By Mick Le Moignan
LIKE many western nations, Australia and Jersey both have an ageing population, a housing crisis and fears about immigration. One remedy is to get costly consultants to suggest solutions. A better one is to invite people who already have “skin in the game” to apply their minds to the matter free of charge.
A government that calls a three-day conference with community leaders just after winning a massive election victory is either utterly devoid of ideas of its own (as Australia’s battered Opposition claims) or supremely confident and seeking a genuine consensus on the best way forward for the nation. Australians are crossing their fingers that the Albanese Labor Government is the latter.
The Economic Reform Roundtable held last month in Canberra, around the Federal Government’s Cabinet table, no less, was attended by 35-40 powerful and well-connected worthies representing business groups, employers, unions, banking, mining and superannuation funds, with economists and politicians. Written submissions were invited in advance of the discussion. On the day, attendees were stunned to be told to leave their phones at the door.
Some submissions were predictable: business lobbies called for reductions in company tax and cuts to regulations and employment law, “to encourage innovation and streamline business practices”. The unions wanted a four-day week and a tax on business to fund employee training.
An economist and a “teal” MP thought outside the box: they proposed a hike in GST from 10% to 15% – a bitter pill to be sweetened with a cash handout of $3,300pa for everyone. They claimed this would generate an extra $24-28 billion in government revenue and leave the bottom 60% of taxpayers better off.
The Treasurer, Jim Chalmers, capable, articulate and likely to be the next PM, set the scene for the conference earlier in the year at the National Press Club. He brought positive news: wages are rising, with the Fair Work Commission ratifying the government’s own proposal to increase the National Minimum Wage by 3.4%, to £12 an hour or £456 a week; inflation is way down, at 2.1% in the June quarter; unemployment is also low, at 4.2%, and the Reserve Bank’s official interest rate is 3.6% after two cuts (to date) this year.
On the downside, the global economy is highly volatile (not helped by the Trump circus and two brutal, invasive wars); cost-of-living increases since the pandemic have held back living standards; house prices and building costs are still rising at a rate which gives many younger people no hope of ever buying their first home. Productivity has grown remarkably slowly for most of this century, averaging close to 0.8% pa.
The Treasurer said productivity could be lifted by workers learning new skills, by making it easier to start or run a small business, by speeding up approvals and cutting red tape – without reducing standards – and by encouraging more innovation and competition and enticing more private and foreign investment. His main aims for the government’s second term were building a more productive economy and a stronger, more sustainable and resilient budget.
He promised to consider all ideas proposed but asked participants not to push their own barrows, but to put forward proposals that were “at least budget neutral”, specific, practical and in the national interest. He asked the media not to ask “rule in or rule out” questions, which he said had “a cancerous effect on debate”. In return, he promised that the government “won’t come at this from an ideological point of view, but from the practical, pragmatic and problem-solving middle ground we’re most comfortable on… Finding consensus will be everyone’s responsibility”.
His final plea was: “Let’s see what we can achieve together if we dial up the ambition a bit and dial down the rancour a bit as well.” Already, the Roundtable was sounding like a refreshing change from the bear-pit battles of two-way party politics, which is all superficial point-scoring and no listening. (Jersey, beware!)
On day one, there was agreement on the need to retrain workers to adapt to jobs fundamentally changed by AI, but division on how to do so.
Day two generated widespread support for simplifying the regulation of housing approvals, while maintaining environmental safeguards. The third day saw strong agreement on the need for a fairer tax system for younger Australians. At the end of the week, Albanese announced a government guarantee that every first-home buyer would need to find “only” a 5% deposit to purchase their first property.
A particularly knowledgeable attendee was Dr Ken Henry, a former Treasury Secretary who worked for Paul Keating as both Treasurer and PM. He wrote most of the 2010 Henry Report into Australia’s tax system, a treasure trove of audacious ideas for tax reform which successive governments have timidly left in the “too hard” basket.
Henry is credited with coining a telling phrase for applying a Keynesian stimulus to the economy: “Go early, go hard and go households!” He produced another memorable bon mot this year: “intergenerational bastardry”, to describe the entrenched fiscal advantages given to Boomers at the expense of Gen Y, Gen Z and Millennials.
Older Australians enjoy “negative gearing” on investment properties, which allows all losses, interest and expenses to be claimed against personal income tax. In addition, there is a generous 50% discount on Capital Gains Tax when the properties are sold. Everyone agrees this is grossly unfair. Labor leader Bill Shorten promised to remedy matters at the 2019 “miracle” election, which he lost to Scott Morrison, and no major political party has been game to risk losing “the silver vote” again.
It remains to be seen whether this “talkfest” as the Opposition calls it, will stiffen the government’s backbone enough for it to stand up to the multinational fossil fuel companies who currently mine and siphon off most of Australia’s sovereign wealth tax-free, or to prise the undeserved subsidies from the Boomers’ arthritic fingers, to give their children and grandchildren the leg-up they deserve. But it’s a start – and a model Jersey might well consider emulating.
