Tax battle will show if reform is still possible

Look at America and Europe and it's clear Australia has benefited hugely - in a material sense, at any rate - from the painful micro-economic reforms of the 1980s and '90s. Look at our performance in the noughties, however, and it's clear the momentum of reform has dissipated. You see that in the business community's unrelenting white-anting of Kevin Rudd's emissions trading scheme, which ended in a bipartisan rejection of...

Read more >>

Major miners generally selfish

In the Rudd government's battle to make the mining companies pay a more reasonable price for their use of the nation's non-renewable resources, any number of dubious arguments are being thrown around. One is the furious debate over how much company tax the miners pay. Another is the claim it was the mining industry that saved Australia from recession. The first is a red herring; the second is the opposite of the truth. As...

Read more >>

THE RUDD GOVERNMENT’S MINI TAX PACKAGE

Economics and Business Educators annual conference, Bankstown, Friday, May 28, 2010 This talk has been billed as an update on fiscal and monetary policies, but now I’ve seen the budget I want to focus in on just one development, the most interesting aspect of the budget, the Rudd government’s tax reform package - its mini reform package. This year the budget was announced in stages and the government’s response to the report...

Read more >>

Let's mine bright ideas and stop being shrinking violets

When it comes to matters economic, the cultural cringe is alive and well. Australians lack confidence in ourselves and our own inventiveness. We see our country's rightful place as a follower of international trends, never a leader of them. We seek the approval of foreigners and fear their disapprobation. One of the favourite Australian laments is the story about some wonderful new invention that local bankers or businessmen...

Read more >>

Shonky advisers have led Rudd badly astray

Kevin Rudd has his back to the wall. He's no fighter, but he has little option but to stand and fight for his bitterly resisted resource super profits tax. With luck the experience will help turn him into the more substantial figure we need to lead us. All Rudd's instincts - and those of the Hollow Men on whose counsel he relies - must be to ditch or greatly water down a tax he now discovers has proved hugely unpopular with...

Read more >>

Henry's bike has three speeds

Remember the two-speed economy? It's not back. No, with the return of the resources boom we're going back to the three-speed economy. That's according to an enlightening speech this week from the secretary to the Treasury, Dr Ken Henry. Assuming the continuing global financial crisis doesn't reassert itself to the point of knocking China...

Read more >>

Prosperity cannot be paid forever by maxing out our green credit

The most thought-provoking comment I've seen on the budget came from Senator Christine Milne of the Greens. ''Every Australian knows,'' she said, ''that if you have two credit cards, it is very bad management to pay off your debt on one of them by racking it up on the other.'' The budget ''pulled down the national economic debt, but it continued the process of racking up our ecological debt''. Sadly, it's true. The budget formally...

Read more >>

Rudd's budget trick: pie in the sky when you die

The annual debate about the budget gets ever more unreal. This year it reached the height of absurdity. Budgets used to be about what the government plans to do in the coming financial year. Now they're about what supposedly will happen any time over the next four years. How unreal can you get? Who on earth knows what will happen over the next four years? No one. Certainly not Treasury (nor any of the smarties who think they...

Read more >>

An early surplus is not just due to mining boom

The most common criticism of this week's budget is that the projected return to surplus in three years is no thanks to anything the Rudd government has done, but simply because of the returning resources boom. There's much truth to this observation, but it also reveals an ignorance of the way budgets work and a willingness by some to make logically inconsistent criticisms of the government. These people would have you believe...

Read more >>

The budget conjurer waves his magic cheque book again

The Prime Minister goes flat out all year, every year promising to spend money. Then the budget reckoning comes around. Will wonders never cease? Economic rectitude with only a modicum of pain. With one leap Labor gets the budget back on track. It should be back in surplus in 2012-13, three years earlier than expected, and all for just a bit of grief for people we have little sympathy for: the drug companies, tax accountants...

Read more >>

Henry's plan is for taxes based on hard evidence

What happens when you ask perhaps the foremost tax expert in the country to conduct a "root and branch" review of the tax system? He recommends things no prominent businessman or retired judge would dream of proposing. Few if any taxes are popular, but in all the submissions to the Henry review there was little agreement on which were the really bad ones - or on why they were so bad. A lot of the arguments we have about particular...

Read more >>

How much stick to give jobless

Just one of the major elements of the Henry tax review that Kevin Rudd brushed aside in his rush for a quick political fix was reform of the "transfer system". Huh? In the jargon of economics, a transfer is a cash payment from the government to an individual, which isn't made in return for the receipt of goods and services. So transfers include pensions, the dole and family benefits. You may think social security payments...

Read more >>

Does the economy depend on population growth?

Talk to University of Sydney Political Economy Society May 4, 2010 There are a hundred political economy points I could and would like to make about immigration and population, but time doesn’t permit so I’m going to focus the more strictly economic question: does the economy depend on population growth? I’ll start by stating upfront where I’m coming from on population: I believe we should do what we can to limit the growth...

Read more >>