Post COVID-19 Australia: a five-point policy propsal
“'Emergencies’ have always been the pretext on which the safeguards of individual liberty have been eroded.”
Much has changed quickly in Australia due to the COVID-19 pandemic, giving policymakers a unique opportunity to reconstruct our revenue stream and regulatory code. Australia is entering a recession for the first time in decades. The virus has trapped Australians in their homes and left them without work. As a result, the federal government has passed the largest stimulus package Australia has ever seen. Right now, the Australian people, and the government alike, cannot afford any waste caused by inefficiency in either the tax system or the regulatory code.
The Australian Taxpayers’ Alliance (ATA), the nation’s largest grassroots advocacy group representing taxpayers, has created a five-point plan to economic recovery in the wake of COVID-19.
Deregulation: Use cuts to red tape as a fiscal stimulus to jump-start the economy post-COVID-19.
Decentralisation of Power: Shrink the government back to its original size and put more power into the hands of the Australian people.
Taxation: Implement structural tax reform and get rid of government waste caused by inefficient and costly taxes.
Domestic Economy: Promote domestic manufacturing by making Australia globally competitive, not by instituting protectionism policies.
Superannuation: Keep the increased superannuation flexibility and give Australians more power over their retirement savings.
Through this plan, the ATA aims to identify government waste so that the government can contain the deficit — without increasing the burden on taxpayers or harming the economy. Policymakers can use this crisis to pinpoint weaknesses in Australia’s tax and regulatory systems and then use the current momentum to push real structural reforms.
Deregulation: Use cuts to red tape as a fiscal stimulus to jump-start the economy post COVID-19
During this crisis governments at all levels have come together to protect lives and livelihoods. These changes have involved increased restrictions to attempt to contain the virus as well as decreased regulations to allow businesses to innovate and come up with creative solutions to the new self-distancing requirements.
In some cases, the easing of restrictions has revealed the economic costs of given regulations outweigh the intended increase in safety, equity, and sustainability. During a crisis, cutting red tape can act as a fiscal stimulus by reducing the cost of doing business and opening hidden doors for innovation.
Furthermore, regulation comes with enforcement costs. This includes agencies tasked with reviewing licence applications, reviewing development applications, etc. If governments can reduce those costs, they can reallocate those funds to help boost the economy.
Deregulation as a third form of fiscal stimulus
During an economic crisis, governments have two options for resuscitating the economy and smoothing the business cycle: monetary and fiscal stimulus. The COVID-19 slowdown is unique in that a pandemic, not a financial shock, brought the economy to a stand still. Consequently, monetary policy is less effective while the social-distancing rules remain in place as businesses know their customers couldn’t buy their products even if they wanted to. Fiscal stimulus seeks to prompt business transactions by pumping liquidity into the economy generally through reductions in tax, government transfers and government spending. However, reductions in burdensome regulation can also act as a fiscal stimulus, without increasing the size of government or growing government debt.
Additionally, other forms of fiscal stimulus, as utilitised in Prime Minister Scott Morrison’s recent $320 billion stimulus package, have a greater positive impact in countries with more flexible labour market regulations. Rigid regulations are correlated with less GDP growth from recovery policies. During the 2008 financial crisis, the United States President, Barack Obama cut Environment Protection Agency (EPA) regulations . These cuts are estimated to have saved businesses millions of dollars. Australia has begun working to reduce inefficiencies in our own environmental agencies. Considering the magnitude of this economic shock and continued economic losses despite the largest stimulus package Australia has ever seen, policymakers need to provide market actors substantially more flexibility.
Examples of deregulation while under social distancing measures
Because of COVID-19 and the subsequent restrictions, businesses have had to innovate to come up with safe ways of providing services and making money. These innovations often push businesses out of their regulatory bounds. Governments at both the state and federal levels have relaxed several regulations as these changes in business practice save the taxpayer from subsidising these industries.
