Election 2022: Neither major party has plan to fix economy, warn gurus

Tony Shepherd has argued that ‘true economic reform is ­impossible in Australia’ because of the influence of independents.

Business Council of Australia former president Tony Shepherd. Picture: Sam Ruttyn

Tony Shepherd, the man who headed up Tony Abbott’s 2014 commission of audit, has argued that “true economic reform is ­impossible in Australia” because of the influence of independents.

The comments from Mr ­Shepherd, a former president of the Business Council of Australia, comes amid criticism of both major parties from leading economists who have argued there is no real plan on the table to tackle Australia’s structural deficit.

Anthony Albanese and Scott Morrison say they can pay for health, aged care, education and the NDIS by growing the economy.

But former treasury secretary Ken Henry told ABC radio on Thursday morning that, at some point, “spending is going to have to be cut”.

“Revenue, though, is also going to have to be raised,” he said.

Dr Henry said Australia’s economic performance over the last two decades was “a great ­disappointment” because not enough action had been taken to address challenges policymakers knew were coming”.

“We’ve been aware of the economy’s failings for quite some time,” he said. “It was 20 years ago when we published the first intergenerational report, which set out the challenges that were emerging … due principally to an ageing of the population.”

Dr Henry said that it was clear two decades ago there was a “need to find ways of growing the economy much faster”.

“We pointed in particular to productivity growth,” he said.

Dr Henry said the belief then was that, if the nation only managed productivity growth of 1.75 per cent per year, the nation “would be in a hell of a mess in 40 years time”.

“We actually achieved 1.25 per cent,” he said.

Dr Henry said that, if Australia had achieved 2.25 per cent productivity growth over the last 20 years then, instead of having an $80bn deficit, the economy would now be in balance.

“It’s just so ironic to see the ­current debate about whether we should fix our budget problems now by raising taxes, by cutting spending or by growing the ­economy faster. Well, that was the ­debate we had 20 years ago,” he said.

Mr Shepherd told The Australian his view was that “true economic reform is impossible in Australia as the Senate is controlled by the independents, many of whom follow a populist and in some cases a single-issue agenda”.

“The decision for the voters is, given such a significant impediment to reform … which party is administratively going to facilitate the stronger economic outcome given the headwinds which are heading our way,” he said.

The Opposition Leader on Thursday declined to commit to a broadbased tax review should he be elected “because we’re up for what we take into this election, and that’s not part of our agenda”.

“We have put out there our multinational tax changes and been upfront about that,” Mr ­Albanese said. “That’s the agenda that we’re taking to this election.”

“I’m being very clear about my agenda for change at this election … to say exactly what we will do as a first term. I want to be able to say, ‘We said we would do that. We’ve done that.’”

The Prime Minister also rejected suggestions that he could not bring the budget back into balance without raising taxes or making savings to essential services, arguing that the Coalition would spend responsibly.

“I have said all along, the way you pay for these things is by ­ensuring you have a strong economy,” Mr Morrison said.