Transforming Australia to have a world class economy
Updated: Jul 30
What is needed if Australia is to become a better place with a powerful economy? Here are my suggestions, for what they are worth.
1. Loosen restraint and restore industry. This is not just lifting Covid-19 restraints, letting people again visit pubs, gyms and cafes. There are a myriad of rules and regulations imposed during the Year of the Covid but also many other rules and regulations that were already in place. Perhaps the PM should persuade a state government to lift every regulation that seems to be unnecessary and watch that state boom.
2. Reform tax system. In my view cutting income tax rates for companies and working Australians, paid for by increasing rate of GST (to, say, 15 %) and including everything would be a good start. If that made incomes slightly more unequal (Australia’s income distribution is middle of the pack of developed nations) find some way to even up distribution. The Productivity Commission says: ‘Graph shows that between 1988-89 and 2015-16, the relative poverty rate has hovered around 10%’.
Debt reduction after WWII was achieved by strong economic growth. Best if this can be repeated but otherwise may require some extra taxes overall until debt is well on the way to being paid off. Short of a global regime of debt forgiveness (just possible) this is likely until debt is largely repaid.
3. Restoring budget balance and when possible create a budget surplus with the aim of reducing government debt. This is obviously not possible in the very short term, but examine action after the two world wars and replicate that fiscal action. It will take a long time, but eliminating the debt is vital if we have firepower for future crises.
4. Australia, with other developed nations, seems not able to extract large productivity gains from disruptive technology in recent years. As the Productivity Commission Chairman, Peter Harris, said in 2016: ‘There is nevertheless a serious debate amongst economists on whether we are extracting less benefit from today's digital disruption than from previous disruptions or industrial revolutions of the 1870s, 1920s or even 1980s’.
5. Diversify current export destination to substantially reduce exports to China. Replace Chinese export destination with exports to India, South Eastern Asia, United Kingdom, Canada, USA and other countries. This will require hard diplomatic work but must be done if we are to get China off our backs.
Despite the new ‘National cabinet’, we still have problems of states with different agendas - eg Victoria and the ‘Belt and Road’ investment. Recently there has been signs of resurgance of numbers of infections and deaths in Victoria. This needs to be dealt with quickly or Victoria will be in deep trouble. Despite attempted hard borders, this will spread.
6. Sort out the issues with water allocations and usage. Discourage production of high-water products such as cotton. Revive the Bradfield Scheme to bring water from the wet North to the dry South of Australia.
7. Create a more dynamic tertiary education system. Restore traditional ‘Technical Colleges’ to train many more competent technicians. Find ways to send the best students at undergraduate levels to do further studies in the USA, UK and the best European universities and even Beijing University for students who have studied Mandarin. Reduce numbers of overseas students to only those with adequate English literacy, or students who are willing to spend a year learning English in Australia before entering an Australian university. (At present overseas students with poor English but paying full fees dumb-down teaching and assessment.)
8. Be tougher on unemployed young Australians to encourage them to replace imported young people to do tiring jobs like fruit picking. Encourage more Australian Aboriginals to join the work force, focusing on areas of comparative advantage – fixing the environment, painting, playing football and other sports, especially athletics.
This may seem paternalistic, but working is a vital part of life and should be required of every Australian.
9. Sort out ways to provide low emission cars, electricity generation and other ways to reduce CO2 and Methane in the atmosphere. Solar, wind and hydro are all good but the first two are limited reliability and the third requires limited places. My suggestion is nuclear electricity as Australia has a lot of uranium and there are highly reliable nuclear reactors, including small reactors suitable for regional towns.
10. Greatly increase spending on Australia’s defences and train young Australians with two or three years of hard work. Learn from Israelis how to survive in a (potentially) hostile part of the world. Build more of our defence kit, as we did during WWII, especially submarines and aeroplanes. It will be painful doing all this but will make Australia far more defendable.
And Fiona Prior watches on with the world as America burns. More here