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    The Nation State

    By
    James Hol
    -
    0

    As another Australia Day passes, it gives us the opportunity to reflect on our national identity and what it truly means to be Australian with the number purporting to opt out of celebrating our national day increasing.

    CHANGE THE DATE

    26 January 1788 marks the landing of the First Fleet and raising of the Union Jack in Sydney Harbour. While it is true it has only been granted public-holiday status since 1994, the term “Australia Day” has been used to celebrate 26 January in all states and territories since 1935. In New South Wales, 26 January celebrations date back to 1808.

    While changing the date may sound like a way of keeping more people happy, in fact complaints about the date are nothing more than a facade for the true anti-Australian and anti-Western motivations behind the movement.

    History is replete with actions that we would find abhorrent in modern society – and some of the actions of Australia’s first settlers are no exception. Regardless of what new date we may find, the grievance industry would have absolutely no hesitation finding some historical injustice on that new date to complain about. Which is precisely the point.

    Australia has now become the global roadmap for Western tyranny.

    The true intention behind those campaigning to “change the date” is to abolish Australia Day in its entirety. In fact, these grievance professionals do not believe Australia, or its culture, is worth celebrating. They are the Australian subsidiary of the global grievance industry’s efforts to prevent the celebration of any aspect of Western culture, despite it being responsible for the most free and equitable societies in human history.

    A BROKEN CLOCK

    But what if they’re right? What if these grievance professionals have stumbled onto something, inadvertently of course? The irony is that Australia is the wet dream of the very authoritarians who attempt to suppress the celebration of any of its achievements.

    Contrary to the popular narrative of the laid-back Aussie, we are an incredibly orderly and compliant bunch. If Shakespeare was right and all the world is indeed a stage, Australia is the usher, dutifully ensuring the audience is seated correctly and quickly shushing those who dare exceed the permitted level of fun.

    And what do we have to be proud of? Let’s look to modern times. Having the world’s longest and harshest lockdowns? Excessive levels of taxation? Forced participation in the political system? A disarmed populace?

    “But we were once a great nation” all the boomers will cry! Perhaps we were; I was not alive to see, but I suspect that is nothing more than a nice comfort to cling to.

    THE LUCKY COUNTRY

    Our history suggests we were always orderly and compliant, inheriting our love for order from Mother Britian and never seeking independence from her. Like an overly dependent child and a helicopter mother: the mother fearful of the harms that freedom may entail, and the child comforted by a familiar dependence.

    The true intention behind those campaigning to “change the date” is to abolish Australia Day in its entirety.

    Australian liberty is no better summarised than by our closest encounter with homegrown rebellion: the Eureaka Stockade. It lasted a grand total of 15 minutes before the rebels were overrun by security forces.

    While the founding documents of the rebel miners proclaims that “taxation without representation is tyranny”, echoing the language of the United States Declaration of Independence, the Eureka flag now hangs in the offices of tyrants across the country.

    The symbol of our failed rebellion is captured by the tax collectors and tyrants it once opposed. All to the rapturous applause and adulation of the captive populace.

    GOLDEN SOIL

    Australia has now become the global roadmap for Western tyranny. American gun-grabbers point to “the Australian model” to disarm their populace. Global health bureaucrats gushed over “the Australian approach” to Covid tyranny. Regulators worldwide were inspired by Australia’s plain-package cigarettes and sky-high tobacco excise.

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    While the Australian economy was once described as “a farm on top of a mine”, it should now be updated to “an unrelenting bureaucracy on top of a mine”. By revenue, state government administration is now the biggest industry in Australia. And tyranny is our biggest export.
    And even though I celebrated Australia Day the most Aussie way I know how, in front of a barbeque, with a beer in hand and the cricket on TV, as the state-mandated bedtime approached, I couldn’t help but wonder: am I truly proud to be Australian?

    What should the Australian Defence Force do?

    By
    Duncan Spender
    -
    0

    Hint: the answer is in the name

    The Australian Defence Force (ADF) does lots of things it shouldn’t.

    Restrict the trading of others

    The Australian Defence Force (ADF) helps to enforce sanctions.  

    It contributes in varying degrees to efforts to enforce sanctions endorsed by the United Nations Security Council, like sanctions against North Korea, Afghanistan, Iran, Iraq, Syria, and various countries in Africa, as well as other sanctions like those against Russia, Myanmar, and Zimbabwe.

    Sanctions impede and redirect, rather than stop, trade involving the targeted countries.  They rarely bring about regime or policy change in the targeted country, and any impact in this regard is more often negative than positive.  Sanctions amount to a diplomat’s response to a call to ‘do something’ without the commitment of ground troops.

