Enjoy five key takeaways from Richard Denniss’ address to the National Press Club, 31 January 2024.
1/ Tax is good
“Tax is an investment in our society, and the highest taxed countries in the world also happen to be the richest, most productive, and happiest countries in the world.”
Australia is a low-tax country. If we were to collect the average amount of tax collected by OECD countries, then this year, we would have to collect more than an extra $100 billion every year.
Instead of collecting an extra 100 billion dollars per year and spending it on the services and infrastructure we so desperately need, we are about to cut tax revenue by around $20 billion per year. No wonder our schools, hospitals, aged care, disability care and public transport lag so far behind the services provided in northern Europe.
2 / Redesigning the Stage 3 tax cuts is the right thing to do
“Anthony Albanese’s decision to recast Scott Morrison’s 2018 tax cuts to suit the economy of 2024 is the biggest and most honest piece of tax reform in modern times.”
In the middle of a cost of living crisis, he will legislate to shift around $90 billion from the top 10 per cent of Australians to low and middle-income earners.
If he had stuck with the plan to give $9000 to those earning over $200,000 and literally nothing to those earning less than $45,000 it would have ripped the fabric of our democracy at a time when democracy around the world is already fraying.
3 / We need a better standard of debate
“We can’t have responsible governments if they are unable to adapt to changing circumstances because they ‘ruled out’ doing anything unexpected.”
Polling by the Australia Institute has repeatedly shown that a strong majority of voters would prefer governments to do what is right for the economy than to keep a promise. However, the issue of trust remains an extremely important one.
The best way to avoid breaking promises is to avoid making them. Many Ministers would much prefer to set ambitious targets for other governments to deliver on in the future.
Many journalists feed into this problem by breathlessly reporting a refusal to ‘rule out’ a tax increase as a ‘secret plan’ for a tax increase. If Australia is to have real tax reform, then we will need to have a real debate about it. And we can’t have a real debate when we can’t even agree on the simple truth that Australia is a low-tax country.
4/ Four steps to fix our tax system
Step 1 – Do no harm.
Economics 101 says we should tax things we want less of and subsidise things we want more of. But here in Australia, we are spending over $11 billion per year on fossil fuel subsidies. If we want to transition away from coal and gas, we need to stop subsidising them.
Step 2 – Do the simple things first.
Australia is the world’s third largest fossil fuel exporter, behind only Saudi Arabia and Russia, but even though we export more gas than Qatar, Qatar collects 20 times more tax on its gas than we do. The easiest way to reduce Australia’s reliance on personal income tax would be to increase the Petroleum Resource Rent Tax.
Step 3 – Be fair.
Inequality is increasing in Australia and the market isn’t going to fix it. The Government’s changes to stage 3 are a good start, but we need to go a lot further. A simple, economically efficient, and popular solution would be to collect more tax from the PRRT. If we collect more tax and lower the price of energy, medicines, childcare and going to the doctor we can reduce inequality, greenhouse gas emissions and the CPI all at the same time.
Step 4 – Think big.
Australia is going to need a bigger, better public sector moving forward, not a smaller one. We have been told if we cut taxes and privatise services, things will get better, but in reality, it’s inequality that has grown, not productivity or service quality. The clearest example of the damage we have done to our society and our economy through decades of tax and spending cuts is that here we are today — the week that school goes back — with a teacher shortage in the middle of a skills crisis.
5/ Choices Matter
“In Australia, we subsidise the fossil fuel industry and we charge our kids a fortune to go to uni. Choices matter.”
“The Australian government collects more money from HECS than it does from the petroleum resource rent tax. Thank you, children. You are the backbone of our economy, not the gas industry.”
Australia is one of the richest countries in the world, and while we can’t afford to do everything we want, we can afford to do anything we want.
Making the stage 3 tax cuts fairer is good for our society and our economy, but if we are serious about improving the lives of all Australians, serious about tackling climate change, and serious about defending this vast continent it is time to admit that we can’t have world-class services if we have a third world tax system.
Scrapping fossil fuel subsidies, taxing the fossil fuel industry fairly, taxing the tech platforms and closing the loopholes that allow many of our wealthiest individuals and companies pay no tax will strengthen our society and our economy.
Investing in free childcare would drive far more people into the workforce than any tax cut. Investing in convenient public transport will drive down the cost of living. Investing in our essential services will improve both our quality of life and our productivity.
None of this is complicated, but until we can have an honest debate about the high cost of being a low tax nation, we won’t be able to fix anything.
From Richard Denniss’ address to the National Press Club, 31 January 2024.
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On Wednesday, 31 January 2024, Richard Denniss and Allegra Spender MP addressed the National Press Club for a debate on the Stage 3 tax reforms. **Check against delivery** [See below for transcripts] Tax is good. Tax is an investment in our society and the highest taxed countries in the world also happen to be the