Another armchair economist with a lot to say, but no real solutions to any real problems. You need to get ahead of the game mate. You are supposed to be an expert.

David

Time tested economic theory (Thatcherism Reaganism) putting more and more of our finite wealth into fewer and fewer hands, created the great depression and the GFC!

Tax cuts, money shifted from the poorest to the wealthiest, are a recipe for crippling the economy! If all you achieve with this ideological imperative/dogma, is to wind down the discretionary spend dependant domestic economy that absolutely relies on it for its very survival!

We need to value add everything we export or just not export it! Iron ore should only leave these shores as finished steel or cars, trucks, firearms etc etc. Grain as milled flour, bread, biscuits, milk as butter, cheese, powdered milk and baby formula, and sugar as ethanol and related products!

You get the picture and in all cases absolutely dependant on the supply of not for profit publicly supplied ultra cheap energy, such as would be available if we allowed ourselves to get into the cheaper than coal thorium based energy market!

All that prevents that is a nonsense ideological imperative that exclusively serves private/foreign interests!

Did you know for example it may be possible for you to power your car, without refueling for 100 years, with just 8 grams of thorium? And the very reason for the phenomenal resistance by the fossil fuel sector!?

Look, we own around 40% of the world's supply of this energy resource, abandoned in the fifties, given there was no weapons spin off! We have a super fund now around two trillion and just need a different mind set and bold policies to make it available as investment capital working exclusively for us, along with a further two trillion marking time in foreign company coffers!

Every western style economy is supported by energy and capital! and we need more of both, ( not more of the same simplistic nonsense, merely masquerading as economics) to get up off the floor and back into the economic contest and the championship rounds!

Doing what you've always done while expecting a different result is time tested madness!
Alan B.

Addendum: Every western style economy is supported by just two economic pillars, energy and capital, and every domestic economy is absolutely reliant on the discretionary spend! None of which is any way assisted by the sheriff of nottingham's economic theory; take from the poorest and most vunerable to give it to the already obscenely wealthy. Boiled down into the simplest terms, we get rich(er) as a nation when we sell more to the world than we buy from it! Thus endith the economic lesson for today.

We invented the direct reduction (arc furnace) one step steelmaking process, and given maximised automation, the cheapest steel in the world with the smallest carbon footprint! [And it could be argued, it wasn't Chip Goodyear's property to sell or give away?] But only if the energy input is also the cheapest! As would be the case of it was supplied by a very local cheaper than coal thorium reactor!

Think, Aluminium is described as congealed electricity and every manufactured or processed/transported product is reliant on an energy quotient for its existence! Ditto all irrigated primary production!

And I'm sure everyone understand electrified rail's economic implications in every phase of manufacture or processing or just getting finished production to market, domestic or export!

We need bold leadership and nuclear power! Just not any nuclear power but cheaper than coal thorium power!

And if we really do need at least a decade to get up to speed on nuclear power!? We've already wasted far too much valuable time prevaricating!

What's your pleasure, decisive action or yet another interminable talk fest?

Choose wisely, one alone achieves an essential outcome, the other just kicks our suspended economic prosperity into the never never!
Alan B.

"Time tested" economic principles should mean those that have passed the test of time, but Tony Makin seems to have included those that have failed. I can't avoid the conclusion that he is incompetent. But incompetence is not unusual in the economics profession. I wouldn't be surprised if economists had recommended the fixed exchange rates that were the real first step to the economic demise of Argentina and Zimbabwe.

He either assumes, or concludes from faulty assumptions, that fairness would come at the expense of economic growth. But the reality is that fairness would enhance economic growth, especially in the current economic conditions.

Company tax cuts are an extremely expensive and inefficient way of boosting Australia’s international competitiveness and improving long-term growth. It would be much cheaper and more effective to create the conditions where it's easier to make a profit in the first place: a highly skilled workforce, permanently low interest rates, good infrastructure and a high domestic demand.

