Summit Notes | The Spectator Australia

The death last week of Mikhail Gorbachev was a fitting precursor to the Jobs and Skills Summit, Australia’s bid for perestroika. Representatives from Big Australia: Big governments, big business, big unions, big universities and big industry associations gathered in Canberra for a demonstration of central planning with Australian characteristics. It remains a disturbing reflection of the important role of the Commonwealth government in the lives and jobs of all Australians that such a summit could attract so many.

The last time such a summit took place was around 40 years ago, when Australia was a different place with a different economy facing different challenges. Today however, Australia is a significantly changed nation and home to a much larger, more complex and dynamic economy in a much more integrated and globally unstable world.

At the end of the summit, Prime Minister Albanese announced eight summit outcomes which were a mix of spending commitments, industrial relations, regulatory changes and immigration policy improvements. But in the mind of Upton Sinclair, who said, “It’s hard to get a man to understand something when his salary depends on him not understanding it,” the economic elephants in the room were ignored.

According to ABS data, total spending by Australian, Commonwealth, state and local governments increased by 34%, from $722 billion in 2018 to $969 billion in 2021. Meanwhile , the Australian economy grew by a meager 4% over the same period. It should come as no surprise that the cumulative public deficits during this period totaled $281 billion, or about $70 billion a year. In the ten years to June 2021, total Australian public debt has almost tripled, from 13.1% of GDP to 38.1% of GDP.

Additionally, according to ABS data, the number of public sector employees across all three levels of the Australian government was 2.1 million in June 2021. This number does not include those whose jobs exist thanks to the government. For example, the vast network of government service providers and the batteries of compliance officers embedded within companies, as well as the accountants, lawyers and consultants who support them. Out of a total workforce of 13.2 million, this translates to around one in six employed people in Australia working for the government.

A relevant consideration in Australia which is experiencing labor and skills shortages is the 20-year project to expand Australian government and re-regulate the economy. Economic reform seemed to end in 2001 and has since reversed. Australia’s slowing economy is the price of too much of Australia’s productive human and financial resources not being employed in production.

When summits such as the Jobs and Skills Summit are organised, it is normal that the most attention is given to the people in the room. But equal, if not greater, attention must be given to those who are not present. As Maritime Union chief Christy Cain noted at the summit, “if you’re not at the table, you’re on the menu.” Given that the most notable unrepresented participants were the young and yet to be born, it should come as no surprise that it will be the next generation who will pay the highest price for a slow growing, less dynamic and more tightly managed. This is in addition to the decline in academic performance they will experience.

Stemming from the summit, the stage is also being set for a reinvigorated debate on the repeal of stage three tax cuts to fund governments’ growing spending commitments.

The stage three tax cuts were legislated as part of the 2019 budget. To be precise, the stage three tax cuts are not exactly a tax cut. They are a partial return of parenthesis creep. Bracket creep is the silent tax increase applied when workers move up a tax bracket as a result of a salary increase. In most cases, these salary increases do not necessarily reflect an increase in purchasing power because they compensate for inflation.

In 1975, Malcolm Fraser promised to introduce bracket indexing on the grounds that “it will make the government more honest with your money. They (the government) will no longer be able to count on the secret tax increase of inflation. Fraser introduced indexing in 1976, but it was dropped in 1982. Why was it dropped? Maybe because the government doesn’t really want to be honest with taxpayers’ money, because it’s politically advantageous to tax quietly and then claim credit for returning the funds through tax cuts or election hog .

The political argument advanced for repealing the third-stage tax cuts is that they mainly benefit the highest earners. Rather, it may be that high-income earners could spend their income in unapproved ways.

Australia’s vast middle-class welfare state has jurisdiction to take money from high-income earners and return it for approved expenditure (minus administration costs). There is no better example than childcare subsidies, including for the same high earners, given the Labor Government’s proposal to raise the ceiling on subsidies to earning households up to $530,000 per year.

The Australian economy and our political debates increasingly reflect Clive James’ observation that “the problem with Australians is not that so many of them are descended from convicts, but that so many many of them descended from prison officers”. Rather than unleash Australia’s economy to realize its full potential, Big Australia seeks to manage the results to its advantage and is then surprised when a complex 21st century economy fails to respond as its central plans suggest.

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