Grattan Institute calls for ’bold’ policy reform after poll

The winner of the looming federal election should broaden the GST base, scrap negative gearing and reduce the cost of child care, according to a leading think tank.

Danielle Wood, Grattan Institute chief executive and the report’s lead author, said addressing a reasonable number of reforms outlined in the Orange Book, could “transform Australia. Picture Supplied

The winner of the looming federal election should broaden the GST base, scrap negative gearing and reduce the cost of childcare to secure the nation’s “future prosperity”, according to a leading think tank.

Grattan Institute’s 2022 ­Orange Book – the list of policy changes it considers imperative for the incoming government – prescribed a raft of policy reform for either Labor or the Coalition, asserting now is “not the time for small targets”.

Confronted with a net public debt expected to reach $729bn, or 34.2 per cent of GDP by mid-2022, at the top of Grattan’s list was “bold” and substantial taxation reform, to address Australia’s “patchwork of more and less efficient taxes”.

“Improving the efficiency of the tax system, by shifting the federal tax mix from more-costly to less-costly taxes, could ­materially boost Australians’ living standards,” the report said.

Included on the list of priorities was addressing the shrinking base of the GST, exploring wholesale changes to Australia’s corporate income tax system and reforming a number of tax concessions that were failing to meet their economic aims.

This included capital gains tax discount, negative gearing and super tax concessions.

“In the case of the current CGT discount and negative gearing arrangements, they act to distort investment decisions, increase price volatility in property markets, and put some upward pressure on house prices,” the report said.

Grattan Institute chief executive Danielle Wood, the report’s lead author, said addressing a reasonable number of reforms outlined in the Orange Book, could “transform Australia.

The reduction of out-of-pocket childcare costs topped Grattan’s list of priorities for the incoming government, arguing high costs were creating barriers for female workers. Lowering the impediments to interest would “significantly boost” economic growth.

The report’s authors recommended a 95 per cent subsidy for low-income households, which gradually tapered for families with incomes above $70,000, at an estimated $5bn cost to the taxpayer.