The GST cannot be raised to alleviate Australia’s serious fiscal problem because Australia's serious fiscal problem is that the government's deficit is far too SMALL! And as for raising the GST, it would indeed be unfair on low-income households, many of which pay no net income tax and are young. Being richer in the future doesn't ignore the fact that they would immediately become poorer – as indeed would retirees reliant on their savings. Seriously, the best solution's to abolish the GST: it would make our retailers more competitive with private imports, it would slash red tape for small businesses, and it would lower the cost of living. In the long term a broad based land value tax would be the best replacement for the GST. In the short to medium term, other taxes would have to rise. That shouldn't be a problem, as other taxes have nowhere near the same negative effects. And it shouldn't be forgotten that a higher short term deficit would be the economically responsible course of action, as it would solve the problem of depressed demand.

(tbc)

(continued)

Maybe a quarter of a century ago it was poorly appreciated that a vibrant business sector is necessary to grow the economy. But nowadays it's well understood. What is not well understood (indeed Tony's failed to understand it himself) is that higher debt is NOT a future tax.

Populist protectionism is likelier to thrive when governments abandon fairness, as free trade's a convenient scapegoat for the government's abandonment of the interests of the less well off. If we killed off the notion that productivity-enhancing reform meant shifting the burden of tax onto those least able to pay it, far more people would be willing to give it a fair go.

Locally based/headquartered companies! Would benefit from changes to the tax rules, to collect all tax as a very modest expenditure tax of say 5%?

Collected via bank main frames as money left accounts?

I've read economists who claimed that all income tax could be more than replaced by a 2% transactions tax? Others who are on the public record claiming that one third of one percent collected as a transaction tax would replace PAYE?

I can't see any reason for not trialling the latter if the net take home pay packet remained unaltered! Which together with the reform would massively simplify PAYE?

That said, I prefer my proposed expenditure tax, taken in lieu of every other tax as the only tax collected? (GST, fuel excise etc) which could be adjusted up or down region by region to alone control all inflation or stagnation?

A stand alone unavoidable expenditure tax, would allow the 7% averaged, currently ripped from the average bottom line as tax compliance costs, to be returned to the total bottom line! So and to encapsulate, nobody no matter how clever could avoid our tax!

Those paying high priced accountants to hide Australian profits in various nefarious tax avoidance schemes or tax havens, would be wasting their money, whereas, those headquartered here and just paying a fair share of a shared burden would see their bottom line improved by at least 7%, the saved and no longer necessary tax compliance costs!

And given the same tax rate would apply as a universal constant, lift household disposables by 20-35%? Make a 15% non contributory super immediately doable as well as seriously lift discretionary spending?

I've seen numbers that strongly suggest that tax avoidance in total, by foreign based firms could be a high as 60 billion per? This money if unable to be successfully avoided would, repair the budget, increase defense spending and make a far more generous social compact doable?

This arguably is how you do root and branch, genuine tax reform that then also stimulates the national economy!
Others can please themselves!
Alan B.

@Tony Makin, Wow man! Are you for real?

Early 80s lower-middle management my tax impost was equivalent to the national Avg Weekly Earnings, $24K! That was too much. If I was in the same boat today the tax take would be about two-thirds(?) less.

Do not tell the readers that PAYE Taxpayers are paying too much today. Do not suggest that 'welfare' recipients are being paid to much either. Both historically and comparatively it's a fallacy.

Makin says: "Company tax cuts ... were intended to improve Australia’s international competitiveness and improve long-term growth."

An even greater Fallacy. Australian Corporate Taxes, Govt $-Imposts are among the LOWEST in the world - whether local or international businesses AU Govt Tax/Imposts are net positive for 'competitiveness'.

Why are you claiming the opposite while providing zero evidence to back up your assertions/beliefs here? Learn how to write an accurate economics article, as Greg Jericho does, by including supporting evidence!

