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The Forum > Article Comments > Structural problems require welfare, tax, regulatory and IR reform > Comments

Structural problems require welfare, tax, regulatory and IR reform : Comments

By Henry Thornton, published 6/6/2012

Further rate cuts are appropriate now, but there is a risk of putting the monetary policy cart before the structural reform horse.

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Yes, we need structural reform.
No, we do not want it in the current climate of media hysteria and political ineptitude.
We have most of our defence budget spent on political police action overseas, we have most of our Law and Order budget spent on a fruitless and counter-productive war and most of our GDP growth is "financial services"...which is just a fancy name for paper shuffling without paper! Computers now run most businesses, yet they are generally run by folks who barely comprehend and are scared of them.
We just had a decade of folks getting excited about the "growth" due to housing inflation and the impacts of credit expansion...and are now surprised when the "growth" due to credit runs out! (and seek to make the poor pay for it)
With factories closing, innovators emigrating and tax benefits for bad housing investors it is not wonder that the economy is going backwards...but we keep assuming that wealth garnering has the same value as wealth creation and treat our greedy pack-heads as heroes.
Lets not talk about excessive welfare for poor unless we completely eliminate welfare for corporations and wealthy individuals. We also need to address the decades of regressive policy leading to family breakdowns (We'll pay you to breed!), a depression epidemic and record company profits being channelled to fewer and fewer people.
Life is pretty good in Australia, but I want my generation to be the last to see us go backwards. We need to reward contributors and punish the parasites...but sadly the media and both "sides" of politics is clearly on the parasites side!
Posted by ozandyh, Wednesday, 6 June 2012 11:33:46 AM
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Very erudite and credible article.
It makes a very pleasant change to read something written by someone who actually understands the issues.
Yes the carbon tax will create an even bigger bureaucracy and simply churn billions. Great for the empire building bureaucrats, who advise govt? Even more so when we convert to an ETS, that then also imposes an additional 140 billions+ in money for nothing brokerage fees, on the global carbon market; and sure to be also passed on to a largely captive energy market!
The structural difficulties referred to, could be easily overcome with real reform, as opposed to fiscal surety merely masquerading as genuine reform, i.e.,the GST.
The ATO is around 20,000 strong and certain to very vigorously oppose and even perhaps interfere with any reform package that might render them and their civilian cohort entirely redundant.
The public service union is a truly formidable opponent that could even topple any govt with the testicular fortitude to buck their often rigid control over policy outcomes; but particularly tax policy?
The structural reform we need would likely be the jettisoning of the current convoluted mind-numbing complexity we call an equitable tax act?
And then replacing all that with a inherently simple stand alone single unavoidable expenditure tax, which could easily incorporate a carbon component, (0.3%) we would all pay; and in-line with each and every carbon footprint, most accurately measured by our expenditure, individual or corporate. A 4.8% impost would allow very large surpluses to be built, which would then allow the Govt to create its own brand new bank and reinvest those same surpluses in our own people and their better ideas, and or, massive infrastructure income earning projects.
The tax rate could be marginally varied region by region, to alone counteract either inflation or stagnation; meaning interest rates could be progressively lowered until they reached historical permanent lows, with all that that would imply for local business,manufacture and export! The fact that compliance cost, which currently rip around 7% from the averaged bottom line, would no longer figure, wouldn't hurt locally based business either.
Posted by Rhrosty, Wednesday, 6 June 2012 11:43:34 AM
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Unfair dismissal legislation could be entirely repealed/ripped up, in exchange for a job start, that was around 80% of averaged male incomes.
For say six to twelve months, plus much larger relocation assistance and retraining/subsidised re-employment packages?
Like say the first six months of probationary employment entirely funded by govt, which would then allow a brand new trainee to be trained up and made somewhat useful, at taxpayer expense!
And wouldn't that be very popular with employers; no longer bound to difficult or drone employees, who would'na work in an iron lung, even if you paid them double?
If no suitable job could be found inside six/twelve months, then perhaps the only remaining income earning/retraining option, could be compulsory military service?
My bet is, if only compulsory military training/service beckoned the able-bodied; there'd likely be no long term unfilled vacancies anywhere.
The destiny of demography informs us, that we have no other choice, but to repeal the nation's mind-numbing complex current tax act in its entirety, and replace all that, with a single, stand alone, broad based and entirely unavoidable expenditure/transfer/turnover/transaction tax.
That then grew with the economy, rather than shrinking with the remaining taxpayer component of the population, who would and could be asked to carry more and more; as govt services become less and less, unless we introduce long overdue viable tax reform and equally massive cost reducing simplification.
[Australia could and should be the most desirable place in the world, to set up and or run an energy dependant high tech manufacturing/processing/reprocessing or Internet reliant service enterprise!]
Which would also allow all compliance costs to also be entirely jettisoned, which alone would add as much as 7% to the Australian based business bottom line!
7% added and 4.8% extracted.
Sounds like a good deal to me; and what's more, paid for in large part by current avoidance schemes and schemers!
Now that's what I call a fair and equitable tax act!
Posted by Rhrosty, Wednesday, 6 June 2012 12:29:52 PM
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Henry it was only a few months ago you were insisting that rates stay put.

Little 12 yr old Marcia knows what's wrong with the world economy.Coached by her parents she is now an internet star.

Why cannot the RBA Henry,create the new money for our banks and stop this debt spiral? As Marcia notes the banks with the click of a computer mouse create our debt money.This money they are creating from nothing represents our productivity.Why is our productivity being expressed as debt?

It is Micky Mouse money for the big banks and increasing debt for us.For us individuals it is called counterfeiting.Bankers have legalised counterfeiting.
Posted by Arjay, Wednesday, 6 June 2012 1:14:05 PM
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Henry, what is missing is a discussion of the Opportunity Cost of population growth.

For example, it is a "no brainer" that it is better to spend $4 billion on universities, research and export manufacture, rather than spend $4 billion on a road upgrade caused by population growth.

It is also a "no brainer" to train our thousands of unemployed 15-25 year olds for the mining jobs, rather than bring in overseas workers. It doesn't matter if mining projects are delayed 2-5 years.
They will still go ahead, but on terms set to benefit all Australians.

It is going to take some time for business types to digest the reality, that endless growth is not possible.

Full employment is possible with stable economic output, if you don't incease population numbers.

No, it is not the end of progress. New products will be developed within a stable population scenario.


Posted by Ralph Bennett, Wednesday, 6 June 2012 11:07:08 PM
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