The Turnbull government has the best opportunity in many years for a sensible reform of the tax system to ensure improved outcomes for most people and put Australia on a sustainable economic track.
As Tim Colebatch, former economics editor of the Age, said at a forum of Social Policy Connections on 21 October, key community sectors have been engaging in worthwhile conversations about what needs to be done to raise enough tax revenue to improve living conditions and plan for an increasing population. (See YouTube clips of Tim Colebatch’s address at Tim Colebatch on YouTube 1, and Tim Colebatch on YouTube 2.)
Colebatch suggested key areas for tax reform, including the GST. He said that, although it was an “inevitably regressive” tax, it was the total package that mattered, with a progressive compensation scheme to ensure and low- and middle-income groups are not penalised. He noted that it was the Howard government which exempted food from the GST on political and equity grounds.
He urged that it was critical to clean up the “rorts” in the existing tax system, particularly in the unfair superannuation schemes, that meant working families were subsidising the living standards of people living off untaxed superannuation.
Colebatch thought negative gearing did more damage than any other form of tax minimisation. It had made housing in Australia “ridiculously expensive”, and forced many young people and families to become renters, rather than allowing them access to home ownership. He recognised the political difficulties of reforming negative gearing, with 1.5 million people being negatively geared landlords.
Capital gains tax concessions were extremely generous at 50 per cent, and Colebatch thought that perhaps reducing them to 25 per cent might be politically possible. And he saw no reason for trusts to be taxed more favourably than companies.
Tony French concurred with Colebatch about the need and opportunity for tax reform. As a tax professional, Tony sketched in our November and September editions of SPC News the background to the tax debate and what might be done.
The UN Climate Change Conference COP21 in Paris
Climate change remains a contested area, as world leaders prepare for the Paris Climate change conference in late November. Nicholas Rowley from the University of Sydney suggests how to clean up Australia’s climate policy “mess”, while Steve Hatfield-Dodds argues that Australia can have economic growth, as long as it is sustainable, with steady material throughput. However, collective choices will need to reshape changes in consumption and production. Bruce Duncan notes how Pope Francis is also highlighting the need to address global warming as an urgent moral crisis. In another article, he reflects on what Tony Abbott’s Margaret Thatcher Lecture in London reveals about our former prime minister.