Imagine you are writing an assignment for your Professor at Uni!

Ideology is not Economics. Economics is not Science. That Economics and Science both use Math does not make them equivalent.

You sound like a "fundamentalist preacher", an ideological shill pushing your "personal beliefs" likely because that's what you're doing.

FACTS Found Here:
http://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online.html

When was the Plebiscite held that agreed Housing would no longer be about "Shelter for Families" but a Loss-Making Industry and manipulated Financial Instrument for Profit Gouging everyday people?
One that's supported by Direct Government Welfare Tax-Breaks paid to tens of thousands of Property Investors?

2012-2013 Residential Property Owners declared a combined ~30% Loss on this "business activity". Is that sane and rational to keep losing 30% on P&L bottom line EVERY YEAR? Is it RORT?

Australian Taxpayers handed over ~$4 Billion in Tax Credits to Residential Property Owners 2012/13 most above AVG Weekly Incomes.

ex-Minister Kevin Andrews is said to OWN 250+ Residential Properties,
so I wonder what his "on paper" investment "losses" and Tax Credits are each year.

Anytime you want to get real tell the WHOLE story, I may listen to you again.

-

This is a good article and the subsequent Forum comments only prove Makin’s point about the level of economic literacy in Australia.

The best metaphor I have heard about the interaction between business and government was voiced by Netanyahu when he was the Israeli Treasurer. Every Israeli has to do military service and he reminded every Israeli of the exercise where every soldier must carry another solder on his back for 500 metres. He said the solder doing the carrying was business, the solder being carried was government and only countries that kept the carried soldier as light as possible would succeed in long run.

As to fairness, Milton Friedman’s words still resonate:
The modern tendency to substitute “fair” for “free” reveals how far we have moved from the initial conception of the Founding Fathers. They viewed government as policeman and umpire. They sought to establish a framework within which individuals could pursue their own objectives in their own way, separately or through voluntary cooperation, provided only that they did not interfere with the freedom of others to do likewise.
The modern conception is very different. Government has become Big Brother. Its function has become to protect the citizen, not merely from his fellows, but from himself, whether he wants to be protected or not. Government is not simply an umpire but an active participant, entering into every nook and cranny of social and economic activity. All this, in order to promote the high-minded goals of “fairness,” “justice,” “equality.”
When “fairness” replaces “freedom,” all our liberties are in danger. In Walden, Thoreau says: “If I knew for a certainty that a man was coming to my house with the conscious design of doing me good, I should run for my life.” That is the way I feel when I hear my “servants” in Washington assuring me of the “fairness” of their edicts.
There is no objective standard of “fairness.” “Fairness” is strictly in the eye of the beholder. If speech must be fair, then it cannot also be free; someone must decide what is fair. Shades of 18C.

If I read his article correctly Makin believes that “fairness” should not be considered over efficiency and productivity. Also that the whole point of our lives is about how much stuff we have or can consume. He also thinks we should move back to the good old days of the nineteenth century, where business is the only thing to focus on, and it should have a free hand to do whatever it feels like.

First I think Tony Makin should definitely get out of his ivory tower and listen to some ordinary people who don’t own a house and are struggling to keep a roof over their families head, because of the cost of living.

Second he needs to understand that it is money in the hands of those with demand that keeps an economy rolling along. If automation, and out sourcing, continues at their present rate, then we will be back in the nineteenth century in the not too distant future, with all the squalor that that created.

The idea that you can raise GST on the young, because they will benefit in the future, ignores the fact that wealth is accumulating at the top of the hill at an unprecedented rate.

So what is the roll of the economy in this more enlightened age. I would have thought the phrase, “give everyone a fare suck of the sav” would be a good place to start. That means curtailing the carpet bagers who use lobbyists in parliament to assist their blind greed obsession. Australia is a lucky country in many ways, however an increasingly large proportion of the population are finding that luck for them, is running out.

Chris

Hear,hear and well said Thomas!