    Deterring and countering restrictions on our own trade

    Some say the ADF can and should defend Australian trade by ensuring the ADF can project power including through a long-range navy.

    This is wrong.

    The likelihood of any attempts to stop Australia’s trade is low, the likelihood of success of any such attempts is low, the impact of a successful attempt to stop Australia’s trade would be far from catastrophic, and the ADF can do little to deter or counter any of this anyway.

    Firstly, consider the likelihood of attempts to stop Australian trade.  Here are some scenarios, from less to more likely.

    • The United Nations Security Council agreeing to impose sanctions on Australia in an attempt to stop Australian trade.
    • An assortment of powerful countries defying the Security Council and attempting to stop Australian trade themselves.
    • One country, such as China, unilaterally attempting to stop Australian trade, including through war.
    • Pirates attempting to stop Australian trade.

    Each scenario is unlikely, except perhaps the risk of piracy, for which traders can arrange their own security.

    The federal government should not have supported this illiberal state policy

    Secondly, consider the likelihood of success of any attempts to stop Australian trade. As we see with current sanction efforts, and even at the height of the last world war, even the most sophisticated campaigns against a country’s trade tend to impede and redirect trade, rather than stop it.

    Thirdly, consider the impact of a successful attempt to stop Australian trade. Despite popular impressions that Australia is heavily trade dependent, Australia has a below-average reliance on trade.  We are more self-sufficient than you think.  So a successful blockade of Australia would cause some hardship, but any claims beyond this are hyperbolic.

    Finally, even in the unlikely event of a successful trade blockade against Australia, what would be the optimal ADF response?

    Nothing.  

    The point is, the cost of having a military powerful enough to counter such a blockade would be greater than the cost of living self-sufficiently.

    The ADF as foreign aid

    The ADF is building infrastructure in PNG, Vanuatu, Fiji and the Solomons, doing maritime surveillance to defend the fisheries of various Pacific Islands, and training military and police forces in various Pacific countries. 

    Such action may fail to deliver political stability and prosperity to the Pacific, and may fail to deter the establishment of Chinese military bases in the Pacific.  Moreover, Australians suffer little from instability and poverty in the Pacific, and Chinese military bases in the Pacific would do little to increase the risk of, or damage from, Chinese aggression to Australia.  

    The ADF’s actions in the Pacific are essentially foreign aid, the funding of which should not be forced on all taxpayers.

    Despite popular impressions that Australia is heavily trade dependent, Australia has a below-average reliance on trade.

    Other overseas operations

    The operations of the ADF beyond the Pacific are unwarranted too.

    The ADF is training Ukrainians to fight Russia and remains in a fight against ISIS in Iraq and Syria, with a current focus on training Iraqi forces. The ADF dons blue berets to police the borders of Israel and the Koreas and to provide security in South Sudan, having recently provided security in Mali.

    These are not our fights. Interested Australians should be free to engage in these conflicts if they so choose, without roping the Australian taxpayer in. The ADF’s engagement in these fights does not represent cost-effective training for defending Australian soil, which is best done through defensive exercises in Australian conditions.  And while ADF personnel are overseas, they are not defending Australia.  

    Enforcing obedience to state law

    During the Covid lockdowns, the ADF was used in support of state police to prevent travel beyond legally permitted limits and to keep state borders closed. 

    The federal government should not have supported this illiberal state policy, and the military should not have been tasked with law enforcement.  In liberal democracies, we train and regulate our military primarily for the exertion of force on enemies, and our police primarily for the service and protection of citizens.

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    Disaster relief

    The ADF is increasingly being used for humanitarian assistance following floods and bushfires. This is not its role; indeed, such activities are a serious distraction from its primary role of the defence of Australia. 

    State governments should bolster the ranks of volunteer organisations to provide humanitarian assistance.

    Don’t Pay the Pied Piper

    By
    James Hol
    -
    2

    More than anything, government is incompetent. It is staffed by people who, by and large, have been or would be unsuccessful in the private sector – whether the receptionist at your local motor registration office or the Prime Minister of Australia.

    Ultimately, we are aware of this. However, thanks in part to television programs such as The West Wing and House of Cards, we simultaneously believe the government is comprised of savant-level masters of psychoanalysis and manipulation.

    THE MARKETPLACE OF GOVERNMENT

    Perhaps one of the biggest tactical failings of libertarians and anarchists is the tendency to view the government as one cohesive and comprehensive entity. While it is true that most Western governments are behemoths, they are not homogenous. Rather, they are comprised of a number of disparate departments competing for their slice of tax revenue. 

