Published in Newsroom.co.nz (Wellington), 20 October 2026
When I first visited Sydney in 1999, what struck me most were the cranes. They stood over the city in every direction, building towers, stadiums and rail lines for the Olympic Games. The future was being built, quite literally, in front of my eyes.
I had come partly to meet, at last, the South Australian pen-friend I had been writing to since 1991 and whom I later married. Australia had always been my dream destination, but at least at the time I thought it would be a one-off holiday.
It felt refreshing to be in Australia. Back home, The Economist had just called Germany “the sick man of the euro”. Some four million Germans were out of work, and reforms were debated for years before being quietly shelved.
Australia back then was the opposite.
The economy was growing at around 4 percent a year, and when I returned in 2001 to write part of my doctorate at the University of Sydney Law School, the optimism was still there. Australia was “can do” where Germany was at best “could do”. It was a great time to be in Australia.
Last week, at the Centre for Independent Studies’ Consilium conference on the Gold Coast, I listened to a man who must have felt much the same. Mathias Cormann grew up speaking German in Raeren, a Belgian village five kilometres from the German border.
Like me, he first came to Australia for a woman, arriving in Perth in 1994. Unlike me, he did not marry her. But he came back two years later to stay anyway.
Cormann’s Belgian law degree was not recognised, so he went to work as a gardener at a girls’ school. He joked in his speech that he ended up in politics because it was the least protected profession left to him. He later served seven years as Australia’s finance minister and now runs the OECD as its Secretary-General.
In his speech, he argued that 2026 is an echo of 1976, the year the Centre for Independent Studies was founded. Back then, Australia was one of the most closed economies in the developed world, and its manufacturers were sheltered behind tariff walls.
But then came the reforms. Prime Minister Bob Hawke and his Treasurer Paul Keating floated the dollar, deregulated finance and cut tariffs to about 5 percent. Their successors John Howard and Peter Costello then made the Reserve Bank independent, paid off the federal government’s debt and introduced the GST.
Cormann read out that list with Peter Costello and Howard government foreign minister Alexander Downer sitting in the audience. It must have been interesting for Costello to hear his own reforms referred to as distant history.
Australia’s reform story ended in the mid-2000s. The appetite for reform had largely faded. Then the mining boom hid the cost of non-reform for a further decade.
I felt the changed climate when I moved back to Sydney in 2008, by which time politics had turned European. That meant more spin, more borrowing and grand schemes with names that sounded as if they had been drafted in Brussels.
Australian labour productivity has grown by less than 0.4 percent a year since 2015, a quarter of its long-run average. In 2023 and 2024, output per person even fell for seven quarters in a row.
As for the cranes, the OECD’s latest survey of Australia also found that construction is now less productive than it was 20 years ago.
“I was there for part of that period, so I am blaming myself too,” Cormann said of the politicians who let reform lapse.
I had met Cormann before.
In December 2014, early in his time as finance minister, he launched Quiet Achievers, my report for the Menzies Research Centre on John Key’s reforms in New Zealand. Given another five years, he told the audience in Canberra back then, the Abbott government could match that record.
Well, not quite. Cormann got nearly six more years in the job. But the company tax cut he wanted died in the Senate.
The rest of Consilium ran under the Chatham House Rule, so I cannot tell you much about other speakers, but I can tell you about the mood of the conference. For three days, speaker after speaker described an Australia stuck in its politics and its economics. You could feel the sadness in the room.
My colleagues from the NZ Initiative and I kept telling each other that every one of those sessions would have worked just as well in Wellington or Auckland. You had only to substitute ‘New Zealand’ for ‘Australia’.
Cormann’s explanation is that reform asks voters to accept visible costs now for benefits that arrive later. In good times, nobody sees the need to impose such pain on voters. And by the time a crisis appears, the memory of why these old protection measures and interventionist policies failed is decades old.
And so, the old remedies are back, from state-run industries to arbitrary migration cuts, all nowadays dressed up as “sovereignty”.
In the Q&A part of his session, Cormann explained what got him into politics. As a student, he visited East Berlin, where a worker asked him why people on one side of the Wall drove Mercedes while people on the other waited 15 years for a Trabant. The two Germanys had started with the same people, the same history and in the same ruins. Policy alone made the difference.
I grew up on the Mercedes side of that Wall, in the Ruhr. And for me, the contrast between the West’s market economy and the East’s planned economy disaster shaped my political beliefs just as much as for Cormann.
Like Cormann, I believe that the choices countries make matter greatly. And I would say that Australia has been running such an experiment on itself, only across time rather than across a wall.
The Australia of the 1990s that Cormann and I both experienced and the Australia of today may have the same people, the same beaches and the same minerals in the ground. But what has changed, almost beyond recognition, is the policy.
Cormann ended on hope, saying this generation maintains the courage of its predecessors. I am not so sure. But after three days of gloomy diagnoses, his speech sounded like a rallying cry, interrupted by applause and ending in a standing ovation.
Of course, this was a room full of supporters and friends. A reform message will always bring them to their feet. Whether it would do the same in the suburbs of Sydney or Melbourne is another question.
I think Australia will eventually reform, but not because of courage. Its reforms of the 1980s, like those of Roger Douglas in New Zealand and Gerhard Schröder in Germany, came when the country’s back was to the wall. Germany only moved once unemployment was heading for five million.
Australia is edging towards that wall, with trade barriers at their highest in generations, another energy shock from the Middle East and its biggest customer now also its greatest strategic worry.
When I left Sydney for Wellington in 2012, my farewell column in the Business Spectator was already a sad one, aptly titled ‘Losing sight of the lucky country’. The Australia I was leaving was no longer the country I had found in 1999 and 2001, I wrote.
I would love to see that Australia again. But I suspect it might take a crisis to get there.
