The AFR has shown its poorly concealed hand. Recently I noted that the editorial loves to preach good policy while lobbying for the opposite:
The HILDA data instead confirms that Australian prosperity will only be rebooted through a revival in productivity growth. That in turn, requires a new pro-growth productivity agenda from Scott Morrison and Josh Frydenberg, even if the Prime Minister figures that the so-called quiet Australians simply want an end to policy activism. Among other policy failures, the mess of energy and climate change policy now threatens to drive energy-intensive industries offshore while undermining the reliability of electricity supply. The Coalition government has relied on a more recent mini-revival in commodity prices and Australia’s lowest ever interest rates to hold up the economy and limp back into budget surplus.
Quite right. So, how should we go about it? The main issue is that capital productivity is very poor:
In policy terms it is easy:
- remove taxes that promote capital misallocation such as negative gearing and franking credits;
- revitalise competition policy by breaking up oligopolies;
- boost R&D policy;
- install full bore gas reservation to crash energy prices;
- slash immigration to repair education standards, as well as drop land prices;
- reform federal state, relations to reduce horizontal tax mismatches;
- pursue a weak AUD policy by all means possible.
Voila! A lean and mean tradable machine with higher productivity, profits and income growth as tradable sectors of the economy boom.
The problem is that this agenda is very difficult in political terms because the banks, retailers, media and other realty parasites that the AFR defends every single day will lose out to higher productivity sectors.
Which is why the AFR constantly calls for reform only to destroy it the moment that it appears.
Therefore, the first step in restoring the productivity that the AFR purports to crave is that it shutter itself.
Today we get the not very well hidden agenda:
…even with the price of capital slashed so low, companies still aren’t investing in much new capacity. The product needs to be changed — reformed on the supply side to remove obstacles and free up labour and capital inputs to the economy.
Much of the capital that will help Australian workers deal with disruptive new challenges will come from overseas. Yet Australia’s corporate tax rates remain among the world’s least competitive, after the Coalition gave up on arguing for company tax cuts with a Labor opposition that went on to lose the election anyway. Why isn’t the Coalition putting it back on the agenda?
And there you have it, according to the AFR, the corporate tax cut will cure high energy prices, low wages, low productivity, low investment, lowflation, cancer and deliver world peace.
Australia desperately needs a need a new business paper with an intellect that extends beyond base trickle down voodoo economics.