No go-slow for ScoMo

Scott Morrison (aka ScoMo) will find on the Treasurer’s desk an in-tray reaching higher than Mt Everest. He could spend months getting across the details of his new remit, reviewing everything all over again.

That would be unfortunate.

Instead what we need from Morrison is action. Australia can’t afford yet more delay in reinvigorating our currently sluggish economic growth.

Firstly, Australia’s uncompetitive taxes need to be addressed. Bracket creep is causing personal taxes to increase each and every year – an extra tax of $25 billion over the next four years, according to the Treasury. The impact is particularly large on average income earners, reducing their take home pay by up to 3 per cent by 2019. This is hitting work incentives, productivity and growth. Higher taxes are hardly a good idea when the economy is growing strongly, let alone when growth is slow. The previous Treasurer, Joe Hockey, argued convincingly that bracket creep is a substantial problem, but then indicated that action to address the issue was some way off. Hopefully the new Treasurer can take act more quickly.

Morrison also needs to push ahead with the broader tax reform process, with a focus on reducing the tax burden (a position he is sympathetic to) rather than increasing it (as argued by Dr Ken Henry, a former Secretary to the Treasury). The CIS has made detailed representations on the tax reform needs.

Other reforms are gathering dust in the Treasurer’s in-tray, particularly the Financial System Inquiry (Murray Inquiry) and the Harper review of competition policy. Responses to these inquiries are overdue: while Morrison shouldn’t engage in a ‘go slow’, it would be better that he indefinitely defers questionable ideas (such as effects test for the misuse of market power) rather than implement them without thought. He should instead be acting quickly to implement the recommendations from these reviews that free up businesses to compete, driving innovation, productivity and economic growth.