The Australian Taxpayers’ Alliance made several policy recommendations to raise productivity and improve the fiscal and legal environment for taxpayers in a recent submission to the Productivity Commission Annual Review. Productivity growth in OECD countries has slowed down in recent years and Australia is no exception to this. The Productivity Commission has stated that changes to policy will be required in the soon future to increase the productivity growth rate that is now slowing down and it’s time we make changes that include the needs of all Australian taxpayers.
The ATA has put forward several policy recommendations to the productivity commission:
Removing Restrictions on Foreign Direct Investment
FDI is vital for filling domestic investment gaps and provides greater opportunities for increasing productivity in the economy. Therefore, Australia should be made more appealing to prospective foreign investors. To do this, a more streamlined approval process should be implemented and needless bureaucratic red-tape should be removed.
Reducing Capital Gains Taxation
Australia’s international competitiveness for foreign investment can also be increased by reducing the capital gains tax. While other countries like New Zealand and Singapore have no CGT, and the US with a CGT of 20%, Australia loses out with a CGT that can reach up to 45%. To better position Australia in the international sphere we have proposed that the CGT be reduced to a flat rate of 15%.
A Formal Inquiry into Existing Industrial Relations, in Relation to the Fair Work Act 2009 (Cth)
To increase the capacity for employers to communicate and negotiate directly with their workforce, the ATA has recommended that the Fair Work Act 2009 be reviewed. Such a review would also evaluate its overall impact, advantages and disadvantages to the productivity of the resources industry.
Unions should be held accountable to the same transparency and standards of businesses, to avoid the additional costs that can arise from criminal practices performed by unions.
A reduction in regulation and bureaucratic red-tape should be carried out to allow for the efficient movement of labour resources.
Reforming Minimum Wage Laws
The minimum wage often leads to greater unemployment rates and therefore efforts to reduce minimum wage should be pursued. “An increase in the minimum wage can only be effective when there is an equal or greater increase in the productivity of the labour force”. Therefore, where there is a minimum wage, skill development programs should be promoted to lower-skilled people to pursue further training or education.
Taking a New Approach to Education and Education Expenditure
In order to tackle slowing productivity rates, a shift of focus from education to training may increase the productivity of a person.
Reducing the Level of Company Taxation
Company tax deters foreign and domestic capital investment, and the potential for greater productivity is avoided. Therefore, the government’s current aim for the reduction of the company tax rate to 25% by 2026-27 should be reduced to within a three year period. Upon reaching a 25% rate, further reductions should be made thereafter.
Company tax rates should also not be influenced by the size of the business. Removing this disparity would also remove the incentives for larger businesses to restructure themselves to stay within small business tax ranges, making the structure and management of those businesses more inefficient.
The Adoption of Functional Regulations to Disruptive Technologies
Government should take a more friendly approach to disruptive technologies such as the expanding sharing economic services like Uber and AirBnB. Policy approaches should consider such technologies as contributors to increasing productivity through innovation and increased efficiency.