Australians are often proud of saying that “we are the only first world country that can boast 28 years of unbroken growth” but the clock is always ticking.
The list of challenges confronting policy makers – drought, balanced budgets, interest rates, trade wars, unemployment, infrastructure funding, taxes, even inverted bond yield curves – is long.
Add in intense media scrutiny which seeks to distil everything to a digestible sound-bite or create confrontation, and a political system which has seldom seemed more fragile, and there is little wonder policy reform is not at the top of any to-do list.
But there is a strong case it should be.
A happy coincidence of abundant minerals, proximity to the world’s fastest growing markets and Western style regulation have meant Australia’s living standards are up there with the best of the world.
Pick a global organisation with a well-known acronym (think OECD, UN, IMF) and chances are Australia will rank near the pointy end on health, wealth, and well-being.
While it would be naïve to think some people are not struggling in Australia, this generation of success not only offers the warm inner glow of knowing your lawn really is greener than most of your neighbour’s, it can breed complacency.
Yet all around us, economic alarm bells are sounding.
Whether it is Productivity Commissions signalling the need for reform, the IMF flagging a global slowdown, the RBA slashing interest rates to levels never before contemplated, or the growing risk of the fiscal gap, the writing is as colourful as the graffiti on a Melbourne laneway’s wall.
And it’s not as though we have not been here before.
Australia was economically charmed for much of the 20th century, but by the 1970s things were failing badly with unemployment and inflation on the rise.
The grand reforms of the Hawke-Keating and then the Howard-Costello eras, which saw tariffs fall, the dollar floated and the introduction of the GST, halted the slide.
But as Keating himself has pointed out, those things can only be done once.
The only choice we face is whether we embrace reform and shape it, or ignore it until we are dragged kicking and screaming into the future we know is coming.
This is the motivation of NSW establishing the Federal Financial Relations Review.
In my view, our Federation works best when it’s driven from the bottom up, not top down. As the nation’s most important state economy, I believe NSW should have a greater say in how the system should work and part of that is helping drive a national conversation.
What shape reform could take is clearly a matter for much debate, and the path to change is marked by battles which result in ideas reshaped and proposals cast aside. Such is the nature of politics.
As a small government Liberal, I have no interest in providing the government with more of other people’s money. Simply increasing taxes is not tax reform.
This is not a hollow statement, in NSW we have cut over $5 billion in taxes since 2016-17, including reducing payroll tax and indexing stamp duty brackets to the CPI.
The Terms of Reference for the Federal Financial Relations Review explicitly include the call that taxes need to be lower, simpler and fairer – as well as more efficient.
The question is not so much the amount of tax but the type and mix of taxes our revenue is raised from.
For example, payroll tax can inhibit firms from expanding in size and creating jobs – it’s a drag on activity. Stamp duty can stand in the way of families getting their keys to their first home or moving to where the jobs are.
Giving people better access to jobs and increasing property ownership are key pillars of the Liberal aspiration agenda and initiatives we should promote. This stands alongside sensible fiscal management.
The commitment of the Morrison Government to return the national budget to surplus is to be applauded. The low taxing agenda is a breath of fresh air compared to the high taxes and heavy regulation Labor proposed.
There is also little doubt big gains lie in reforming industrial relations, company tax cuts, expanding our resources sector and opening up our energy markets.
I believe it is just as important to examine reforms which can boost productivity, lessen the burden of taxes and promote investment and growth.
Hawke, Keating, Howard, Costello – each bit the bullet, put the good of the nation above politics, and left our nation better than they found it.
That’s our challenge too. Our entire nation’s future prosperity is at stake – we are all invested, so let’s hear all the arguments, and decisively chart the course.
This is the conversation we have to have. Let’s have it.