Let me conclude on this note, if I stepped outside my house and filled a cubic metre sized box with earth then separated the thorium content, I'd get about 3 MM's of thorium? And that's enough thorium to power my home (air conditioners, heaters hot water etc) for a year for a total cost of a cent a day? Or a $1.50 a quarter!?

Power that cheap would reinvigorate our vehicle building industry, shipbuilding, metals smelting and all manner of high tech manufacture!

It puts medical isotopes in our hands that cure cancer, demonstrably.

The after turbine residual heat is still enough to desalinate water and thorium reactors do not create Co2! A frozen salt plug in line below the set and forget reactor, means if the liquid fissile material drops down, it hits the frozen salt plug on it way to a heat tolerant holding vessel, to remain there until cooled back to sodium fluoride crystals!

This clean, cheap, safe energy that creates medical isotopes and very little waste, waste that is miniscule in comparison to that created by the uranium industry, and just what we need to ramp up jobs and growth and our energy dependant economy!

Moreover, this technology can be used as FBR's to use up the waste of current nuclear technology!

Now if a old retiree like me can know this stuff,(see u tube) it's london to a brick that our super smart pollies know it as well, but take considerable pains to hold the current (king coal) going to hell in a handbasket, energy line and the devil take the economy, jobs and growth?

Which given we have some, are just a fraction of the potential that's available with a decidedly bolder, vastly less timous mindset at the nation's helm!?
Alan B.

EQ,

That you, or indeed anyone else, regard Makin's rant as a good article tells a far more damning tale of the level of economic literacy in Australia.

You seem to have failed to notice that government has a symbiotic relationship with business. Business pays taxes, and the government creates conditions where business can thrive.

If you want to use Netanyahu's metaphor, keeping the carried soldier as light as possible is not the best strategy for long term success; ensuring the soldier remains strong is a far better strategy. The countries with the lowest tax rates aren't the most successful at all.

Fairness has not replaced freedom, but the Founding Fathers you refer to were America's not ours, and their emphasis on freedom was reactionary. But there was a country that fairness played a more prominent role in the founding of: New Zealand.

@ Alan B., related to Peter Lang? :)

You are preaching to the converted by targeting my name in your spam posts about Thorium Nuclear Reactors and their benefits.

It is off topic here though, take this as my reply to every time you have mentioned this recently and into the future.

I am aware of Thorium and HTRs for about a decade now. Being able to reprocess atomic fuels and nuclear arms waste 'plutonium' etc is well documented. I can't recall the exact numbers but basically thousands of years in half life can be reduced to a 100 or so and thereby making storage of nuclear waste safe and rational and in an economically affordable way.

Unfortunately the world is still being run by psychopaths and war mongers, otherwise...

China's application of old German tech using "pebble-bed" Nuclear Reactors is a still an improvement on Thorium, because these types of HTRs are 100% safe in regard a nuclear plant 'meltdown' - as occurred in Japan and Ukraine. This a proven fact.

The nuclear fuel balls can in fact be held in one's hands without any radiation, and yet the operate at a much higher temperature than the typical GenII/III water cooled reactors.

THis kind of nuclear tech was not developed properly in the 60s or 70s because of the accepted myths of that time, and the reasons why the original electricity reactors were used - they made the necessary product for plutonium and MAD national security purposes.

My humble suggestion to you is to keep researching the subject, there are many advantages to the pebble-bed reactors, the first commercial sized Nuclear electricity plant opens in 2017 in China, and they already have orders on the books for this "modular designed" nuclear power plant.

http://neutronbytes.com/2016/04/09/progress-report-on-htgr-reactors-in-china-and-u-s/
http://www.technologyreview.com/s/600757/china-could-have-a-meltdown-proof-nuclear-reactor-next-year/
http://www.rt.com/news/332254-china-meltdown-free-reactor/

Recommend your Thorium/Nuclear news you include some decent URLs to quality info to make it easier for the few who may be interested.