While previously restricted under most liquor distribution licences, NSW , Victoria , ACT , and SA have allowed liquor stores and bars to deliver alcohol beverages to their customers. These kinds of licencing allowances have expanded beyond merely the alcohol industry. Childcare workers have been allowed to continue in their roles without extending their working with children licence.
Many states have allowed extended operating hours. In NSW, the construction industry was previously barred from working on weekends and holidays, but are now allowed to operate at their own convenience. Home businesses can now operate 24 hours a day and hire more than two people, but no more than five people. Retail businesses may also now operate 24 per day. Food trucks can operate at any time on private property as long as they have permission from the land owner, and ‘dark kitchens’ can be established in any commercial kitchen. Because of COVID-19 and the supply chain shortages, South Australia, the state with the strictest operating hour restrictions, expanded trading hours for supermarkets.
To streamline development on emergency projects the NSW Minister for Planning and Public Spaces can now approve development, avoiding the traditional quagmire of acquiring planning approval. However, this change only applies if the Minister believes the new building is a priority for public health, such as building emergency hospitals. In NSW, the Emergency Measures Bill 2020 removed the requirement for planning decision-makers, usually councils, to display physical copies of some documents including the standard Development Applications (DAs), Environmental Impact Statements, registers of development consents, complying development certificates and construction certificates (CCs).
Individuals on the Pharmaceutical Benefits Scheme are now allowed to receive their medication by mail. Professionals can now provide mental health services by phone.
Conclusion - Policy Recommendations
The deregulation has shown many of these regulations served little initial purpose. Even worse, these regulations posed a cost on desperate businesses and handicapped creativity. Red tape is notoriously inflexible which can be dangerous in times when a business’s ability to adapt determines its ability to survive.
Changes, such as those shown in section Examples of deregulation while under social distancing measures, made in response to COVID-19 or the subsequent social-distancing rules should be evaluated and extended if they prove helpful to the relevant industries, or they streamline government bureaucracies.
Regulation provides a service to Australians by making Australia fairer, safer, and cleaner, however, in hard times the costs of the regulations can outweigh their benefits. By cutting red tape, policymakers can cost-effectively jumpstart the economy.
Decentralisation of Power: Shrink the government back to its original size and put more power into the hands of the Australian people
In a crisis, the government must act quickly and by design democratic systems require slow deliberation before any changes are passed. Additionally, the pandemic prevented Parliament from meeting lest they break self-distancing requirements. As a result, much of the burden of regulation has been transferred to the ministers. Australia has looked to Prime Minister Morrison to act as a strong and decisive leader. The states have relied heavily on their premiers and their police forces to tell them how they should proceed in these uncertain times.
However, when this crisis has passed the Australian people must demand the baton back. Powers given to ministers need to go back to Parliament. Rather than leaning on strong leaders, we need to give more power back to the states and to the councils. Instead of letting the police act as judges, we need to return to trial by jury with the concept of innocence until proven guilty.
Returning powers to the people
The social distancing restrictions have inevitably encroached on the basic freedoms of every Australian. The government has taken a hard-line stance by policing everything from funerals to what constitutes daily exercise. While there is reason to debate the necessity of these measures, some states have gone beyond merely social distancing regulations and have begun legislating how Australian’s spend their time in isolation.
While many states have decreased regulations surrounding alcohol, WA implemented purchasing quotas due to concerns about excessive alcohol consumption and hoarding. Similarly, the NT has increased restrictions for alcohol sales. Only those with an address listed on their ID are allowed to purchase alcohol to prevent people from gathering in groups to drink. Federally, the Alcohol Beverages Advertising Code (ABAC) has begun restricting memes about drinking during the lockdown.
While well intended these kinds of restrictions do little to actually curb problematic alcoholism. Instead, the above regulations have singled out an industry during unstable economic times and have made it more difficult for those who wish to consume alcohol responsibly to do so. Even more problematic, the ABAC has attempted to restrict humour and has fined a business in WA for posting popular pictures and comments on social media. After COVID-19 is contained, Australian’s need to demand that all COVID-19 related restrictions, even those not directly connected to lockdowns, be pulled back.
