Ideas@TheCentre – The Centre for Independent Studies

Ideas@TheCentre

Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Lockdown leaders’ insulting excuses

Monica Wilkie

27 November 2020 | IDEAS@THECENTRE

gladys berejiklianLeaders who bend their own COVID rules are insulting the trust and faith their constituents place in them.

Gladys Berejiklian was caught breaching NSW Health guidelines by not self-isolating while waiting the results of her COVID-19 test. Last week, California’s governor Gavin Newsom attended a friend’s party at a busy restaurant.

From trips to the English countryside, visits to second homes, sneaky haircuts, and amorous extra-curricular activities from the UK lockdown-in-chief, leaders have not been shy about breaking their iconclad, crystal-clear COVID-19 rules.

These lockdown flouters gave various versions of the same apology — claiming they acted responsibly, assessed their own risks, and were sorry they did not set a good example.

These are perfectly reasonable explanations. So why are they good enough for our leaders but not for the rest of us?

Australians have been continuously implored to take this virus seriously, change our behaviour — pretty much permanently, and almost all activities have been restricted.

Fishing, golf, pub drinks, and even sex were all banned in various jurisdictions. Tragically, people have been denied visits to dying loved ones and prevented from farewelling them at funerals.

If you were found eating a kebab, holding a house party, or trying to organise a ‘COVID-safe’ anti-lockdown protest, you were fined, arrested and branded a selfish #covidiot.

These people could not have claimed they “behaved legally and reasonably”, “acted in the belief [they were] immune” or “knew that [they] didn’t have any [COVID-19] symptoms.”

Whether the coronavirus response was proportionate and necessary will be debated for years to come.

But in March, governments decided COVID-19 warranted an unprecedented response – compared to seasonal flu or recent viral infections. This response relied upon a series of coercive measures.

We were told we were ‘all in this together’ and we all had to make sacrifices for the greater good — and we did. Australians have been remarkably compliant, and our leaders have been rewarded with sky-high approval ratings.

But such good will is not unbreakable — especially if our leaders continually demand compliance from us and latitude for themselves.

Resist protectionism and regulation

Simon Cowan

27 November 2020 | IDEAS@THECENTRE

protectionism globe world mapWhile the short-term issues associated with the recovery are crucially important, they’re not the only serious economic problem we face.

Although it may seem like the sort of dull thing we used to be concerned about back when we didn’t have any real problems (circa 2019), you may recall that wage growth leading into the recession was at near record lows, despite a 28-year run of uninterrupted economic growth.

As the Productivity Commission pointed out in their latest report on productivity, stimulating and maintaining productivity growth are the only things that will boost wages in the long term.

There are two roadblocks to rebooting productivity. From the right, the concern is the re-emergence of economic nationalism and protectionism. From the left, the issue is the strangling growth of regulation.

It took a long time for Australia to move away from protectionism. There is a serious risk that the border safety concerns of the pandemic will drive Australia, and the rest of the world, back towards the insular, protectionist attitudes that were prominent in the 1950s, 60s and 70s.

Scepticism of a free trade led approach to international relations has been growing for years before the pandemic.

But a pro-market agenda is not a pro-business agenda: it’s a pro-consumer agenda.

The biggest benefit comes from the competition that foreign producers bring to domestic markets. Competition drives innovation and cuts margins: that means more products and lower prices for consumers.

Regulation is a different type of limitation on competition, one that is equally damaging and even more insidious.

The number and scope of regulations imposed by government has exploded in the last decade or so. It would be convenient to point to the global financial crisis and its supposed failure of capitalism as the genesis of this trend, but in reality a desire to tamper with market forces to control economic outcomes far predates this downturn.

If the green shoots of recovery are indeed more robust than they seemed a few months ago, it will be because of Australia’s efforts at deregulation and opening of markets in the 1990s and 2000s made our economy one of the most resilient in the world, in spite of the hostility to those ideas that has been growing since then.

It will not be easy to reignite this agenda. But if we want broad-based wage growth, then it’s time to go to work.

This is an edited extract of an opinion piece published in the Canberra Times as It’s time to go to bat for market forces

Super system is sound

Robert Carling

27 November 2020 | IDEAS@THECENTRE

retirement superannuation superHere we go again — yet another review of retirement incomes, this one the outcome of a year’s work by an independent panel supported by a Treasury secretariat, and released by Treasurer Josh Frydenberg last Friday.

Australia’s retirement income system — based on a means-tested public pension and compulsory private superannuation — is much admired from abroad. But at home, policy activists and others with an axe to grind just can’t leave it alone.

Not that something that’s broken should not be fixed. But how broken is the current system? Not much, according to this latest review, which says the system is fundamentally sound, effective and broadly sustainable in cost.

The review debunks the myth that the superannuation system will not substantially reduce the cost of the age pension.

But while giving the system a big tick, the review goes on to canvass changes anyway.

It lends support to the many experts, analysts and commentators that have argued the SG rate should be left at 9.5 per cent. It gives the government a lot of ammunition to cancel the legislated increases or at least defer them again.

The report also makes clear its view that the pension asset test taper rate should not be eased, and hints that pensioners’ own homes should be included in the asset test.

It spills a lot of ink on the old chestnut of superannuation tax concessions and does not hide its irritation with some aspects of them. But the opportunity for another skirmish in the long war of attrition against tax concessions will undoubtedly excite those who see these concessions as an unjustifiable drain on revenue they would rather see spent on their own favoured causes.

The rest of us see concessions as being consistent with a tax system that would not discriminate against saving; and the money is better left in taxpayers’ pockets than given to governments to waste.

It is unfortunate this review has swallowed the Treasury line and clearly favours increased tax on super, but the current government, at least, has already made substantial changes in 2017 and is unlikely to come back for more.

However, the review will always be no more than a starting point because retirement incomes policy deliberation moves on quickly from the facts to judgements, trade-offs and raw politics.

This is an edited extract of an opinion piece published in the Canberra Times as Australia’s retirement income system prompts another round of national navel-gazing