ScoMo is aiming for a reform consensus, at The Australian:
Scott Morrison will push business and unions to join forces to drive a wave of reform that has not been seen for 30 years, when Australia was last in recession before the economy rebounded to an unprecedented era of growth.
But at the AFR the consensus looks a lot more narrow:
Cuts to an “uncompetitively high” 30 per cent company tax rate are under serious consideration as part of a broader economic upheaval that the government believes will need to be on the same scale as the Hawke-Keating reforms of three decades ago.
With Treasury, the Department of Prime Minister and Cabinet and the coronavirus committee led by businessman Nev Power all working on policy options for the October budget, the government is operating on the assumption the economy is in a similar position to that of 30 years ago when it underwent a badly needed overhaul under Labor.
…Nothing is being ruled out in terms of tax reform, deregulation and industrial relations changes during what the government is calling a “harvesting phase”, other than there should be no increase in the tax burden or the introduction of new taxes, such as a coronavirus levy, that would sap growth.
That seems to rule out anything of use. A corporate tax cut by itself would be disastrous. Adding nothing but massive inequity to lower growth.
A wayfaring Malcolm Turnbull outlines what need, probably ensuring that we won’t get it, also at The Australian:
Malcolm Turnbull has urged Scott Morrison to consider clamping down on property and superannuation tax concessions as part of wide-ranging economic reform to aid the recovery of the coronavirus pandemic.
The former prime minister said “extraordinary” tax reform measures should be pursued when he was asked whether the government should revisit tackling concessions in negative gearing, superannuation and dividend imputation.
Turnbull joins the conga-line of political failures proposing the tough reforms we need only after leaving office.
That aside, this is what is required for broad-based reform that shifts the structure of the economy to new and better growth drivers, from household debt to productivity and tradeables, as input costs from land to tax fall along with the Australian dollar. In that context, cutting corporate taxes, along with income taxes for a higher GST, makes sense.
If it is done right then it will reboot Australian income growth and be evenly shared in profits and wages.
If it is done wrong then it will only shift a greater share of stalled income towards capital with the resulting demand deficit structurally lowering growth.
This is an epochal crossroads for the nation. We either go the way of the Banana Republic, entrenching all the policy mistakes of 25 years. Or reverse back to the way the inclusive, meritocratic and dynamic nation.
And, just quietly, it’s possible that neither of these is right and the truth lies elsewhere. I’m beginning to wonder if Wuhan flu is simply incurable and what we really need to be preparing for is a government-supported fortress economy complete with universal basic incomes…
Over to you ScoMo.