Reinstating parliamentary powers
Because Parliament cannot meet while following social distancing rules, much of the decision making power has been given to the ministers. While efficient for a time of crisis, this change decreases the voice of the people.
During times of crisis, power tends to centralise moving from the state level to the federal. The federal income tax was introduced in 1915 to fund WWI and was never repealed. Both the state and federal governments taxed income until the states relinquished that power completely to the federal government in 1942. Times of crisis lead to prompt and often dramatic changes to our governmental system. Often those changes, particularly the centralisation of power, are never retracted. Keeping Parliament, both federally and at the state and territory levels, operational means Australians still have a voice no matter the circumstances. The Australian Federal Parliament operated during the World Wars and Spanish Flu; the fact that it is closed now should give Australians reason to question. It’s discomforting that our ministers don’t see the operation of democracy as ‘essential’.
Reestablishing an equitable judicial system
With more security comes less independence and it appears a less equitable judicial system. To keep Australia safe the federal government was forced to implement self-isolation laws and the state governments sent out the police to enforce despite better alternatives.
The states have given their police forces jurisdiction to issue on the spot fines of $1000 or more. Queensland has already collected $2.5 million in fines. Officers are left with the sole responsibility of determining guilt. Rather than relying on a jury, one individual’s judgement determines the fate of the accused. We need to roll back this type of law enforcement and bring back the concept of “innocent until proven guilty.”
Social pressure in Australia to maintain proper distancing was, and continues to be, incredibly strong, making the police enforcement both over the top and unnecessary. Many businesses asked their employees to work from home days and weeks before the government passed social distancing measures. Australians bought overpriced masks and hand sanitiser. Individuals began reducing their outings and chose to avoid large gatherings. The heavy-handed use of fines was unnecessary and continues to burden the Australian people, many of whom cannot afford to lose $1000 during these tough economic times. Government’s need to put more faith in the people they govern instead of opting for a big stick before people have a chance to prove their good intentions.
The criminal justice system has similarly degraded, no longer giving Australians a right to a trial by jury before they are proven guilty. Many states have instituted judge only trials, because a jury would break the rules for large gatherings and the accused have a right to a speedy trial.
Complainants in criminal trials can give testimony via a pre-recording, evidence which will be admissible in future trials. This takes away the defendant's right to a cross examination. If any cross examination is given the complainant will have the opportunity to discuss with the prosecutor before supplying answers. Each state judicial system has implemented its own COVID-19 reaction plan, none of which favour the accused.
While heavy-handed policing and quick judge-only trials may be efficient and less risky, it costs Australian’s their fundamental human rights. For a country to call itself free it must maintain a standard of innocent until proven guilty.
Taxation: Implement structural tax reform and get rid of government waste caused by inefficient and costly taxes
The federal government passed the largest stimulus package Australia has ever seen. While the package arguably contained much waste, the economy needed a large influx of liquidy and it is the role of the government to create a stable environment for businesses and people to thrive. The stimulus package from the GFC took over a decade for Australia to pay off, this package which was four times the size will take Australia even longer to recover from — particularly as the economy continues to reel.
The government needs to collect the maximum revenue without slowing the economy or further burdening people and businesses. Some taxes are much more expensive than others. Those inefficient taxes include: stamp duty which disrupts the housing market, payroll tax which punishes employers who hire more workers, and the corporate tax which makes Australia uncompetitive internationally. Furthermore, the personal income tax is not tied to inflation. In order to maintain the same wage in real terms individuals must see a nominal increase in their earnings, an increase which puts many Australians in a higher tax bracket even though they're not earning any more money. By cutting or reducing these taxes and making up for the losses elsewhere the government can stimulate the economy and get Australia back on its feet sooner.