It's unfortunate the SA Commission failed to address China's HTR-PM reactors, building HTR-PMs in SA to reprocess the worlds nuclear waster while producing carbon free electricity.
-

Alan B.

While the amount of energy obtained from a few milligrams of thorium might theoretically drive you car for many years, it requires a much larger critical mass of Thorium and U233 to actually make a viable reactor. That would be something larger than your car would carry, although perhaps a not too large truck might suffice.

David

CORRECTION: I said: "Is that sane and rational to keep losing 30% on P&L bottom line EVERY YEAR?"

The figure is actually 25% LOSS, sorry for the mistake.

The point here is a simple one. The LNP Neo-Liberals said that taxpayers finds should not be directed anymore to the local Motor vehicle industry. Abbott et al said it wasn't THEIR JOB to support unprofitable "industries".

Yet no Government has ever given away $4+ billion a year, year on year of TAX PAYER MONEY to any MV industry nor any other business sector until the Residential Rental Property business sector arrived in town.

Those INDIVIDUALS have been getting ~$4 billion in Tax Breaks on a -25% Loss each and every year.

How is that sustainable and why are Taxpayers funding these people's wealthy retirements through both Negative gearing and the 50% CGT Discount?

There's a big ballyhoo now over the Government's deal for $6.3 billion in savings to pass parliament. The compromise deal, announced on Tuesday, will see the Turnbull government save $6.3bn over four years.

This equates to a measly $1.56 Billion per year, or an MINISCULE 0.38% reduction to the Annual Federal Budget Spending.

Whereas the Government could cut $10+ Billion per year with the flick of a pen and only wealthiest 1% to 20% of the population relying upon GOVT WELFARE ENTITLEMENTS would even notice it.

The side benefit of course is that over time the UN-Affordability of Housing across this nation would head in the opposite direction, helping everyone's Boat float a little higher.

Especially in combination with Banning all International Citizens, whose Govt does not allow Australians to purchase real estate in their nation, from buying property and businesses in Australia forthwith - again another flick of the pen.

My further retort to the mindsets of those who think like Tony Makin can be read here:

Psychology, Politics, Economics, Math, Ethics and Morality are inseparable!
http://drive.google.com/file/d/0B-M0yAR0UPhPY3VEN0ZDalVNekk

Contrary to what Makin asserts, Public Policy doesn't need more Economics in it - it simply needs some TRUE FACTS and HONESTY and MORALITY behind it - post haste!
-

I'm amazed at the vitriol this straightforward piece has attracted (actually, that's not true, this is OLO after all).

It seems to me that one of the major failings of our political decision-making process is that it is all too willing to ignore good, sound reasoning about what is needed in favour of giving people what they want, which is nearly always more reward for less effort.

The past 150 years has seen enormous social progress: real progress, not "reform", in which the aim is to deform possible good ideas so that they look the same as the old ones. Most of that genuine progress occurred before 1960 and laid the footings for the hippy movement and other "counter-culture" social change movements all of which were distinguished by a determination not to accept facts that didn't suit their preferred way of looking at the world.

That long period of sustained productivity growth that has almost all been brought about by technological change: we don't have improved prosperity because of "diversity", but because we have better machines year on year. The cause and effect are frequently confused in public pronouncements from on high. That increased prosperity has allowed social experimentation that could not be countenanced in earlier times, when the most important measure of a person was their ability to produce needful things with their own toil. Even being born to wealth was no guarantee of a sinecure: "gutter to gutter in 3 generations" was a serious warning of the dangers of giving children of wealth too much ease and comfort.

For 3 generations now we have been desperate to give every child as little toil and trouble as possible, which is a worthy aim in isolation, but it leaves us with a nation that has great wealth, most of which is wasted on trinkets.

Our politicians make much of public bickering over minor issues, because all that spoilt brats want to hear is "what's in it for me".

Thanks for the article.