    Good leaders should be able to admit their faults and avoid acting on emotion

    Both libertarians and authoritarians like to think that government departments work in tandem, sharing relevant information and working together to overcome an obstacle or bring down the ‘bad guy’.

    While they do undoubtedly work together at times, we should all be very hesitant to assume that is typical. Often, it is in the interests of the self-serving bureaucrats who lead various government departments to work against other departments. 

    What is better for the Department of Foreign Affairs and Trade (DFAT) than to prove the incompetence of the Department of Home Affairs? If you were a self-serving bureaucrat at DFAT, you could leverage that to demand more scope, which means more funding, a bigger empire, and perhaps more money in your pocket.

    INCOMPETENCE BEFORE CONSPIRACY

    Whenever we are presented with government inconsistencies, we should always consider incompetence before conspiracy. That is not to say that government conspiracies do not exist, but the level of expertise required to pull off many of the conspiracies posited is something that is simply not possible for the incompetent people who have comprised our governments for many decades.

    When attempting to determine the likelihood of a conspiracy theory being true, it is always worth examining:

    1. The number of co-conspirators required.
    2. The profit or benefit for the conspirators.
    3. The use of unfalsifiable statements and arguments.
    4. The deliberate misinterpretation of events.
    5. The excessive use of baseless arguments.
    6. The number of assumptions required.
    7. The false messiah.

    It is true that most Western governments are behemoths, they are not homogenous. 

    THERE BUT FOR THE GRACE OF GOD GO I 

    Even when we look at recent Covid tyranny, the most likely culprit is old-fashioned pride. While homegrown tyrants like Dan Andrews and Mark McGowan do not deserve to ride off into the sunset of retirement without facing the accountability of the people, that does not mean they were motivated by a global conspiracy to imprison their own constituents and usher in a social-credit-style system at the behest of the World Economic Forum (WEF). Occam’s razor dictates that their real fault was the inability to detach their own pride and ego from the policy they prescribed. We all find it difficult to reverse our instinctive position and admit that we were wrong. 

    This does not excuse tyranny; good leaders should be able to admit their faults and avoid acting on emotion, but it is important we recognise the banal origins of tyrannical behaviour. We are all capable of extreme tyranny.

    THE RABBIT HOLE

    All this is to say that there are some conspiracy theories out there that are ridiculous, yet refuse to die. Flat earth, reptilians, QAnon and fake moon landings are just a few that immediately come to mind. These theories are not only completely ridiculous, but dangerous. They serve to ideologically neutralise those who believe them: instead of directing their investigation towards actual, observable corrupt government and corporate institutions, they are too busy chasing shadows, fighting imaginary adversaries and worshiping false messiahs.

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    What have any of these conspiracy theorists actually accomplished? Have they created a thinktank that has shaped public policy? Have they run a successful candidate? Have they meaningfully gained influence and shaped culture? Have they captured a single reptilian? Have they found real evidence demonstrating the earth is flat? Have they proven anything? All they have achieved is increased sales of their “natural remedies” they advertise.

    Julian Assange and Edward Snowden showcased actual government corruption and exposed real conspiracies in their entirety. Meanwhile, when it comes to grifters like Ricardo Bossi or Q, the revelation is always “just around the corner”.

    Challenging narratives and thinking critically isn’t just about calling out corporatist media propaganda and government corruption, but also the grifters within our own movements.

    The Lure of Government Benevolence

    By
    David Leyonhjelm
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    3

    Why is it that in many countries, including Australia, governments consistently spend more than they collect in taxes, thus increasing the national debt? 

    Most governments understand that budgets should be balanced. They have seen what happens in countries that accumulate too much debt and cannot service it. And yet, the debt keeps growing. 

    The explanation is rather uncomfortable for many of us. It is, broadly speaking, our own fault. We keep electing governments that reflect our thinking.

    There was a time when we largely provided for ourselves. Prior to 1909, for example, there was no age pension; everyone was expected to save for their retirement, directly or via a mutual society. 

    The reality of socialism is universal poverty, but the illusion of unlimited, universal care remains powerful.

    Similarly, prior to 1910 there was no disability support pension. Privately funded charities and philanthropic organisations provided assistance for the disabled. 

    It was the same with health care; Medibank, the precursor to Medicare, did not exist until 1976. 

    University fees were a private cost until 1974. There were many scholarships on offer but those who failed to obtain one and whose family was unable to pay the fees would often delay or forego tertiary studies. 