The Cost of the Federal Stimulus Package
During downturns, the government has a responsibility to safeguard the economy. Good governments smooth business cycles by taxing and cutting spending during times of prosperity, and during economic downturns spending and cutting taxes. This kind of unprecedented economic drop required an unprecedented response from the government. The federal government has been incredibly resistant to cut taxes during this crisis, instead creating programs and spending.
So far the stimulus package adds up to more money than a year's worth of income and business tax revenue. The three iterations of the stimulus package add up to $320 billion. The federal government’s revenue in 2018/19 from taxes on income, profits, and capital gains equaled $338 billion, only a few billion more than the stimulus package. In all years previous, those taxes add up to less than the amount spent on this stimulus package.
Cutting taxes doesn’t come with the same bureaucratic costs as spending. While the government needed to institute fiscal stimulus, this package contains much waste. The Coronavirus supplement and the payments to support households, adding up to $18.1 billion, went largely to pensioners. In a normal downturn when the government gives low-income individuals money they immediately spend those funds, while those less in need tend to save a larger percentage of a given payout. However, with all but essential services shut down no one is able to get out and spend and stimulate the economy. This money should have gone to help those most impacted by the virus and lockdowns, helping them buy groceries and other essential goods and services.
Services Australia was forced to hire an additional 5000 employees to manage the increased demand for their services. The government would not have had to pay additional salaries if they instead chose to increase tax refunds and used already available resources at the ATO.
Subsidies to specific businesses like Virgin Air and Qantas have led to anti-competitive behaviour. The government spent $1.715 billion on subsidies despite evidence showing that subsidies result in deadweight loss, that is the measure of lost economic efficiency and therefore total welfare when the optimal level of goods or services are not produced due to some distortion in the market. Subsidies inherently favour certain industries and businesses giving them a competitive advantage.
In past economic crises, international governments have implemented similar spending measures to stop recessions from deepening. However, in the aftermath, many leaders are tempted to continue spending while increasing taxes to reduce the debt from reaching problematic levels. This is precisely how the United States President, Herber Hoover, reacted after the market crash in 1929 and by the end of his presidency in 1933, the United States had been launched into the Great Depression. Government spending invariably leads to waste. Australia’s leaders would be wise to look to the mistakes made in foreign countries in the past and instead focus on structurally reforming the tax code to increase revenues without burdening the taxpayers and risking a much deeper recession and possibly depression.
Because payroll taxes directly impact a company’s ability to hire, cutting payroll tax is an efficient way of boosting job growth and giving businesses extra money with which to pay their staff. NSW and Victoria have been leading the charge to cut or reduce payroll tax permanently. Every state has already implemented some variation of temporary payroll tax relief.
Currently, NSW is allowing businesses with a payroll less than $10 million to get a three-month waiver for payroll tax, plus an additional three-month deferral. Larger businesses are eligible to defer payroll taxes for six-months but don’t receive a waiver. In Victoria, businesses with payrolls up to $3 million will have their full payroll tax liability for the 2019-20 financial year refunded. Those eligible businesses may also defer paying payroll tax for the first three-months of financial year 2020-21 until 1 January 2021. In WA, businesses with payroll up to $7.5 million will have their payroll tax waived from March to June 2020. Also, the payroll tax threshold will be increased from $950,000 to $1 million from 1 July 2020. In Queensland, businesses with payroll up to $6.5 million will be refunded two months of their payroll tax, and the state will not require them to pay payroll tax for a further three months, until March 2020. The Tasmanian government is waiving payroll tax for the hospitality, tourism and seafood industries for the 2019-20 fiscal year. The state has also given other businesses with Australian group wages of up to $5 million the opportunity to apply, based on the impact of the virus, to have their payroll tax similarly waived. In ACT, employers directly affected by the 'prohibited activities list' will benefit from a six-month waiver of payroll tax from April to September 2020. All ACT businesses with Australia-wide payroll tax group wages of up to $10 million are entitled to an interest-free deferral of their 2020-21 payroll tax until 1 July 2022. The NT has given businesses with payroll up to $7.5 million the chance to apply for a payroll tax waiver for the March to August 2020 return periods. In SA, businesses with payroll up to $4 million have received a 6-month waiver from payroll tax for April to September 2020. Even more recently, states have begun waiving payroll taxes on all job keeper payments.
