Ideas@TheCentre – The Centre for Independent Studies


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.

Glimmer of hope

23 March 2012

As the federal government celebrates the parliamentary endorsement of Australia’s second major new tax in recent months – the minerals resource rent tax – it is appropriate to reflect on the fact that around the world, the last few years have been depressing times for advocates of tax reform consistent with limited government, incentive and individual liberty.

One key indicator of a country’s commitment to these principles is its top personal income tax rate. Many countries, particularly in Europe, have lifted their top marginal rates in recent years as they grapple with large budget deficits and act on concerns about inequality of income distribution. In the United States, the Obama administration would have increased the top federal rate had the Congress not stopped it, and will still attempt to do so if re-elected in November.

The libertarian view is that increasing top marginal rates is a populist reaction, is the wrong way to address legitimate concerns about inequality, will harm economic growth prospects, and will raise little revenue anyway.

There is now a glimmer of hope for libertarians that these arguments are being heard. The UK budget announced this week brings the top rate down from 50% to 45%, and foreshadows a further cut to 40%. The background to this move is that the 40% top rate, established by the Thatcher government in 1989, was raised first to 45% and then 50% by the Brown/Darling government during the global financial crisis. HM Treasury now finds that the increase has raised much less revenue than expected, and has encouraged high earners to relocate from the United Kingdom.

This is a world first: the reversal of a populist tax hike implemented during the global financial crisis. But it is no more than a glimmer of hope, for at the same time the socialist candidate for president of the French Republic is proposing to lift the top rate to an eye-watering 75% if he wins, which at the moment seems likely. This is a move back to the 1980s, when confiscatory marginal rates were the order of the day in all developed countries until more sensible policies took hold.

In Australia, the top marginal rate of 45% (plus Medicare levy) has not been increased (apart from the flood levy, which is supposed to be temporary), and there is no talk of it being increased. We should recall, however, that the Rudd government came to office with the ‘aspirational’ goal of a top marginal rate of 40%. That was quickly dropped, but it should be restored as policy, as part of a sweeping income tax reform that reduces all marginal rates and then indexes thresholds for inflation every year. Instead, the government is increasing the tax-free threshold and lifting some marginal rates, and indexation has been forgotten.

Robert Carling is a Senior Fellow at The Centre for Independent Studies.

'Of its essence a great mistake'

23 March 2012

While Australia’s federal system has often been described in these terms, this was actually how Paul Keating pointedly referred to the seat of our federation. Beyond being the butt of the same pithy line, the parallels between Canberra and Australia’s federal system are limited.

Australia’s federal system continues to be an effective means of dispersing political power and ensuring that far-flung regions are not at the mercy of a distant central government. Our federal system manages to do this relatively well despite a severe vertical fiscal imbalance that sees the states tasked with responsibilities they do not have the funds to effectively discharge.

Notwithstanding its recent ill-health, Australia’s federal system is therefore a good example of the way federalism promotes democratic accountability in geographically large countries. In fact, the only comparably large country without a federal system is authoritarian China.

By contrast, Canberra fails as a capital city. Canberra is all machinery of government and little else. Other capital cities are repositories of world history (Athens, Mexico City and Rome); centres of global commerce (Tokyo, London and Seoul); and hubs of cultural innovation (Paris, Beijing and Berlin). Canberra is none of these things.

Such are Canberra’s shortfalls that even consummate diplomats struggle to mouth the pro-forma laudatory lines. The question inevitably asked of members of the diplomatic corps in Canberra is ‘How have you found your time in Canberra so far?’ The response is inevitably at best attempted enthusiasm.

To be fair, Canberra arguably does have some of the features suitable for a distinctly Australian capital city. If Washington D.C.’s ubiquitous Grecian columns are symbolic of the grandeur of the American Republic, then the unimposing and eucalyptus bushland-girt Australian Parliament captures something of Australia’s unpretentious egalitarian ethos.

Be that as it may, surely we are confident enough in our own sense of Australianness to not need to fabricate an urban representation of it midway between two organically produced Australian cities. As a Canberra emigrant seeking naturalisation in Sydney, my response can only be in the affirmative.

Benjamin Herscovitch is a Policy Analyst at The Centre for Independent Studies.

Separate training system fails Aboriginal people

23 March 2012

The Aboriginal Health Worker role is an Aboriginal identified position, which means only people recognised as Aboriginal can train and work as Aboriginal Health Workers (AHWs). Approximately 1,000 AHWs are employed across Australia, but many more have completed or enrolled in AHW training. Of the 450 registered health workers in the Northern Territory in 2010, only 195 were employed.

Separate courses and career paths for Aboriginal people have a poor track record. Earlier this year, GenerationOne reported that many Aboriginal people are frustrated because training courses were not leading to jobs.

A major national review in 2000, ‘Training Re-visions,’ identified a number of problems with the training provided to AHWs. In particular, as no clear definition of the AHW role existed, training was ‘all over the place’ and lacked consistency and quality control. Each state and territory had its own training, resulting in differences in course development and delivery, even within regions, states and territories.

Two recent reports on AHW training – ‘The Aboriginal and Torres Strait Islander Health Worker Project’ and ‘The Aboriginal Health Worker Profession Review’ – suggest that many of these longstanding issues remain unresolved.

Training for AHWs continues to be provided by Registered Training Organisations (RTO), who receive financial benefits to ‘get bums on seats’ but are not held accountable for poor outcomes.

The Batchelor Institute in the Northern Territory admits that its training program relies on local health services to provide clinical job training support. Some students end up working in clinics where this support is not available, preventing them from completing their training properly.

Despite these problems, the federal government has committed to ‘national registration and accreditation’ of AHW practitioners on 1 July 2012 under the Australian Health Practitioner Regulation Agency (APHRA).

However, a third of AHWs have no qualifications or have not completed training so they will not meet the new registration requirements. The government’s solution is to have two tiers of health workers – registered and unregistered. This approach risks confusing the health worker role further, not to mention the potential health and safety issues in having non-registered and untrained health workers practising medicine.

Like everyone else, Aboriginal people deserve to be treated by qualified and competent health professionals. It is also ludicrous to expect the least educated and most poorly paid health care workers in Australia to be capable of tackling some of the country’s most difficult and intractable health problems.

Sara Hudson is a Research Fellow at The Centre for Independent Studies and author of Charlatan Training: How Aboriginal Health Workers Are Being Short-changed, which was released this week.