    For women returning to work, childcare was typically provided by families, friends and neighbours, or by community organisations such as churches. Government subsidised childcare only began in 2000. 

    Most people would probably be disinclined to wind back the clock. And yet, most people also believe that they already pay too much tax and do not wish to pay more. And therein lies the problem. 

    In the five years in which I was a senator, I wrote hundreds of articles for newspapers and magazines. The subject on which I received the most hostile feedback was the suggestion that eligibility for pensions should take into account all assets, including the family home. It was inequitable, I argued, that the taxes of those who could not even afford to buy a home were funding the pensions of those living in multi-million-dollar houses. 

    I lost count of the number of people who claimed they were entitled to a pension because they had paid taxes during their working life. Many also argued that age pensions were justified because there were parliamentary pensions (although these were abolished in 2004). 

    It made me realise that Australians want to have their cake and to eat it too. That is, they want the government to pay for all sorts of services, but do not associate this with taxes. Money from the government is somehow different.  

    We keep electing governments that reflect our thinking.

    The outcome is that governments implement generous schemes such as the NDIS, age and disability pensions, Medicare, childcare subsidies and HECS, generally to public acclaim, without mentioning where the money is to come from. There are far more votes in spending money than collecting it. 

    This presents a problem for libertarians, who advocate low taxes and small government. How can they persuade Australians that the hugely expensive government-run schemes they consider to be a right are either not necessary or could be replaced by something that is cheaper and more effective, if approached differently. 

    This same problem is now facing Argentina’s new president, Javier Milei. Although Argentinians elected him with his libertarian agenda, he did not receive a majority of votes and his party does not have a majority in parliament. Argentinians, like Australians, have been told for decades that the government will provide. Like most Australians, most are yet to accept that their expectations are unrealistic. 

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    Unless voters can be persuaded that there is no such thing as free government money, and that personal responsibility yields better results at lower cost, there is little chance governments will implement policies based on that. Even in Argentina, which has defaulted on its national debt no less than eight times, the appetite for economic reality is low. Milei will require the wisdom of Solomon to implement his policies. 

    We must hope that he succeeds. The reality of socialism is universal poverty, but the illusion of unlimited, universal care remains powerful. 

    It Takes Two To Tango

    By
    Max Payne
    -
    1
    Jim Chalmers

    Australia’s centrally planned economy is failing – intergenerational wealth gaps are widening, economic prospects are waning, and the side effects from the Reserve Bank’s (RBA) medicine are becoming worse than the disease. 

    Inflation is a scourge, insidiously stealing wealth from those least able to protect themselves, and it benefits the least needy. 

    We hear all sorts of explanations as to why inflation is not the government’s fault: the RBA was too loose with monetary policy, AHPRA failed to regulate bank lending standards effectively; hell, even consumers themselves were blamed by former Governor Phillip Lowe.  

    But Lowe is gone now and the RBA board under Chalmer’s new darling, Michele Bullock, has continued to hike rates with a 25 basis point increase last week. It’s high time the government understood that fighting inflation is going to require some sacrifice of its own. As Dimitri Burshtein explained, more tax doesn’t make for better government; likewise, more government spending doesn’t curb inflation.   

    Dumb and Dumber

    The RBA effectively only has one instrument to fight inflation – and that is to increase the cash rate, the thinking being that if borrowing becomes more expensive then demand will be sapped from the wider economy. Australia is a land of high household debt, and it’s largely mortgage holders who feel the pinch when rates rise.

    Australia desperately needs synergy between the government and RBA on inflation

    What is truly disappointing about the current economic climate is the complete lack of synergy among our central planners – and their approach to the drivers of inflation. The Government seeks to relieve cost of living pressures with subsidies, welfare and spending, while the RBA is slamming the brakes on. We also cannot hope to tame inflation if infrastructure spending remains at record highs and the bureaucracy continues to grow (Georgia shows what must be done).      

    Where credit is due

    The ‘lender class’ are older Australians who have paid off their homes and are now seeking better returns on their investments – a higher cash rate delivers them higher returns (albeit reduced in real terms by inflation). Meanwhile, mortgage holders only see their costs rise as rates climb, squeezing their already tightening budgets. Downstream from this, renters are slugged as their landlords pass on higher mortgage repayments amidst low rental stock.  

    The ‘lendee class’ is getting smashed on two fronts – inflation on the cost of goods and services, while the RBA’s rate hikes squeeze them even more. 

    There has to be a better way.

    Government to the rescue

    The Federal Government needs to take three key steps to reduce the impact of inflation on the ‘lendee class’.  

