Scott Morrison puts $31bn price on Labor tax plans

Scott Morrison has ­accused Labor of exploiting ­worries about low wage growth to justify its ‘socialist agenda’.

Treasurer Scott Morrison will also flag a new policy direction to lift Australia’s national productivity by targeting the health and education of people as the new drivers of ­efficiency and growth.

Scott Morrison has ­accused Labor of exploiting ­worries about low wage growth to justify its “socialist agenda” that he claimed would amount to a $31 billion extra annual tax burden on the economy and threaten Australia’s standard of living.

Delivering his annual Bloomberg address today in Sydney, the Treasurer will also flag a new policy direction to lift Australia’s national productivity by targeting the health and education of people as the new drivers of ­efficiency and growth.

Ahead of the release of the first of a five-yearly Productivity Commission report, Mr Morrison revealed the report had ­signalled that Australia needed to “shift the dial on our productivity agenda”.

Improvements in health results, the report will say, could ­realise gains of more than $100 billion over the next few decades, with poor health representing one of the largest brakes on the economy’s labour supply.

But any gains in living standards would be put at risk, the Treasurer will warn, if Labor were to implement its tax ­agenda, which includes lifting the top marginal income tax rate to 49.5 per cent.

Echoing Finance Minister Mathias Cormann’s scorching attack on Bill Shorten last week, Mr Morrison has accused the Opposition Leader of luring ­people to a “neo-socialist” ­agenda and driving the politics of envy by exploiting concerns about wage growth.

“The reason for this new-found fondness for failed socialist and protectionist economic policies is the frustration still being felt on wages growth,” Mr Morrison will say in his address.

“Flat wages growth has opened the door to the politics of envy. It has been some time since Australians have received a ­decent pay rise.

“And when your wages haven’t budged in a while, ­despite the fact you are still working hard and putting in the long hours, the stress on your household budget begins to bite.

“This is not just a problem we are facing in isolation; wage growth has been weak in virtually every developed economy, as the global economy transitions out of the post GFC funk that has lingered longer than most had predicted. This is now being exploited by neo-socialists and cynical political opportunists alike.

“Whilst the improvements we are seeing in our economy are welcome, they are of limited comfort to households who as yet have not seen this translate into an ­improvement in their incomes.”

Mr Morrison claims the ­Coalition is meeting its promised cap to keep tax as a percentage of GDP at 23.7 per cent. But Labor’s tax plan would amount to a tax-to-GDP ratio of 25.7 per cent. The difference, the Treasurer will argue amounts to an extra $31bn annual tax burden on the economy under Labor.

While arguing that business profitability was one of the best levers for a recovery in wage growth, improved productivity would require getting more people out of hospital, out of bed, and into better education.

“Our future living standards will also remain heavily reliant upon growth in productivity,” he will say. “This point is arguably more critical now than it has ever been.

“We need a sustained lift in productivity growth to around 2.5 per cent for us to maintain our living standards at 2 per cent national ­income growth.’’

Unlike the big macro-economic reforms of the 80s and 90s, Mr Morrison said the new productivity drivers would be found in the health, welfare and education sectors.

“The commission argues that delivering health and education more efficiently, and with a serious focus on what improves outcomes for the users of these services, will deliver bigger benefits than even traditional industry reform,” Mr Morrison will say.

“Poor health can represent one of the largest brakes on an economy’s labour supply, with preventive health measures potentially having significant positive effects.

“Also, if you want to reduce ­inequality, health outcomes are one of the best ways to do it.”

But the opposition has accused the Turnbull government of being the roadblock to wages growth and narrowing the inequality gap, claiming cuts to penalty rates was an example of a government lowering the standard of living for working Australians.

“Every time Scott Morrison complains about tax increases, millions of low- and middle-­income earners need to remember he wants to increase your income tax,” opposition Treasury spokesman Chris Bowen said.

“Turnbull and Morrison pretend they’re the party of low tax and yet Scott Morrison just brought down a budget with $20 bn of new taxes (over four years). “The latest round of Liberal Party focus on Bill Shorten is ­beyond embarrassing, it’s telling the Australian people a year into the term that they’ve stopped governing and have nothing positive to say about the future of the country.”