Col, By OECD standards Australia has low employment participation - so it is not just willingness (so be a bit frank and own up) - especially comparing Australia to a comparable society like Britain. I grant that both less labour-market regulation and EITC's have helped generate that higher level in the UK. What I am proposing would reduce minimum wages relative to the median income and compensate by tax credits - and more people would move off awards - and hence it would promote enterprise bargaining (both at a firm wide or individual basis) than WorkChoices as well.

A wage-tax-trade-off is also far better than you propose because it ensures that after-tax wage outcomes are not increasing pressure on a "working-poor" as you would want by the sound.

“Col, By OECD standards Australia has low employment participation” so what?

I would observe, when there is a need to import labour because there are insufficient locals available, “willingness to work” must be considered as an influence upon “participation in work”.

Whilst governments exercise largesse with the revenues they expropriate (being those above what they need to supply specific services) from their electorates to fritter away on pretending to subsidise the lower paid, the “disadvantages” of working will always be “exaggerated” by those who prefer a free ride at everyone else’s expense.

My scant knowledge of tax (I use a tax agent in Australia, despite being an accountant, qualified here as well as UK) still tells me: fluffing around with tax credits will lead us into an ambiguous morass of poverty traps (ie where someone is, in the immediate short term, better off on tax credits instead of working for a living), as do-gooders enmesh what should be a “revenue earning process” into some sort of quasi wealth redistribution program.

Ameliorating the effects of tax at the lower income levels is still best delivered by tax free thresholds (which the flat rate income tax suggestion did not discard).

However, one of the realities of humanity is this

A free society works on the assumption that people are responsible for themselves and thus responsible for generating the necessary income needed for their own well being. We are not, despite what Ken Livingston was preaching when I lived in London, a commune of organised drones to be directed and micro managed at the whim of his central committee. If you think that ever worked, just ask why those of (the previous) East Germany used every means at their disposal to “jump the wall” and why West Germans did not.

Col, I only work for Ken - I don't always agree - so your line of argument is absurd on that front. May be I should change the by-line to lawyer and independent thinker then. I work on the Events and Olympics advisory not political advisory and I've never worked for a politician full time in a political or press role.

Back to the real issue - High employment participation reduces welfare costs and increases Australia's ability to fund good cheap services and reduce tax across the economy, which is one reason why it is considered that $3B in tax credits if done well would be self financing. I don't know why you think I'm a socialist - if you read the article I would be well to the right of Beazley and the ALP on IR, perhaps not tax though.

Wage-tax-trade-off are by far the best welfare to work scheme. Do you want to reduce the welfare burden or not?

Only an ALP leader heavily tied to union power would miss that wage-tax-trade-offs produce far better economic results than Howard's economic model of LITO off-set at the low end. Beazley is afraid that a 'pause' in minimum wages is not sellable to the ACTU and others. Howard has obviously thought it too big a sell in middle Oz. We're likely to all be worse off for this assessment by both Howard and Beazley

Col, on your other point, I think higher business-migration would assist Australia in producing higher workforce participation - given that we have an ageing population - so on that front you also miss the mark. Also most estimates of the effect of business-migration as well as wider immigration is that it is a job creator pro-growth strategy. Lastly the problem of blockages in the economy is due to three main factors I highlight in the article - 1. high minum wages and their disemployment effects - 2. lack of incentive in the tax system at the low end - 3. most importantly skills miss-matches (see point 7 wider education for the unskilled funded by low-interest loans or HECS). So on this front - resolving the skills miss-match is the key. To suggest it is 'only' a lack of willingness is same rehetoric used such as dole-bludger - sometimes it's true - and sometimes it's not - it is also often that pople don't have a skill that is sought after. Are you pro-investment in skills and large uplifts in business-immigration? If you're not - and Australia follows - you will see Australia go backward economically and our growth trajectory upward will begin to trend down over time.