The states have universally cut payroll tax, in an effort to maintain employment. As the Australian economy continues to struggle the state should consider cutting broadening payroll tax reductions. Both NSW and Victoria are considering cutting both the payroll tax and stamp duty in the wake of COVID-19. This kind of structural reform could save thousands of jobs in these states. When states cut payroll tax, they make it possible for employers to pay their workers for approximately an extra three weeks depending on the states’ payroll tax and the tax bracket into which the employee falls. Those extra three weeks of pay and profits could easily make the difference for businesses surviving on the margin as to whether they can keep a given employee. It is time the other states also consider tax reform and axe the tax on jobs.
Many taxes have unintended consequences and distort market forces. As last years’ Thodey Review pointed out, stamp duty is one of Australia’s most problematic taxes. Stamp duty is both incredibly volatile due to the ever-changing property market. It also disincentivises mobility and downsizing, as well as contributes to housing unaffordability. States are now listening to widespread appeals for the repeal and replacement of stamp duty with a fairer and more efficient land tax. NSW seems likely to implement the changes with Victoria following close behind.
Economists estimate for every dollar of stamp duty collected it costs taxpayers between $1.70 and $2.35. That difference is lost money, otherwise known as ‘deadweight loss’. Just as fining drivers for speeding reduces the number of speeding cars on the road, stamp duty decreases the number of houses on the market. The unequal distribution of houses, along with other factors, including land-use regulation, contributes to the lack of affordable housing in Australia. Sydney is one of the world’s least affordable cities, second only to Hong Kong. Earnings continue to fall further behind as the housing market becomes ever more uncertain.
Of pensioners, 18 per cent own homes worth over $1 million. Of retirement-age Australians, 68 per cent collect the pension. The stamp duty incentivised elderly homeowners to keep their homes instead of moving to more size appropriate accommodation and paying the residential stamp duties.
In 2014, workers on the London Underground went on strike, shutting the train down for months. Londoners were forced to change their commute. After the trains were back up and running, 5 per cent of people chose to keep their alternate commuting methods. Experts expect the world will see a similar phenomena with working from home. With employees working just as productively from their homes many employers will forgo expensive CBD rents. As a result the owners of these corporate buildings will be forced to sell their property. Stamp duty forces them to sell their property for less than they could otherwise. The cost of the tax is shared between buyer and seller, so punishes already struggling business people.
In contrast, the land tax is Australia’s most efficient tax, meaning it has a minimal deadweight loss. According to the Tax Foundation’s International Competitiveness Index 2019, Australia ranks number 3 out of OECD countries for having a competitive land tax.
The Australian government should consider removing the owner-occupier exemption for the land tax and broadening the tax base. This way state governments could efficiently replace the stamp duty while making the land tax more equitable. At face value, taxing only property investors appears to burden only wealthy landowners. In reality, much of the tax burden is passed onto renters -- many of whom have recently lost their jobs and been forced to move.
Australia’s land tax, unlike many countries, only incorporates the value of the land, not of the property more broadly. As a result property owners are not stopped from improving their land and contributing to the economy. A property tax punishes landowners who improve their property with a higher tax. As land supply is fairly constant, it is far less volatile than the property market and could provide a consistent and reliable revenue stream from the government.
Some economists have stated that the annual land tax imposition would amount to between $7000 and $10,000 per year per property owner. For this to be true, we would have to increase the land tax significantly, lower the tax threshold, and tax the total property value, not merely the land. Those unnecessary changes would undermine the benefits of trashing stamp duty. By expanding instead of increasing land tax, the bottom fifty per cent of owner occupiers would pay little to no tax.
