’s campaign.

While the review and retribution of Brazil’s failure will last about as long as the calamity at the Maracanzo in 1950 (which continues to this day), the immediate lesson for Australia is that resting on laurels and relying on natural resources is not enough. We need to diversify industries and our economy. Building up other players to ensure a balanced and sustainable team.

Australia may be blessed with natural resources in mining, gas, agriculture and renewables but without development of this and other sectors like technology and services we risk a 7-1 drubbing at some point. Just ask Polaroid, who complacently ignored all advice despite having a brand synonymous with their core product, only to file for bankruptcy in 2011.

 

4.    Increasing women in leadership is a pre-requisite for winning

An observation. The World Cup Final comprised two nations with women as their heads of government – Germany with Angela Merkel and Argentina with Cristina Kirchner. The tournament itself was hosted by a country led by a woman, Dilma Rousseff. The semi finals were contested by three nations led by women. Curiously, Julia Gillard became Prime Minister on the day that Australia won its only game in the 2010 World Cup.

The lesson here is if Australia fails to embrace women in leadership positions, we do so on the basis that we might never feel like our German friends are feeling today.

 

5.    Relatedly, do not fear diversity and globalisation

The wonder of the World Cup has always been its diversity and its global audience. But what marked this World Cup was the diversity within teams as much across the tournament. Edward Telles of Princeton University recently observed nowhere has diversity been greater than in the composition of the nine World Cup teams from Latin America. Of course, this also extended to other teams: the US team is coached by a guy named Jurgen, Switzerland’s best player is an Albanian Kosovar migrant, Belgium’s two strikers hail from Kenyan and Congolese descent and best of all, Australia is coached by King Ange, our captain is Mile Jedinak and our top scorer is of Samoan background. In this World Cup, there were 25 French-born players representing other countries — 16 alone for Algeria; five more players than were part of Les Bleus’ squad.

In the context, we shouldn’t forget that Germany’s ‘fourth star’ was the first since reunification. Toni Kroos, perhaps Germany’s most consistent performer was born in East Germany. Symbolically, Andre Schurrle and Mario Götze (the maker and finisher of the decisive goal on the Final) were both born in the unified Germany. A cornerstone of the Germany’s youth development program has also been to capture players from different social and ethnic groups expanding the base of talent and changing their style of play.

Like the San Antonio Spurs revealed in the NBA finals, diversity in sports represents the welcome face of globalization but more importantly is a critical enabler to success.

This applies across the spectrum. Recent Credit Suisse research has shown that executive boards that have both men and women have outperformed the all-male composition by 26% over the last six years. The World Economic Forum has also confirmed that diversity of skilled immigration has a positive impact on the income and productivity levels of nations.

Lesson here for Australia: our openness and entrenchment of diversity enables and promotes our economic success and this should be defended vigorously. That’s what made the frolic on changing the Racial Discrimination Act so silly.

 

6.    Listen to the people

The lead up to and organising of this World Cup has been marred by controversy over misplaced public funding and failed infrastructure projects. This was largely ignored or criticised by FIFA and other commentators in the lead up to the World Cup. When the legend Pele criticised the egregious waste of public money and suggested greater spending on health and education he was ostracised and excluded from key events.

What were all these people (including the comedian John Oliver) complaining about? Expenditures such as the Arena Amazonia built at Manaus at a cost of approximately $300m, which is now redundant after four World Cup games. Funding for this was provided in part through reprioritising measures previously directed at addressing inequality.

While budgets and implementation are driven by authorities, it is useful for governments to remember that citizens may be the best judges for how public money should be appropriated and what priorities should drive budget. Given the reception the Commonwealth Budget has received, the Government ought to be heeding this lesson here too.

 

7.    Football is king

To be clear, football is king. Angela Merkel was due to meet the new Indian Prime Minister Narendra Modi on the day of the World Cup Final. I guess the billion people watching the game know which ‘meeting’ Chancellor Merkel attended. (And how could you blame her!)

That’s the thing about the World Cup. It creates history and challenges individuals to create their own history. Sure, history told us that no European team has won a World Cup held in South America and it told us that the Socceroos would come home with football in Australia in tatters, without hope. Instead, football in this country goes from strength to strength.

Given the major strides taken by Ange’s boys in this World Cup and in heeding the broader lessons from Brazil ’14 for our economy and our nation, we should look forward to a bright future and await (hopefully!) the inevitable analysis in 2018 that goes something like: ‘Since the last World Cup, Australia did…..”

About Amit Singh

Amit Singh

Amit Singh is a former economic and political adviser to Prime Ministers Rudd and Gillard.

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