Captain Lowe demands BROAD-BASED economic reform

With the emphasis on broad-based, via The Australian:

“What those reports say is … we should be looking again at the way we tax income generation, consumption and land in this country,” Dr Lowe said.

“They say we should be looking at how we build and price infrastructure. They say we should be looking at how we train our students and our workforce so they’ve got the skills for the modern economy.

“They say we should be looking here at how various regulations promote, or perhaps hinder, innovation and they say we should be looking at the flexibility and complexity of our industrial relations system.”

This is NOT what ScoMo&Co hinted they would do. Broad-based reform makes sense because it lifts productivity, income and competitiveness. It is structural reform that will alter the growth drivers in the economy, as well as so equitably. 

Depressionberg is making dangerous noises today:

Treasurer Josh Frydenberg has put lower company taxes back on the agenda by saying Australia’s rate was still to high.

“Our company tax is still very high by international standards … We will look at tax reform because we’re always looking for opportunities to cut taxes,” he told Sky News.

Mr Frydenberg was responding to Reserve Bank of Australia Governor Philip Lowe who says a pro-growth agenda is needed to lift the economy from the coronavirus-induced recession.

If ScoMo picks and chooses from this list, cuts corporate taxes and launches Work Choices 2.0 then it will not have the same impact at all. If we:

  • reform property taxes;
  • reform superannuation giveaways;
  • lift the GST and cut income tax (hopefully more at the low end);
  • cut corporate taxes;
  • build infrastructure, and
  • keep immigration low…

then we can expect a resurgence in the tradeable economy and rising incomes that are shared between labour and capital.

If we instead just cut corporate taxes, launch Work Choices 2.0 and allow a resumption in mass immigration then we will get massive inequality and a yawning demand deficit as little changes in the growth drivers and all the gains accrue to very few interests.

This is a major crossroads for the nation. The RBA should not allow its rhetoric to be hijacked by the government’s trickle-down nutters.

David Llewellyn-Smith
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Comments

  1. Who gave this bureaucrat a mandate to do anything like this, to shape our economic policies, etc.
    His powers are clearly stated in law and he shoukd stick to them and let democratically elected representatives to do their job.
    RBA sis not even allowed to advise the government.

    • migtronixMEMBER

      Yeah only the duopoly should be able to use money printing to buy influence and cheat.

    • IMO unless you want RBA to stick to their mandate by perpetually cutting interest rates and QE to infinite, then you should be welcoming Lowe putting pressure on the government to take some responsibility.

    • Would like to echo that sentiment as it applies to our various Police Forces. Their duty is to carry out government policy, not to seek input to government policy. It makes me livid when I see members of the Police advocating for legal changes, bemoaning the behavior of citizens and announcing “crack-downs”

  2. GunnamattaMEMBER

    “What those reports say is … we should be looking again at the way we tax income generation, consumption and land in this country,” Dr Lowe said.

    ……….so giving taxation concessions to the wealthy, old, speculative and unproductive isnt the way to go?

    “They say we should be looking at how we build and price infrastructure. They say we should be looking at how we train our students and our workforce so they’ve got the skills for the modern economy.

    ………so uber expensive urban land, uber expensive fuel and energy pricing isnt the way to go? Is he questioning whether having the worlds most expensive tertiary courses is in Australia’s interest?

    “They say we should be looking here at how various regulations promote, or perhaps hinder, innovation and they say we should be looking at the flexibility and complexity of our industrial relations system.”

    …..Things like Negative Gearing, or novated leasing? Does that mean we should look at Franking Credits reform as well? What innovation does the private medical system support again?

    ……on

    the flexibility and complexity of our industrial relations system.

    We really are being sold a pup over and over and over again – try the Brits, try the Americans or Candians, anything in Europe – Australia has far lower levels of employee protest/disruption than anywhere, Australian employers go through far fewer hoops to get someone working for them, Australian workplace conditions are far less likely to experience inspection or to be visited by a Union. Australia has far higher levels of casualisation and temporary employment. Australian employment laws are about as simple as they come.