    • Reduce or remove excise tax on fuel, alcohol and tobacco   

    Measures that decrease the cost of items are needed, not inflationary welfare that only continues to drive demand. Fuel excise is particularly important due to its impact on the transportation costs of goods. Meanwhile alcohol and tobacco excise disproportionately affect lower income earners. 

    • Reduce GST, or expand the criteria for exempt items

    The Goods and Services Tax disproportionately affects lower income workers as the tax applies as a flat rate on all eligible items, many of which are essential. This will impact state government revenue but with many household budgets at breaking point, they too will have to learn to live within their means.

    Inflation is a scourge, insidiously stealing wealth from those least able to protect themselves

    • Sensible energy policy

    A thriving economy needs cheap and abundant energy, with energy being a key input across the supply chain, not to mention household budgets. Australia must abandon its 2050 net-zero and 2030 emissions reduction targets. We should welcome investment in coal fired power and natural gas, which we have in abundance. Longer term we must embrace nuclear power. 

    Not only would these policies provide genuine relief for those suffering the most from inflation, but they would actually reduce the costs of production and business, helping the RBA rein in inflation. 

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    Australia desperately needs synergy between the government and RBA on inflation, and the attempts of Chalmers and co to direct public scorn onto the central bank in order to save face are a great shame. If Australian households are expected to do it tough for a while, it’s high time our government accepted the same responsibility. After all, it takes two to tango.  

    Other People’s Money

    By
    Dimitri Burshtein
    -
    1
    Ross Gittins, Sydney Morning Herald economics editor

    Philosophy #1: Living On Other People’s Money Is Unwise

    When reading the news and opinion, I am frequently mindful of the idea of other people’s money and the perceptive words of French economist Frederic Bastiat, who wrote that “The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.”

    I thought of Bastiat when reading a recent opinion column by Ross Gittins, the Economics Editor of the Sydney Morning Herald.  There really needs to be a better lexigraphy to reflect the differences between the economic writings of Bastiat and Gittins.  After all, we don’t call plumbers aquatic surgeons.

    Philosophy #2: Exploiting Other People’s Money Is Good

    In Gittins’ latest, he again advocates for higher taxes, because “… paying tax is good and, for better government, we should pay more”.  Evidence be damned, that ever more expensive government has delivered ever worse outcomes – from education, to health, to defence.  But for some, it is axiomatic that we must tax other people’s money more. 

    Messrs Gittins and Keating: you are welcome to voluntarily pay higher tax.  But until you do, please don’t demand that others are forcibly required to do so.

    As long as it is other people’s taxes. The funny thing is that those who advocate higher taxes never seem to volunteer to pay higher taxes themselves.  No doubt, the ATO would accept voluntary contributions, but that is not the game.  Higher tax advocates don’t want to pay higher taxes themselves.  They just want other people’s money so that they can “live at the expense of everyone else” as Bastiat predicted.

    Call To Authority

    Gittins starts his case with a call to authority saying that “former top econocrat did something no serving econocrat is allowed to do, and no politician is game to do: he set out the case for us to pay higher, not lower, taxes.”  That former econocrat is Michael Keating (unrelated to Paul Keating) and he delivered his remarks at the Australia Institute’s revenue summit at Parliament House in Canberra.  That’s the Australia Institute that has never found a tax or regulation they did not like.

    Keating and Gittins are reflecting what is known as bureaucrat logic: that increasing input delivers better outcomes.

    Frederic Bastiat. Frugal with other people's money
    Classical liberal economist, Frederic Bastiat. He cautioned frugality with other people’s money.

    Permit some definitions:

    • Inputs are resources going in – such as dollars.
    • Outputs are things that are produced with the inputs – such as patients treated or students graduated.
    • Outcomes are the results – such as healthy citizens and kids who can read.

    But for some, it is axiomatic that taxes must be increased. 

    No Linear Relationship Between Inputs and Outcomes

    Bureaucrats, econocrats and many politicians seem to believe that, despite evidence upon evidence to the contrary, there is a linear relationship between inputs and outcomes.  Increase education spending and you get more literate kids.  Huge increases in Gonski funding delivering worse education outcomes is just a bump in the road.  Even more is required.

    Messrs Gittins and Keating: you are welcome to voluntarily pay higher tax.  But until you do, please don’t demand that others are forcibly required to do so.

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    As American writer Harlan Ellison said: “The two most common elements in the universe are hydrogen and stupidity.”  There seems to be a high concentration of both in Canberra.

    No Laffing Matter

    By
    Bob Day
    -
    3

    An Australian was on holidays in the south of France.

