Former treasurer Joe Hockey warned Australia could face 15 per cent unemployment within the coming five years and has labelled Labor’s capital gains tax changes a “mistake”.
The Tony Abbott-era treasurer said Australia – and many other Western countries – are failing to keep up with major advancements in technology.
“We are sleep-walking into the future,” Mr Hockey told the National Press Club.
“We are – and it’s not just us but Europe and everyone – so far behind what is happening in the US with technology and robotics.
“My expectation is by 2030, 2031, within five years, we could be facing 15 per cent unemployment in Australia and in the Western world.”
A 15 per cent unemployment rate would more than triple the current rate of 4.5 per cent in Australia.
Mr Hockey said developments in artificial intelligence were inevitable and job losses from the emerging technology will disproportionately affect younger generations.
This will spur the need for Australians to “innovate in response” to the technology, Mr Hockey argued.
But, said Mr Hockey, Labor’s plan to scrap the capital gains tax discount and replace it an inflation-adjusted model makes that much harder.
Leading business figures have warned the move will send business founders overseas while Mr Hockey argued it could crush Australia’s ability to keep up with technology trends.
“If you take away the incentive to innovate you are crushing your ability to respond to the future,” the former treasurer said.
His warning comes as many major Western nations, including the United Kingdom, France, Italy, Germany and Japan, now spend more on welfare than they earn in income tax.
Mr Hockey asked how a country could continue this if unemployment reached 15 per cent.
“Now you look at the budget and you say, hang on, what happens if we’ve got 15 per cent unemployment?” he said.
“Where’s the money going to come from to fund existence or our existing programs, let alone new stuff that’s coming?”
He warned that Labor would look for alternate sources of tax revenue and could extend its scope to major assets once deemed safe.
“You’re going to see the tax system move from income into capital and they’re going to start talking about death taxes and taxes on the family home like they have everywhere else,” Mr Hockey said.
“The only way to survive rapid change in the world is domestic innovation. That is the only way.
“You’ve got to give people hope and you can’t give them hope if you’re taking away more from what they achieve.”
He also reflected on his valedictory speech in parliament where he backed limiting negative gearing to new builds.
He said Labor’s decision, which involves scrapping negative gearing on properties purchased after budget night, was the “right policy”.
“I stick by what I said in my valedictory speech,” Mr Hockey said.
Labor’s planned changes to negative gearing do not apply to homes purchased before the budget was delivered.
Investors who build a new home after the budget was handed down can negatively gear their property.
Treasury estimates the negative gearing and CGT reforms will support around 75,000 additional owner-occupiers over the next decade.
It also expects house prices to grow about two per cent less over a couple of years than they otherwise would have.