Economic roundtable begs question: are Jim Chalmers and Anthony Albanese barking up the wrong tree?
Is there a case for fiscal guardrails?
Bark once, if you agree. Woof.
Should we return industrial relations regulation to its 2022 state? Woof.
Should the top marginal tax rate be cut? Woof. Should we allow immediate deduction of all company expenses? Woof.
Let’s face it, Jimbo’s carefully curated roundtable was never really about productivity.
To the extent he even understands the factors that drive productivity growth, he is unwilling to do anything constructive.
Cut the size of the care economy, not on your nelly.
Make private investment more attractive, not likely.
Accept that expensive and unreliable energy is an increasing drag on the economy and do something about it, in your dreams.
Of course, what he is implicitly accepting is that annual GDP growth above 2 per cent is basically impossible; figures closer to 1 may become common.
Let’s not forget here the government is foregoing revenue because of lower GDP growth – a lot of it – but heck, that’s the way the cookie crumbles in Jimbo’s world.
As for the ludicrous proposition being put by Jimbo that he wants consensus on tax reform, give me a break. Labor bitterly opposed the GST and took its rollback pledge to two – or was it three? – election campaigns before giving up.
When it comes to tax reform – pause for laughter – the assembled ‘experts’ should have been reminded that nations don’t tax their way to prosperity. All that earnest chat about intergenerational inequity also ignores the fact that current oldies were once young.
They faced very high-income tax rates, crippling interest rates and a relatively lack of ‘free’ public services.
They have saved – indeed been forced to save – in good faith but now face the prospect of having their accumulated assets fleeced because that’s ‘fair’.
And let’s not forget that the current crop of kids has relied on their parents for much longer than in days gone by. There’s also the bank of mum and dad to consider.
No doubt, the suggestions in the Cabinet Room came thick and fast. The current head of the Grattan Institute, Aruna Sathanapally, wants higher taxes on the elderly, including their superannuation balances and any other assets they may have, as well as on the wealthy more generally.
Who cares about incentives to accumulate capital and fund investment when legalised theft is an option? (The Grattan Institute has never seen a tax increase it doesn’t love, by the way.)
But you have to weep when the head of the ACTU, Sally McManus, claims that lowering taxes doesn’t improve living standards. Was this some sort of joke? Giving more to people to take home evidently doesn’t do anything to improve the scope for people to spend or save as they see fit.
Mind you, Sally is probably reflecting the preferences of her biggest group of members – teachers and nurses. Increasing government spending on education and health, particularly if this ends up as higher pay for those employed in these sectors, is very popular with this group of unionists. It’s just not clear whether the sectoral outcomes are much improved by committing even more taxpayer dollars, particularly to schools.
This final day of Jimbo’s shindig had the feel of the last day of the carnival. All the attendees had consumed far too much roundtable red lemonade and were shouting ideas left, right and centre – OK, mainly left.
Get rid of negative gearing, remove the capital gains tax discount, increase the rate of tax on family trusts, increase the GST, remove the GST exemptions, increase superannuation taxes beyond the government’s Division 296 plans, ditch the diesel fuel rebate, introduce a carbon tax or, at least, a tax on fossil fuel exports, ditch stamp duty but have universal land tax. The feeling of joint exhilaration must have been palpable apart from the fact that most of these ideas smack of complete economic illiteracy.
The only piece of potentially good economic news during the week was delivered by the Health Minister, Mark Butler, cutting across Jimbo’s event.
The decision to separate children with developmental delays and mild autism into a separate arrangement – Thriving Kids – could transform the NDIS into a sustainable arrangement to assist those with permanent and profound disabilities. The States were dragging their feet on this initiative for children and so Butler was right to move.
Having said this, simply making two entities where there is currently one won’t necessarily make much difference fiscally speaking unless different principles are attached to Thriving Kids.
It should be means-tested from the get-go, and the offerings should be strictly evidence- based. There must also be an expectation that the support is time limited. We shouldn’t be labelling our young children, particularly boys, with an affliction they can never grow out of.
Kids mature and navigate life as adults. That should be the aim.
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If I have a choice between seeking economic policy advice from Jimbo, Albo or Toto – I’m picking the dog. I’m pretty sure I could train Toto to bark at the right time.