The International Monetary Fund has advised Australia that economic growth will be lower than predicted by Treasury and the RBA, perhaps 2.5 % in the absence of serious economic reform.. (Timing is all, and the leading policy wonks in Australia probably now agree with the gnomes from Washington.)
Other advice included broader tax reform, especially finding ways to broaden the GST, cutting income and business taxes and introducing a land tax on the unimproved value of people’s land, including the land on which ones house sits. It praised Labor’s curtailment of negative gearing and capital gains on investments. It included a warning about the risks from falling house prices, and Aussie households’ world record gearing of their housing. There was two cheers for infrastructure spending and energy reform , likely to improve productivity and increase growth in the longer term. A thoroughly full shopping basket and one imagines the gnomes of Washington would scream blue murder if such a package was applied to their good selves.
Our own chief gnome, the RBA’s Dr Phil Lowe, when asked how to raise real wages, called for ‘a laser-like focus’ on lifting productivity. Henry agrees, and has been pointing out this basic theorem for several years now. Dr Phil is also reported (Weekend AFR, P6) as saying Australia’s ‘first order’ of priorities should be ‘the pricing and provision of infrastructure, the way we accumulate human capital, the incentives we have for innovation and the tax system’. If such a set of reforms are now introduced wages growth will be ‘OK but not really good in the absence of productivity growth’.
What about us pensioners, Dr Lowe, without wages, paying tax on the land value of our homes, missing franking credit refunds (if Labor is elected) and paying Kelly O’Dwyer’s tax on our ‘excess’ superannuation balances’. (‘Let them eat sausages and dry bread’ the Chief gnome will presumably say.)
Meanwhile Australia’s two main political parties are facing each other with a dirty election in mind. Labor’s ‘Mediscare’ last time is being matched by ‘illegal immigrant arrivals’, and if a few boats of illegals arrive I’d back Shorten to ‘lose the unlosable election’. He will squeal like a wounded pig, of course, but Henry will be pleased to say it was a fair cop.
A reform Henry proposed some time ago is that political parties should be subjected to the same laws as company directors. Outright, proven lying, could be punished by, say, three years in the clink, and six proven lies in one campaign could lead to a life sentence, with file marked ‘never to be released’.
We are so lucky, gentle readers. We are deluged with advice from On High. Problem is, it is too general, too complicated and features too many things to fix. Here is a simpler program. Swap consumption tax for income tax, get rid of double taxation wherever it appears and introduce a program to raise industrial productivity, with programs to be introduced nominated. Explain why such a program is needed and get on with it after the moderate time allowed for shouting and screaming. Bring in the IMF and Dr Phil to endorse it if they will, and, if they do, give them all ACs when they retire.
Fiona Prior enjoys playwright Nakkiah Lui’s latest swipe at Australian political culture in ‘How to Rule the World’. A new twist on an old, Svengalian tale. More here.
Gor blimey, comrades. AFLX (the ball moved to quickly to see), the Sheffield (preparing for the Ashes), WAFL (the shielas are getting better and better), Winx wins again (what a mare she is), its all happening. Soon, however, real AFL will be with us and we can settle down to red blooded contact, and wait for it, Caaaarlton!’s former captain ‘Murph’ says our team is on the rise.
Image of the week - Aussie economy