The ACT currently has a much higher land tax because the state has attempted to phase out the stamp duty by increasing the land tax and lowering the threshold. Instead policy makers should work to broaden the tax base to include more homeowners. That being said, the ACT has been moving towards a better and more efficient tax model.
By incorporating the 67 per cent of Australians who own and occupy their homes, the government could generate an additional $20 billion in new tax revenue.
While all taxes take money out of the pockets of the Australian people, some taxes cost more than others for the same revenue. In this time of upheaval, the state governments could do much good by trashing taxes that slow the economy, distort the market, and hurt the Australian people.
The high corporate tax was implemented in 1915 to help Australia pay for WWI. After the war the government never repealed it. Now the tax bars foreign investments from creating Australian jobs, makes Australian goods more expensive and harder to export, and threatens to kill off local businesses.
Small and medium-sized local businesses pay the bulk of Australia’s 30 per cent (or 27.5 per cent for the smallest businesses) corporate tax rate. These businesses lack the resources to legally avoid Australia’s anti-competitive tax rate through tax havens or reinvesting all profits.
Netflix Australia instead pays a mere 19 per cent to the Dutch government. By taxing too much the government is leaving money on the table, or in this case under a windmill. Netflix is not alone in using tax havens to legally avoid Australia’s taxes. Exxonmobil Australia is similarly registered in the Netherlands, the US with a corporate tax rate of 21 per cent, and the Bahamas where there is no corporate tax. The median OECD nation only charges 21.4 per cent for the corporate tax.
We live in a global economy and Australia’s high tax rate makes it difficult for our businesses to compete with businesses in other countries that have additional profits to reinvest in the company or extra bandwidth to lower prices. The high corporate tax rate has contributed to the destruction of Australia’s manufacturing industry and other export goods. Because of this Australia’s economy is overly dependent on one industry, mining.
Domestic Economy: Promote domestic manufacturing by making Australia globally competitive, not by instituting protectionism policies
COVID-19 has revealed large gaps in Australia’s supply chain. Our domestic economy was weak before we faced multiple disruptions in a short period of time. Australia was forced to scramble for medical supplies and other necessities normally sourced from abroad. Many people have demanded protection for our local industries and policymakers have lowered the threshold for government scrutiny of foreign investments.
Instead of attacking foreign industry to help our own, policymakers should make the economic ecosystem friendlier to businesses so that Australia can be internationally competitive. Changes should include increased bureaucratic efficiency so that businesses aren’t waiting on the government before they can break ground, reducing unnecessary and outdated regulations, and globally competitive capital gains and corporate taxes.
The Problem with Protectionism
Treasurer Josh Frydenburg recently passed a law that lowered the threshold for government scrutiny of foreign investments down to zero. This slows the process and gives the government the opportunity to select which business they think should exist in Australia instead of letting the market decide. This policy aims to reduce Chinese takeovers of struggling Australian businesses during this economic downturn. However, by failing to focus the legislation, policymakers have allowed for continued Chinese takeovers of vulnerable businesses while threatening the already severely damaged Australian economy.
Some politicians and new pundits have recommended increasing tariffs and quotas. However, restrictions on foreign imports act as a sales tax on Australian consumers. Importers are forced to increase prices which decreases buying power for Australian people and lowers real wealth in Australia. Countries tend to retaliate when another country institutes tariffs and quotas, with their own restrictions. The Australian economy depends on our ability to export natural resources. If we cause other nations to retaliate, we could harm our own economy more than we help it.
Rather than cutting off foreign resources, we need to diversify our supply chains. COVID-19 has revealed our over-dependence on China for goods. Free-trade agreements with the UK, India, and others would give the Australian economy more security. Additionally, by creating free trade zones domestic manufactures will have a larger market to export their products and therefore are more likely to survive.