    Strolling along outside his hotel, the Aussie was suddenly attracted by the screams of a young woman kneeling in front of a small child.

    The Aussie knew enough French to determine that the child had swallowed a coin.

    Seizing the little boy by the heels, the Aussie held the boy up and gave him a few good shakes and out popped the coin.

    “Oh, thank you sir, thank you,” cried the woman.

    “You seemed to know just how to get that coin out of him, are you a doctor?”

    “No madam,” replied the man, “I’m with the Australian Tax Office.”

    In my last post, Prison Break, I spoke of rights and responsibilities.

    … when taxation rates are reduced revenues do not fall.

    Regulations that prevent people from working under terms and conditions which suited them, was, I said, an infringement on liberty, freedom and dignity. It violated a person’s right to get a job and their responsibility to provide for their families.

    I will now add a further hazard – it prevents them from paying tax to cover the many services the state provides to that person.

    Rights … responsibilities … and tax. They are all linked.

    Jean-Baptiste Colbert, Finance Minister to King Louis XIV of France, famously declared that “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

    A modern finance minister might rephrase this as, “The largest possible amount of revenue with the smallest possible amount of economic and political damage.”

    Which brings me to a man called Arthur Laffer.

    I had the privilege of meeting the famous US economist in Parliament House in 2015. Dr Laffer was in Australia on a speaking tour.

    Arthur Laffer is of course most famous for his Laffer Curve.

    It is self-evident that tax revenue would be zero if tax rates are set at 0% (bottom left corner of the graph).

    Revenue would also, of course, be zero if rates were set at 100% (bottom right corner).

    Starting at 0%, as tax rates rise, revenue also rises until at some point on the graph it starts decreasing as it heads towards that 100% point.

    Eminent Australian and UK economist Colin Clark once said economic growth declines if taxation is more than 25 per cent of GDP.

    It’s also been said, “When the taxes of a nation exceed 20% of the people’s income, there is a lack of respect of government. When it exceeds 25%, lawlessness.” 

    In Australia it is close to 30%.

    Take one example of this lawlessness – the cash economy, currently estimated at 15 percent of GDP, one of the largest in the developed world. An underground economy of that magnitude requires the involvement not only of a lot of businesses, but also of millions of consumers.

    As we know, laws only work when people believe in them and clearly, they have no respect for our tax laws.

    It’s also been said, “When the taxes of a nation exceed 20% of the people’s income, there is a lack of respect of government. When it exceeds 25%, lawlessness.” In Australia it is close to 30%.

    Despite what many advocating tax increases would have us believe, the total tax take in Australia is quite high. They say that compared with other developed economies, Australia is a low tax country, and that workers and companies could comfortably pay more. Not so.

    When it comes to taxing incomes, Australia is up there with the Europeans and is way ahead of most of our neighbours in the Asia-Pacific region.

    A paper published by the Adam Smith Institute stated, “If you look at the experience of those who have introduced a single-rate flat tax, and also the tax reforms of the 1980s which took place in Britain and America, reducing tax rates causes revenues to rise.”

    As Arthur Laffer showed, and as has been demonstrated many times, when taxation rates are reduced revenues do not fall. When the Australian company tax rate was cut from 39 to 30 percent, revenues went up, not down. The famous Reagan tax cuts from 70% to 30% in the 1980s produced a $9 billion increase in revenue when a $1 billion shortfall had been forecast.

    When Sweden halved its company tax rate from 60 per cent to 30 per cent, company tax revenue tripled.

    Nobody enjoys paying taxes, but in the 1950s and 1960s relatively low taxation and a comparatively simple set of tax rules meant that most people paid what was due without too much complaint.

    Today, however, the Government and the ATO find themselves locked into a destructive relationship of repression and resistance with ordinary taxpayers.

    Where people can avoid tax by exploiting loopholes, they will do so; where they can’t eg PAYG taxpayers, they become resentful at the unfairness of it all.

    Full House?

    By
    Max Payne
    -
    1

    As Australia grapples with a crisis of housing supply and affordability, the ‘M’ word is rapidly re-entering the lexicon, this time from both the conservatives and progressives. Yet I can’t help but wonder whether and how much Australia’s current levels of migration influences issues such as housing affordability. I believe this is a red herring that has allowed proper scrutiny of resource allocation within Australia to be lazily sidestepped. 

    Everyone – from economists to politicians and everyday Australians – loves simple solutions to complex problems. The so-called ‘housing crisis’ is no different, and this time the primary culprit appears to be immigration. In the midst of skyrocketing costs and severe shortages of materials, new housing construction is far from meeting growing housing demand. 

