Issue No. 56 - Month/Month year
by Professor Richard Blandy
The Federal elections have given Australia its first minority government in generations. The economic, social and environmental issues facing Australia remain, however, whether the Federal Government is able to deal effectively with them or not.
If it cannot deal effectively with them, the long run impact will be a deterioration of Australia’s economic performance – slower economic growth, higher unemployment, lower standards of living and a worse environment than would otherwise have been the case.
This article looks at a range of current issues, the likelihood that the Federal Government will be able to deal effectively with them and the likely economic and political outcome. The issues chosen were canvassed in the election and/or have arisen since then. The issues are:
• Tax reform
• A carbon price
• Population growth and regional development, and
• Murray Darling Basin water reform
A tax summit is scheduled to take place in 2011. Reform options (most of which follow recommendations of the Henry tax review) which should be on the summit agenda include:
• Raising the personal income tax threshold from $6000 to $25,000. This would give an immediate tax break to lower and middle income earners and halt much of the wasteful and inequitable interaction between the social security system and the income tax system. Incentives to work and save would be strengthened, strengthening the economic growth outlook.
• Applying a marginal income tax rate of 35% from $25,000-$180,000 and 45% above $180,000. This would give an income tax break ...