Q+A: Australia has a governance gap. Why is it getting worse?

[upbeat music] Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Shaun Aylmer. Australians expect a lot from the organizations they deal with, but the new twenty twenty-six Australian Governance Index finds a substantial gap, a governance gap, between what Australians expect from organizations and how they believe they actually behave. Integrity and accountability are the biggest problem areas, and forty-three percent of Australians think organizational behavior has become worse in recent years. Katrina Horrobin is CEO of the Governance Institute of Australia, which is a great supporter of Fear and Greed. Katrina, welcome to the podcast.

Thank you very much, Shaun. Good to be here.

And Matt Rowley is a partner at strategic advisory firm General Strategic, which worked on the index. Matt, welcome to Fear and Greed Q&A.

G'day, Shaun.

Katrina, let's start with the forty-three percent figure. Almost half of Australians think organizational behavior has become worse in recent years. Only seventeen percent thinks it's improved. What's gone wrong?

So this is what we call the governance gap, the, the gap between, uh, what Australians expect from organizations and what they see them actually doing. Uh, and I think there are a number of reasons for this, but this, this research specifically looks at, uh, seven behaviors and assesses, uh, the expectations against the reality for those seven behaviors. So it, it's getting bigger for a number of reasons, and I think specifically it's, it's about the pace and the scale of change that we're seeing at the moment and the, the headlines getting ever bigger in terms of the governance gap. That gap exists right across organizations. It's not something that just comes from the top. Uh, and that's what we here at the Governance Institute care most about. We, we are looking at where decisions are made everywhere in an organization and how we strengthen capability in individuals and in organizations when it comes to decision-making.

Matt, the biggest gaps nationally are around integrity and accountability. What's it mean? Like, are Australians effectively saying organizations know what they should be doing but don't do it, or are they not taking responsibility for the behavior? Why is it integrity and accountability?

Well, well, I think what's really interesting about this, I mean, that's at a headline level, but the bit that's really, really interesting is that actually Australians expect different behaviors from different sectors. So yes, overall, you know, integrity and accountability people think are really, really important. It's part of this thing around, I guess it's like a social contract that people feel with these organizations and these sectors, that there are things that these sectors and organizations should be delivering to them. Um, and I think it's this piece actually we're at peak level of use of the term social license. Never has this been used more before, um, including, for example, in federal parliament. So this year in federal parliament, the term social license has been used twice as many times in Hansard than it ever has