    Changes to Australian IR laws are not going to make the slightest difference to the profitability of Australian firms or the competitiveness of Australian labour. They are far less of a factor than monetary policy which has been central to the AUD being higher than it would otherwise for quite some time.

    Bringing up the old furphy about industrial relations laws – notice how they refer to ‘Industrial relations’ when they want to position it as something which needs ‘reform’ and ’employee relations’ or ‘workplace relations’ when they have it under control? – is mainly a dog whistle for their rusted on voters.

    On Frydenburg

    Treasurer Josh Frydenberg has put lower company taxes back on the agenda by saying Australia’s rate was still to high.

    “Our company tax is still very high by international standards … We will look at tax reform because we’re always looking for opportunities to cut taxes,” he told Sky News.

    The simple fact of the matter is that corporate tax cuts are essentially irrelevant to the fortunes of Australian corporates. With the exception of miners/resources (who are digging Australia’s national endowment out of the ground and selling it offshore) and some parts of the medical research world (CSL and smaller players for starters) for the most part Australian companies are living off the domestic bubble – start with Woolworths and Coles, but all of your banks, Telecoms, Insurers etc – and operate in a level playing field, where they have no or little competition apart from other companies facing exactly the same corporate tax rates. They dont compete with other sovereigns on tax rates, they compete within a jurisdiction with the rules of that jurisdiction applying to all.

    • We should not bail-out companies based in tax-havens.

      Denmark and Poland are refusing to bail out companies registered in offshore tax havens

      “Companies that seek to dodge their obligations to broader society by cutting their tax bills shouldn’t expect to get bailed out when things go wrong,” Robert Palmer, the executive director of Tax Justice UK, told Business Insider.

      https://www.businessinsider.com.au/coronavirus-companies-tax-havens-banned-denmark-poland-bailout-2020-4?utm_source=reddit.com&r=US&IR=T

      • GunnamattaMEMBER

        completely agree. No company domiciled in any jurisdiction other than Australia should be receiving funds from the Australian budget or taxation concessions reducing their appropriate taxation payments to the Australian budget.

        • +1
          and furthermore any government support to companies should receive equity, the more companies minimised tax the more equity we should demand.

    • happy valleyMEMBER

      +1 We were f.cked before and we will be f.cked even worse with SFM’s and Joshie’s policies of helping mates.

      The corporate tax cuts proposed in 2018 under Turnbull/SFM made no sense then – SMEs would not have used them to employ more people. If an SME even exists after ScoVID-19 has done its work, they’re not going to be taking on extra people, let alone employing all that they previously did.

      As with 2018, corporate tax cuts were about the CEOs etc at the big end of town and making their life/bonuses easier and somewhat ridiculously, reducing the tax that foreign shareholders paid.

  3. “Those reports” …. what we need to see is what questions the reports were to answer. And the boundaries that they were given (whispered in a back alley) …. eg do not fvck with real estate.

  4. Reminds me of Trainspotting. These cocks would be going through a rougher withdrawal than Renton right now. They have no chance of getting clean. Even Renton went to the big city and got involved in real estate after getting off heroin.

  5. Blueprint for meaningful economic reform:
    – Shut down the RBA
    – End Govt support for the SIBs (Big 4)
    – Reduce Govt to its core role in the country i.e. an Admin branch
    – Sever the link between tertiary education and PR
    – Take a chainsaw to all the useless and failing regulation that currently wrecks any prospect of small and medium sized businesses being able to compete with entrenched, Govt-coddled ‘Big Business’
    – Discard every property-targeted incentive that attracts capital away from productive endeavour to rentier activity.

    That’ll do …. for a start.

  6. Why would you support raising GST at this time?
    Surely we want to lower taxes & increase money flow in economy, higher GST would do the opposite.

  7. if the BS JobKeeper and other stimulus and the politics (so Im told by treasury) is anything to go by broad based will not be on the agenda