The Executive Director of the Australian Retailers’ Association, Russell Zimmerman, said a push by business leaders – widely reported last week – for more spending on infrastructure, alongside sweeping reform of taxation and regulatory arrangements, was critical if Australia’s GDP growth and prosperity were to continue.
Commenting on calls for tax cuts, workplace reforms, cuts in red tape, and more infrastructure projects to curb congestion and create jobs, Mr Zimmerman said soft GDP figures released last Tuesday – and lower than forecast retail trade figures for April – showed complacency over Australia’s “miracle economy” wasn’t an option.
“27 years of continuous economic growth doesn’t just happen – you have to work at it,” Mr Zimmerman said.
“Unfortunately, the reform process undertaken by the Hawke, Keating and Howard governments that unlocked huge economic dividends for this country has ground to a complete halt over the past decade or so,” he added.
In the face of softening indicators in a number of sections of the economy, it’s time to get moving,” he said.
Echoing calls from the property sector, senior corporate leaders and the Business Council of Australia, Mr Zimmerman said that rather than accepting slowing conditions in the face of global economic headwinds, state and federal governments should be proactive in identifying and executing opportunities for a new reform agenda.
“When Australia has some of the highest rates of business taxation in the developed world, for example, cutting the company tax rate to 25% is an absolute no-brainer – especially when this would still leave Australian businesses at a competitive disadvantage compared to their international counterparts,” Mr Zimmerman said.
“Similarly, a fresh look at GST and PAYE taxes is overdue: it’s internationally accepted that consumption taxes are far more efficient for collecting revenue than taxing income. The introduction of the GST in 2000 aimed to switch the tax mix away from income and onto expenditure, but income taxes have crept back up,” he added.
Mr Zimmerman said politically-charged rhetoric claiming business tax cuts were “handouts to billionaires” or that cutting income tax for middle earners was “stealing from the poor” was irresponsible, and called on all parties to resist the temptation to take cheap political shots at the expense of meaningful reform.
“The fact is that Australia is resting on its laurels; the politicisation of economic reform to the point nobody undertakes it is a huge risk to our prosperity and continued growth and, unlike the Global Financial Crisis a decade ago, the mining sector won’t necessarily bail the economy out next time,” Mr Zimmerman said.
Mr Zimmerman also said the “blame game” between Canberra and the states – with governments of different political stripes playing the national interest off against their own political interests – had gotten so out of hand that it was actively damaging Australia’s economic reputation and prospects, and said the practice had to stop.
“A good example is Adani, on which the Queensland government has spent years obstructing a project that will create thousands of jobs and generate billions of dollars in coal royalties…and which found out at the federal election that Queenslanders actually want the project to proceed, and now it can’t approve it quickly enough.
“How much needless damage has been done over the past five years as a result of this? It’s impossible to quantify, but you wouldn’t think it’s added anything to the economy,” he noted.
Mr Zimmerman said there were “endless targets” when it came to reform projects: from lowering and simplifying taxes, to streamlining regulation and cutting red tape for business, and to using the opportunities presented by infrastructure requirements to undertake major projects that would generate jobs and economic dividends.
“From broadening the GST base and cutting income taxes, lowering corporate taxes, and re-examining tax compliance structures for business, to seeking agreements between the states to align taxes such as payroll tax to give certainty and foster efficiencies for businesses operating across state borders, and to identifying, funding and building infrastructure projects that will unlock the potential of our major cities and regions – from roads to dams and to ports and rail – the list is literally endless,” Mr Zimmerman said.
“Rome wasn’t built in a day, of course, and it’s impossible to do everything at once. But I would urge governments of all colours to work together, to use these opportunities to develop reform agendas for the next decade, and – as I said at the outset – to get moving,” Mr Zimmerman concluded.
Tuesday, 11 June 2019