Unsustainable economic ecosystem
Australia has a shortage of domestic manufacturing thanks to a cocktail of unnecessary regulations and uncompetitive taxes. Australia can boost its domestic markets by simply improving the economic ecosystem.
First, Australia needs an internationally competitive corporate tax rate (see point three on the corporate tax rate). Furthermore, the Capital Gains Tax, also high in comparison to the rest of the world, reduces the incentive to invest in Australian businesses. Many manufacturing companies, even Australian companies serving Australian consumers, choose to operate overseas because the tax rates are so much more favourable.
Next, by cutting red tape (see point one) Australian can make it easier for businesses to start and can put more resources into the coffers of existing businesses. Before opening in Australia, businesses must maneuver through a minefield of obstacles and regulations that demand attention and compliance. For example, delete duplicate licences and simplify the system. To start a manufacturing business, the entrepreneurs could easily have to apply for forty plus licences. Next, industrial relations reform would make it easier for businesses to hire Australians. By simply making Australia an easier place to do business, the government can boost the economy and make our nation internationally competitive and able to attract foreign dollars.
Lastly, government agencies need to make obeying their own deadlines a top priority. Prime Minister Morrison in partnership with the Minister for the Environment is working to make sure all environmental approvals are processed on time. Pre COVID-19 only 19 per cent of approvals were actually completed in the designated time frame stopping 81 percent of businesses from growing their business when they planned. If the bureaucratic agencies are overwhelmed and can’t get through their workload, how much worse is it for the people trying to start businesses. No policy should be instituted unless the government is fully able to uphold its end of the deal and provide the services and oversight it promises. Not only should policymakers work to make the licensing process more efficient, but they should save labour by cutting unnecessary and outdated regulations. If Australia is to recover quickly and fully from this crisis, our politicians need to scrutinise all departments, not just the Department of Agriculture, Water, and Environment.
Superannuation: Keep the increased superannuation flexibility and give Australians more power over their retirement savings
Part of the federal stimulus package allowed struggling individuals to pull up to $10,000 from their superannuation accounts tax free. The new regulations also provided more flexibility for individuals collecting superannuation.
The government claims superannuation belongs to the account holders. However super is compulsory, is taxed when it is realised, and Australians are only allowed to withdraw their money in very specifically outlined emergencies and then a high tax rate of 17 to 22 per cent. Superannuation effectively acts as a tax taken from workers’ wages. The government should give individuals more autonomy over their retirements by making superannuation an opt-out policy where people can withdraw money tax-free when they need it most. The government can only react to national disasters; it cannot make similar exemptions for every personal crisis, crises which could be even more devastating than COVID-19 for the people impacted.
Liquidity in itself has value. For this reason, banks offer interest on savings accounts but not checking accounts. By arbitrarily making superannuation highly illiquid, policymakers have made the owner of those accounts that much poorer. By loosening regulations, lawmakers can automatically increase wealth for individuals and add value to the economy.
Through this Policy Proposal, the Australian Taxpayers’ Alliance, sought to simply outline key areas where the state and federal governments can use this crisis to make Australian freer and more prosperous, not poorer and more restricted as appears to be the current trajectory should certain policies remain in place.
Some states have taken steps in the right direction. The federal government has also begun considering and pursuing some of the above proposals. We commend their good work and recommend they make changes that increase individual liberty and national prosperity permanent.
Should the government at all levels deregulate, decentralise, restructure the tax code, encourage domestic production, and give people power over their superannuations, the Australian people will see long-term growth and prosperity. While necessary, the current reactions to COVID-19 will only provide a short sugar high to the economy. If our leaders are not wise, this could lead to a great depression more deadly than COVID-19.
That being said our leaders are facing an unprecedented crisis and so far have been able to act quickly and decisively. The Australian people have reason to celebrate much of the work done by our government during this time. However, that work is far from over.