The eighth wonder of the world

Albert Einstein is reported to have said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

Of course, many of us with superannuation accounts have learned that truism. Mostly, we have learned it a little too late to fully grasp its potential.

It is ironic that the most proven way of progress – regular, ongoing, small improvement – is often ignored for the less likely ‘big bang’ answers that might catapult us forward.

It’s true in our personal lives and can often be true in public policy as well.

This week, the NSW Treasurer proposed a state based productivity commission to stir and spark debate about how to accelerate Australia’s largest state economy.

It’s a good idea. However, it’s worth remembering that only last year the Productivity Commission released a report that highlighted how we could lift the productivity of our cities by $29 billion.

Like Einstein’s ‘compound interest’, the benefits of productivity reforms are always cumulative and are not always seized because they don’t seem material. Improvements to planning systems, removal of unnecessary red tape, finding better ways to manage our morning and evening commuter peaks, and moving away from stamp duty can all provide real, lasting and cumulative benefits.

Likewise, the same principle of small, incremental improvement applies to the vexing challenge of emissions and improving the sustainability of our cities.

Be it energy policy, planning reform or tax settings, we live in an era where politicians seem to have lost the will for ‘big ticket’ reforms. Rather than throw up our hands and lament, our approach must be to work with people and help deliver the incremental reforms that can quickly add up (while still building the case for bigger changes).

And a special reminder: at 5pm (AWST) today, nominations for the Property Council’s highly successful 0 Women in Property sponsorship program will close for 2018. This flagship program aims to accelerate the experience of women across the industry. If you haven’t nominated, or know someone who could benefit, then I encourage you to get your nomination in before the deadline.