    Not only do we have an unrealistic image of what type of dwelling or location we need to live in, but both taxes and regulation act as a disincentive to the type of nimbleness that a housing ‘crisis’ demands.

    The affordability of houses and land has long been an economic challenge in Australia and, as Bob Day pointed out, vested interests tend to keep it that way. High house prices are politically popular given many Australians own their homes, but they also form the backbone of state budgets through inflated stamp duty and land taxes. 

    There is another angle here too – Jobs and Skills Australia reported last month that a whopping 36% of occupations in Australia are experiencing a worker shortage. An economic vacuum exists that can only be filled in the short term by migration – yet apparently there is nowhere to house them. 

    Or is there? 

    Let’s take a look at a couple of graphs …

    What this shows is that the most common type of dwellings in Australia have three or four bedrooms, yet the most common household sizes are single or two occupants. There is also a trend towards rates of single and two person households that has slightly accelerated in recent years. Do we have a ‘housing crisis’? Or do we have a ‘misallocation of housing crisis’? 

    It sounded callous and out of touch when ex RBA Governor Phillip Lowe told Australians to rent out an extra room or move in with mum and dad if cost-of-living was beginning to bite. But perhaps he was right. Maybe it’s not a case of Australia lacking the space for migrants, but that we lack the capacity to house each single or two-person household independently in their own dwellings.  An attitude shift might be necessary.  

    This is highlighted by the fact that migrants on the whole – particularly the international students who anti-immigration economists have in their sights – are in fact adapting to the housing crisis much better than existing citizens. Housing researcher Dr Zahra Nasreen found that the majority of Sydney’s shared house accommodation was filled by international students and other migrants, along with young professionals. 

    Along with the drip-feeding of land supply, which artificially inflates prices, the difficulties in construction, the regulatory burden that stifles higher density infill, and the migration program, misallocation is a substantial contributor to our housing shortage. 

    Do we have a ‘housing crisis’? Or do we have a ‘misallocation of housing crisis’? 

    A major reason for this is stamp duty, which is an insidious block on housing mobility – punishing home-owners financially for up-sizing, down-sizing, or moving closer to employment opportunities. If we are to utilise our existing and future housing stock to its fullest capacity, we must abandon this tax. 

    Another reason is that family homes are not taken into account when assessing eligibility for welfare payments such as aged and disability pensions. This creates an incentive to remain in homes that, if sold for something smaller, would create surplus funds and threaten eligibility.

    So far governments around Australia, particularly in Victoria, have simply targeted landlords, holiday home owners, short stay accommodation providers and empty land owners with new taxes and regulations. It is about time we had a serious conversation not only about how to increase our housing supply but how to maximise use our existing stock. 

    Not only do we have an unrealistic image of what type of dwelling or location we need to live in, but both taxes and regulation act as a disincentive to the type of nimbleness that a housing ‘crisis’ demands. Before we as libertarians abandon important principles such as freedom of movement and succumb to the allure of protectionism, we ought to ensure migration really is the problem they say it is.     

    Death, Taxes and … Death Taxes?

    By
    Max Payne
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    0

    “We know that there is a growing pot of wealth, sitting in the hands of older Australians that will be passed on in coming decades.”

    Gosh, that sounds juicy. What government could refuse the temptation to take a slice of that pie?  

    However, that sentiment speaks to the fundamental flaw in the approach of our policy makers towards balancing our books – always trying to increase revenue without doing much to cut spending.

    While it would take a brave government to set their sights on inheritance as a potential source of tax revenue, comments from incoming Productivity Commission boss, Danielle Wood, indicate the wrong question is being asked. 

    Structural Budget Pressures

    Treasurer Jim Chalmers, who is arguably among Labor’s more agile and pragmatic front-benchers, has flagged the NDIS and aged care as key budgetary pressures going forward. While high commodity prices are currently keeping the wolves from the door, the rapidly rising cost of Government funded services and a forecast drop in revenue over time has even the typically Keynesian Labor camp concerned. 

    Australian Treasurer, Jim Chalmers. Are death taxes next on the agenda?

    Although Labor has denied plans for an inheritance tax are on the agenda, Danielle Wood’s comments and the wider conversation nationally on debt and deficit are clearly not focussed on fixing the most glaring issue facing the budget – spending. 

    Out of control spending    

    For example, since its inception in 2013, the NDIS has grown astronomically and now accounts for the biggest cost of any social program the Federal Government runs – $30 billion last financial year. Originally designed to help those with genuine disabilities, the NDIS faces many unforeseen challenges. Its expansive criteria means that over 500,000 people now use the NDIS, participants don’t leave the program as quickly as first envisioned, and up to 20% of NDIS payments are estimated to be fraudulent! 

