The great diversion: election arguments about tax

No one’s more interested in taxation than me, but there’s got to be more to this election campaign than claims about which side is high taxing and which low taxing, and interminable arguments and scare campaigns about franking credits and negative gearing.

Fortunately, the nation’s best and most independent think-tank, the Grattan Institute, has taken a much broader view of the issues to which the winning side should pay most attention in its Commonwealth Orange Book (an allusion to the red book and the blue book that the public service prepares to present to whichever side wins).

Illustration: Simon LetchCredit:

To help voters put the election issues into context, however, Grattan starts by comparing our performance on a broad range of indicators with nine comparable countries.

On standard of living – measured by gross national income per person – our $62,800 a year is well behind the United States ($75,900) and less behind the Netherlands ($68,100), Germany ($66,900) and Sweden ($64,900), but ahead of Canada ($57,300), Britain ($54,900), Japan ($54,300), New Zealand ($48,800) and South Korea ($48,400).

So we’re in the middle of the pack of rich countries. We can afford high quality public services (paid for by moderately high taxes) and afford to treat the disadvantaged with consideration.

But, despite all the times Scott Morrison repeats the words “strong economy”, our living standards have stagnated in recent times.

Illustration: Andrew DysonCredit:

At 73 per cent, our rate of employment – the proportion of the working-age population with jobs – is at the low end of the range (New Zealand is on 77 per cent), but all countries are comfortably above America’s 70 per cent – a sign that all’s not so well in Trump’s supposedly strong economy.

A good check on our present success is our NEET rate – the proportion of people aged 15 to 29 who are not in employment, education or training. At 11 per cent we’re level with New Zealand, and better than Canada, Britain and the US, but worse that Germany, Sweden and the Netherlands.

Could do better. We need to fix the almighty mess we’ve made of vocational education and training.

On income inequality, our gap puts us towards the wrong end of the pack: equal with New Zealand, worse than Sweden, the Netherlands, Germany, Canada and even Britain, but better than South Korea, Japan and the pinnacle of inequality, the US.

We could greatly reduce inequality simply by paying the $3 billion a year it would cost to raise the dole by $75 a week – a truth Bill Shorten shouldn’t need a protracted inquiry to tell him. That $3 billion, by the way, compares with the estimated annual cost of Morrison’s tax plan, when fully implemented, of $35 billion a year.

We do surprisingly badly on housing, with fewer dwellings per 1000 adults than all the others bar South Korea. And with median housing costs as high as 23 per cent of disposable income, we’re dearer than everywhere except Holland.

Less surprising is how badly the land that used to boast about its cheap power is doing. These days, only German households pay more for electricity than ours do. Despite our ever-growing exports of LNG, our industries pay more for gas than the Canadians, Kiwis and Americans.

And, thanks to the policy dominance of the climate-change deniers, our electricity use generates far more carbon emissions than the others do. A lot more reform of the reforms needed.

Our relatively low funding of schools, and its division on a sectarian basis – the religious get more than the non-religious; some religions get more than others – hasn’t left us looking good in international comparisons.

If you ignore the poor deal we give our Indigenous (as we usually do), our health system ranks well. Our life expectancy at birth is bettered only by Japan, and the cost of our healthcare as a proportion of national income is at the lower end (and only a bit more than half what the Yanks pay for their appalling system).

Even so, there’s room for us to get better value for money, and our out-of-pocket healthcare costs are higher than everywhere except Sweden and South Korea.

Which brings us to the quality of our governance. In Australia, trust in government is low and falling. In international comparisons, we’re about middle of the pack on trust.

But Australian cynicism is now at an all-time high – only a quarter of us think “people in government can be trusted to do the right thing” – the lowest since the survey began in 1969.

Grattan says there’s a growing sense that people in government look after their own interests, or those of powerful groups, rather than the public interest.

Many other democracies have stronger rules on political donations and lobbying, designed to keep special-interest influence in check. Most rich countries restrict political donations or party spending in some way. We don’t.

The feds are lagging the states in establishing an effective anti-corruption or integrity commission, in requiring timely disclosure of political donations, publishing ministerial diaries and in imposing a lobbyist register without glaring loopholes.

The failure of both sides to act at the federal level undermines the effectiveness of state measures.

So, turns out we do have issues other than tax we should be focusing on.

Ross Gittins is the Herald’s economics editor.