Business people shouldn’t fall for claims that the Liberals are the party of reform and low taxes. History and the government’s own economic forecasts confirm this is wrong.
In a major speech last Thursday, Anthony Albanese set out Labor’s approach to economic reform. Not that you’d know it, for it was overshadowed by a kerfuffle over his lack of recall of the six points of Labor’s policy on the National Disability Insurance Scheme released a fortnight earlier.
To its credit, the Financial Review at least reported the speech, even if disparagingly for not setting out a detailed, comprehensive economic reform program. Other media outlets ignored such boring matters as the country’s economic future, engaging in a shriek-a-thon of Walkley-award hoping outrage.
No such questions of detail are even directed to Mr Morrison. If they were, he’d simply say he didn’t accept the premise of the question and move onto the day’s photo opportunity.
Anyway, asking the Morrison government about economic reform would be pointless. It doesn’t see any need for it, claiming its stewardship has put the economy in rare health.
This was evident again on Sunday night’s debate. While Albanese spoke repeatedly about policies to lift productivity growth, Morrison didn’t consider there was any reason to undertake economic reform.
But the Morrison government’s own budget forecasts and those of the Reserve Bank tell a different story.
Productivity growth had ground to a halt even before the pandemic hit the economy.
Nobody should be surprised, therefore, that after the sugar saved by households from the COVID-19 stimulus payments runs out, the economy will hit a wall.
How do we know?
Budget Paper No. 1 forecasts GDP growth in 2023 at a paltry 2 per cent – around half the growth rate of the rest of the world.
The Reserve Bank agrees, its Statement on Monetary Policy released last Friday forecasting 2 per cent GDP growth next year and no improvement on that in the year ending June 2024.
Yet all we get from the Coalition is backslapping that it has put the economy on a strong growth path.
Albanese at least acknowledged the need for economic reform in his speech.
And he pointed to productivity-raising policies that Labor has announced.
Labor’s move towards a universal childcare subsidy has been acknowledged by KPMG and the Grattan Institute as a reform that will raise both female workforce participation and national productivity.
Labor’s policy to provide fee-free TAFE courses in identified areas of skill shortages is also a productivity measure.
Reforms to industrial relations laws backing in the work already underway between the ACTU and the Council of Small Business Organisations of Australia will make workplace relations simpler for small businesses.
A commitment to convene an employment summit to bring employers and unions together to ensure enterprise bargaining works effectively has productivity-raising potential.
And an energy transition based on Labor’s announced policy, supported by every major business organisation in the country, would put in place productivity-raising new investment and open up new export opportunities.
A myth has developed that the Hawke and Keating governments took to elections highly detailed economic reform programs.
They did not. Instead, they set out the case for reform and indicated the directions in which they proposed to head, such as creating the open, competitive economy through tariff reductions and cooperation with trade unions and business organisations to modernise the workplace relations system.
If Albanese were even to mention the words ‘tax reform’ a hysterical media would demand that he rule out all changes to tax rates and bases.
The Coalition has not entertained any tax reform.
Worse, when the NSW government sought the Morrison government’s assistance in facilitating the replacement of the highly inefficient stamp duty on property transfers with land tax the answer was a flat no.
It was Paul Keating who got rid of the Liberals’ punitive top personal tax rate of 60 per cent.
And it was Paul Keating who cut the company tax rate from 36 per cent to 33 per cent and put a halt to the Liberals’ double taxation of dividends.
Mr Morrison’s only tax commitment is to increase it as a percentage of GDP to the second-highest level in the last half century – behind only the Howard government, as confirmed by the government’s own Budget Paper No. 1.
Yet Morrison and his ministers continue their false claim that Labor taxes more heavily than the Coalition.
Many people in business loyally support the Liberal Party. It’s a bit like me loyally barracking for my favourite footy team no matter how badly they perform. Go the Bulldogs!
But people in business shouldn’t fall for the claims that the Liberal Party is the party of economic reform and low taxes. History and the government’s own economic forecasts confirm this is wrong.
Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, a visiting fellow at the ANU and adjunct professor at Victoria University’s College of Business.