    Aged care is not immune either – one of the key recommendations of the Aged Care Royal Commission was to establish a ‘blank cheque’ style funding model. This would ensure outcomes remained uncompromised by ‘fiscal challenges facing the government of the day’. With attitudes like that, it’s no wonder social programs are growing at such a speed and are open to rorts – the government is being told the cash tap can never be turned off! What message does that send to users or providers? Of course, the first proposed solution to the issue of funding was to slap a levy on taxpayers – in other words, more tax.

    Cutting through 

    Dramatically reducing the size and scope of all government programs would be a more ideal solution (Caroline White knows it!), but at the very least Chalmers and the relevant ministers could begin with more palatable reforms in the service sector. For example, a user-pays model for aged care services – reducing the share paid by the general tax-base and increasing accountability for providers. Meanwhile the NDIS could benefit greatly from increased scrutiny of payments made and more stringent eligibility criteria.

    The government is being told the cash tap can never be turned off!

    While governments fear the political ramifications of being seen as ‘gutting’ social services, perhaps the issue needs re-framing. The Australian Taxpayers Alliance found in 2021 that a Victorian worker earning an average salary costs about $73,000 to employ. Of that amount, 55% is taxed! Our lifestyles, our productivity, our time and our future are being gutted – and all for what? So that whatever we have left when we finally kick the bucket can be taxed one last time?

    We can only hope that one day governments will attempt some introspection, but it doesn’t look likely just yet. Apart from talk of scrapping the Stage 3 tax-cuts, aged-care levies and death taxes, Jim Chalmers has also flagged that he expects future nation-building funding to fall at least partially on the super funds.

    At what point will we finally see the leadership required to start treating the problem of spending rather than the symptom of revenue?   

    4 Free Enterprise Policies Guaranteed To Make The Economy Roar!

    By
    Caroline White
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    2

    Red tape is a productivity-sapping and innovation-destroying virus on business. Australia is feeling the effects of a generation of governments that believe any problem in the world can be solved with another little rule, constraint or compliance requirement.

    Australian business is suffering death by a thousand cuts.

    There are too many rules to actually know and obey.

    It’s worse than a mere harmless intent though. Too many politicians and bureaucrats cannot help but paint business as the bad guy, an evil that needs to be contained.

    There are enforcers of the rules in all three levels of government. Workplace regulations, tax, superannuation, industrial relations awards and so on are dictated by the Federal government with their powerful agencies, particularly the ATO. The State governments are the most interventionist, with licensing, WHS, regulation and compliance of premises and properties, payroll taxes, stamp duties. These are enforced by an army of bureaucrats from scores of agencies. Then finally our dear local councils look over us to make sure we are operating according to their codes and plans, their rangers constantly on the lookout to catch us out. Sadly, they are aided and abetted by many citizens who see it is their duty to dob-in the smallest misdemeanour. 

    The Liberal Party are as bad as the left leaning parties, full of party careerists with little real-life experience. They talk of removing red tape, but the track record of recent Liberal governments has been to pile on more. They are incapable of addressing the problem because they do not genuinely believe it’s a problem.

    The system is so complex, many small businesses do the same as mine. We do enough to get our business open and what we can grow and prosper, despite the myriad of regulations we are knowingly or accidentally breaching. But there are too many rules to actually know and obey.  Ignorance of the law may not be a legally valid excuse, but ignorance is virtually inevitable when the law regulates almost every aspect of life and business. We are all commonly breaking the law because it is impossible not to.

    So, what would I do about liberating business from this byzantine morass of red tape? How do we unscramble the omelette?

    First, all new laws should have a sunset date of 5 to 10 years. The law lapses automatically if it isn’t extended.

    Second, we sunset all existing laws over the next 5 to 10 years. Yes, every single law would be assigned a sunset date to lapse. This can be a random date; it doesn’t matter. As long as the law is reviewed or lapses.

    Thirdy, we halve all fines and penalties. We remove incentives and rewards for the government to seek out non-compliance and confrontation. We reduce the size of the government to get rid of the people imposing the rules and bleeding off our hard work.

    Finally, we abolish and cut taxes. Abolish payroll tax as it taxes job creation and discourages investment. Cut company and personal income taxes to remove the disincentives. Australia’s company tax rate should be 15% to more closely align with our trading partners. Income taxes should be reduced to a top rate of 25%, so the best and brightest want to come to Australia.

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