An erosion of trust is leading to populist policies that are bad for national prosperity, according to members of Business Council of Australia who attended a joint BCA and CCIWA Lighthouse Leadership lunch at the Hyatt on Tuesday.

The lunch saw Coca Cola Amatil group managing director Alison Watkins, Australian Unity group managing director Rohan Mead and BAE systems’ head of engineering Brad Yelland speak candidly about the challenges facing business and what it means to be a leader.

When asked about the public’s falling trust in business and other institutions like government and the media, Watkins said it has led to risks like populist decisions which business needed to be very aware of.

“If the community has lost that trust in us, that’s a problem because it tends to leave us vulnerable, as we’ve seen in a number of countries, to populist type decision-making where governments just want to be seen to be doing something,” she said.

“Or at the other extreme it leads us to a situation of policy paralysis where it’s really hard to advance a longer-term policy agenda because nobody really trusts a decision that’s right for the long term.

“They ask whether it really is going to play through as the politicians are explaining it.”

Mead said ‘short termism’ is corrosive and is fuelling much of the distrust.

“The fact is that we seem to have lost the capacity to fashion the architecture of public arrangements, public policy, capital market policy etcetera with a view to taking long-term decisions,” he said.

Yelland said one way of rebuilding trust was to focus on individuals.

“A lot of the trustworthiness of the organisation and corporations comes down to the individuals within that organisation and how they behave, so it’s very important as a leader to make sure we’re always behaving in the most responsible and ethical way possible,” he said.