The first two days of the Treasurer’s economic reform roundtable went well, at least if you ask Jimbo. Lots of back-slapping consensus, even though much of the agreement was completely inane, such as supporting better regulation. Does anyone support worse regulation?
To be sure, the Prime Minister couldn’t avoid the temptation on the first day of having a dig at the Governor of the Reserve Bank, Michele Bullock – also referred to as Sandra.
You must understand that Anthony Albanese regards concepts such as the non-accelerating inflation rate of unemployment – the NAIRU – as essentially a conservative plot devised by neo-classical economists.
He was taught this disdain in his undergraduate studies in political economy at Sydney University all those years ago. It’s just a pity he hasn’t forgotten the drivel he was taught.
Mind you, non-economists have no trouble understanding the concept of the NAIRU. Running the economy too close to full capacity unleashes inflationary pressures. D’oh, as Homer would say.
However, Albo made a pointed reference to the fact that inflation in Australia had fallen, albeit slowly, without a significant increase in the rate of unemployment. ‘That’s not my government’s way,’ he thundered, thus undermining the independence of the Reserve Bank while taking credit for something the government didn’t actually achieve.
Unemployment remained low, albeit rising somewhat, principally because the taxpayer has been funding four-fifths of the new jobs. Were it not for this, we would have experienced increases in the rate of joblessness like Canada and New Zealand.
That our budgetary position is quickly deteriorating and our national debt is rising rapidly are also ignored by our Dear Leader. To his mind, concern for these issues is another example of a conservative plot devised by neo-classical economists. When Albo was at the varsity, he was taught that the government could simply print more money, if needed. Because that has worked so well in places like Argentina (in the past) and Venezuela.
It was not until the third day of Jimbo’s shindig that the hand-holding chumminess fell apart somewhat. And let’s be clear here – day three was always the point of the in camera get-together.
The aim was to soften everyone up for higher taxes, particularly on older people and anyone with wealth. Productivity was simply a smokescreen. Jimbo and Albo don’t give a fig about productivity, particularly if doing something about it would hurt their comrades and supporters.
The loony ideas came thick and fast. Aruna Sathanapally, who currently heads up the Grattan Institute, had a basketful of ideas of raising more taxes. Let’s not forget here this is the Institute’s signature dish, ‘Policy au Grattan’ – raise more tax revenue and don’t worry about who it hurts or any economic damage.
All the faves were trotted out: negative gearing, capital gains discount, tax on trusts, superannuation taxes, inheritance tax, land tax, yada yada yada. ‘Hit the rich, hit oldies’ was the theme of the day.
Of course, Jimbo listened carefully. For him, it was like watching a game of footy where his team was winning by a big margin. There would have been a few in the room who muttered some objections – probably not the weak leaders of the business groups who were there just for show – but this disapproval was easily batted away by the majority.
Of course, it was a complete stitch-up; making the case for higher taxes was the real purpose of the three-day event. Gosh, you couldn’t expect the government to rein in spending. Following predetermined fiscal rules is so yesterday. For Labor, government spending is like sperm: every drop is sacred. Just ask the Monty Python crew.
Having said this, the quote of the day went to Sally McManus, secretary of the ACTU. I had always wondered whether she is as thick as a plank, notwithstanding her political guile. Confirmation followed on the final day. She declared that lowering the burden of tax doesn’t raise living standards. Que? So, when people have more money at their disposal, it doesn’t make them feel better off.
Jimbo achieved exactly what he wanted from this magnet for the media: a set of criteria to raise taxes while ignoring virtually all the key factors that drive productivity growth. The one exception is the decision to pause the National Construction Code (NCC), which had been a Coalition policy taken to the last election. At that time, former minister Ed Husic, described the policy as ‘stupid’, but he doesn’t count anymore having been demoted from the ministry. He now just shouts at the moon, criticises Israel and no one takes any notice.
But the latest version of the NCC had gotten completely out of hand, with the green prophets taking control. Every new home would be required to have EV charging capability and double-glazing would be mandatory throughout the country – because of climate change.
The builders’ associations did the sums and estimated that the cost of building a new stand-alone house would rise by between $30,000 and $50,000, which included the compliance costs of dealing with the more than 2000-page building code.
(Having awarded my gold medal for the most ridiculous comment of the jamboree to Sal, Cassandra Goldie of the Australian Council of Social Services – she seems to have been in that job since I was teenager – deserves a special mention. She argued against the pause to the NCC because, in her view, the green tape will lower energy bills. But hang on, doesn’t she represent the most disadvantaged members of the community who will never be able to buy an environmentally sensitive dwelling; nay, any dwelling?)
Let me get back to the pre-cooked tax guidelines that Jimbo released minutes after the bash wound up. They are:
– Achieving a fair go for working people including in terms of intergenerational equity;
– Finding an affordable, responsible way to encourage business investment;
– Making the tax system simpler, more sustainable to fund services, particularly with an ageing population.
The translation of these dot points is as follows: we don’t want to tax income and consumption any more than we currently do, so a Labor government is going after savings/wealth and targeting older people and the wealthy. Expect to hear a lot more about ‘intergenerational equity’ as the guiding principle for stealing the assets of people who were encouraged to accumulate them according to the rules of the day. We will be told that it’s only fair. There won’t be any grandfathering of the changes to the tax rules, unlike when treasurer, Paul Keating, introduced the capital gains tax.
Grandfathering might be a fine principle to minimise sovereign risk but, hey, you don’t raise any serious revenue for years if you do that. That’s not what Jimbo has in mind. He wants more tax revenue, and he wants it now. That’s what the real message of the roundtable was.