Cut red tape to kickstart economy, Morrison told

Business leaders and economists are urging Scott Morrison to enact tax and regulatory reform in the wake of the COVID crisis.

Prime Minister Scott Morrison has been urged to seize the opportunities that arise from rebuilding the economy. Picture: AAP

Business leaders and prominent economists are urging Scott Morrison to seize the opportunity of the “Team Australia” moment and enact tax and regulatory reform in the wake of the COVID-19 crisis.

Big business is turning its mind to what will be needed to start a recovery on the other side of the pandemic and urged the government to take the chance to simplify tax and industrial relations laws.

Business Council of Australia chief executive Jennifer Westacott said the country “must not waste a second of this new level of co-operation in our society to get important things done”.

Business Council of Australia Chief Executive Jennifer Westacott. Picture: AAP

“We agree with the Prime Minister that business-as-usual policy is not going to drive the growth in the economy Australia will need once we get through this crisis,” she said.

Mr Morrison has made it clear that, despite unprecedented intervention, the government “sees business at the centre of the economy” and laid the rhetorical groundwork for “pro-growth” reforms that will lead to a “revitalisation of the private sector”.

Ms Westacott said the suspension of some regulations had made business easier during the pandemic and it needed to stay that way for the economy to recover.

“Once and for all we need to make it easier to do business and get rid of unnecessary red tape, much of which has been put on hold during this crisis, because it is an obvious impediment to doing business,” she said.

“We must strengthen our global competitiveness and efficiency so we have a business sector that can attract investment, bring forward large projects, provide jobs, pay tax and deliver the living standards Australians expect.”

Australian Industry Group CEO Innes Willox said policymakers and business should not miss “the opportunities this sobering episode presents to build a better Australia”.

He nominated broad tax reform and a less rigid industrial relations system as priorities. “We have a very high reliance on income taxation … a very high reliance on taxes on normal profits; we still impose high marginal tax rates at relatively low levels of personal income. We need to protect employees’ rights and … sufficient flexibility to change workplace arrangements to build highly productive and resilient jobs.”

ANU economist Warwick McKibbin said the government should review all government spending and move towards a consumption-based tax system.

“We need a review of what we’re spending, see where there is duplication with the states. It has to be comprehensive,” he said.

“If you do it policy by policy, it will be shot down and there’ll be no hope for changes anywhere.

“We need to get rid of tax distortions and move from taxing income to taxing spending. It needs to be fundamental change so we have the same revenue but a different economy.”

Economist Saul Eslake warned the hope for a ‘‘V-shaped’’ recovery later this year was “impossible”.

He said households whose mortgage payments had been deferred would suddenly face higher or longer repayment periods. “Remember the payments have been capitalised by the banks, not forgiven,” he said.

“They will have run down their discretionary savings, have seen their super balances hit hard, including in many cases by their own withdrawals, so there won’t be any sort of ‘snap back’ to normal.”

Additional Reporting: Adam Creighton