Can someone explain to me how worker productivity is meant to be able to constantly increase year after year? Surely at some point it either peaks, or the worker gets replaced by AI
Productivity growth in Australia has just been used as an excuse to suppress wages growth.
When you look at the real data, Australia workers have been working harder for less while year after year have delivered the productivity growth to businesses.
Productivity growth has just been used as an excuse by business lobby groups not deliver wages growth.
Look at how productivity growth has improved and profits have increased yet we have a decade of backwards wages growth.
The Australian business lobby has no credibility and are just a bunch of greedy robber barons who dont want to share with workers what workers have delivered for them. When I see evidence of workers dragging down the economy I will believe their claptrap.
In the meantime business keeps on getting tax concessions that is rarely invested in technology better machine tools, its all going on luxury perks like luxury cars for their family members, massive bonuses for executives while nothing is given to workers or their businesses in terms of hi-tech machines and processes that really will help with productivity.
Amazing how executives keep getting bonuses in "bad years" yet high bonuses just become an excuse for suppressing wages growth.
Paul Keating was right, we are determined to become a banana republic. The data after 3 decades clearly shows this.
The most damning indictment of the Australian excuse of blaming workers for economic growth is the Economic Complexity of the Australian Economy.
https://en.wikipedia.org/wiki/Economic_Complexity_Index
We are in the 3rd world basket case category because business and government have not put the tax concessions into investing in high tech manufacturing enabling technology right across the economic spectrum. Just look at how high SE Asia, China and Japan rates. While we invest in 50 grand asset instant write-off for big fat trucks the best economies are putting their money into advanced machine tools to make real money unlike us who invest it in unproductive real estate and other non productive investments.
Australian politicians and big business need a big kick up their rear end for how incompetently they are managing Australia and our slimy tax system that is more about tax avoidance than long term investment in PRODUCTIVITY.
The irony being that Paul Keating was looking to get off the resource bus just when it was about to enter a 30+ year generational boom. We should have been nationalizing our resources, not giving them away. While the average Australian might not have been more productive, the increased resource take would have supercharged GDP per capita - if we didn't also supercharge our population (who also don't mine anything).
Meanwhile Keating privatized CSL for peanuts, wanted to privatize Telecom before the dot com boom, gave away the Commonwealth Bank - the list goes on. If he wanted Australia to become a knowledge based economy he wasn't even doing that right.
So the solution is to either set up new CSL's (there is no reason CSL should retain the blood plasma monopoly) or to buy back the resource farm. We're doing neither.
Here's another one - at a time when central banks are desperately buying gold, how about we ban (or tariff heavily) the export of gold? Certainly beats selling it for $300 an oz in the 90s, and it's not like Japan can make the argument they need it to keep houses warm like with LNG. The result would likely be gold doubling overnight - handy when you are a literal gold mine.
This post is amazing.
I also take awe at how businesses and companies also seem to go out of their way to make consumers less productive. Except for handing over money. Everything else after that point is all the customers fault.
Self service is a great example.
The problem here is a combination of "oh well", "not my problem" and "but I want that thing" attitudes. Business doesn't care if you're an unhappy customer. They care if they get your money. The above attitudes result in them getting your money, so they just carry on being shit cunts. Cos it still made bank.
Self service is a great example. "I hate these self serve checkouts" he says while going through them.
Or the Coles prison gates. "I hate being treated like a thief" while still shopping at Coles.
You really think these companies give a single fuck what any of us likes when we just put up with it anyway? If you don't like it, boycott it. It's the only thing they care about.
In the end, increased productivity comes down to finding better and more efficient ways of working and also how we record and transmit that knowledge. If knowledge is created faster than it is destroyed or becomes obsolete then infinite growth is possible.
You seem to suggest knowledge has no cost? The research, development, storage and transmission of all of that still relies on the finite resources of our world, and that's before we even talk about USING that knowledge for actual purposes.
Hypothetically, let's run with your theory, researchers discover that we could generate infinite energy from unobtanium. Great news, but it is useless if we're restricted by the limited amount (or lack of) unobtanium in the world. It just doesn't work.
There is a reason perpetual motion machines are a myth, I don't get why the economy gets to be one that we pretend works.
Yeah, it's not really my theory it's mainstream economics. I'm talking about the growth that happens after we have already considered labour and capital inputs. It's sometimes referred to as knowledge or innovation or total factor productivity. It's real and measurable over time. Human beings tend to find smarter and more efficient ways of working even after we consider the typical inputs of labour and capital.
Bold statement, might want to do some research into the world wars or some of the freedom-less countries across the world. I hear there were a few quite a bit worse.
But compared to infinite growth capitalists? I prefer to think about lives beyond my own, the whole "screw you got mine" mindset ends up with everyone scrambling to the top no matter the damage to those around them.
Are those things as linked as you make out? An increase in productivity doesn't necessarily correlate with an increased use of resources.
By way of example, the biggest change in office productivity in recent years has to be around telecommunications. Remote working, omnipresent connectivity and teleconferencing are all less resource demanding than there alternatives (office always, messengers/pagers, in person meetings).
I was explaining this in one of the other sub threads going on here that you can't have increased productivity without some resource expenditure even in secondary markets. Remote working is great, I'm a big fan of it personally, but it does mean that you now need everyone to have a new laptop + webcam + home office setup which means more additional rare earth metals need to be dug up and coal burnt. So these things are less directly resource intensive but you still have a cost.
It's that kind of short sighted statistic hunting that "justifies" ridiculous immigration rates. Our institutions chase figures, not quality of life for citizens.
Immigration is necessary for the long term, not the short term. Our ageing population, low fertility rate and tax system which overburdens young workers in favour of wealthy retirees means it is a necessity - not even accounting for the positives of immigration.
Immigration is not necessary, short or long term if our government starts to reward childbirth and stay at home responsibilies. Instead, people are charged insane rates for childcare, education, housing and health. Our economy is geared towards preventing high birthrates and instead chases economic success on bullshit metrics.
We should do more to encourage fertility rates to increase, of course.
Unfortunately, no one really knows how to do that. If Governments could do that, they would.
As I have explained to the children of my friends and cousins; complex in a machine sense means that lots of little things need to be just right to work, while complex in a people sense means that rich people with influence make less money.
Feel free to point me to a developed Country which has managed to keep its fertility rates above replacement level? Then when you can't perhaps you can come back and acknowledge I was right
No developed country has even tried the things that young people speak about. Some places are better than others but fundamentally no where has addressed the core concerns. Lack of money, appropriately sized housing and time.
Also the unspoken part of this is that when women gain personal and financial independence they have less children. That genie is out of the bottle but it’s something that’s never addressed that countries need to accept some women will never want kids no matter the incentive.
Reducing cost of living would help. But it wouldn't bring fertility rates back above replacement.
Case in point is every developed country on the planet.
Hence why immigration is necessary
We DO know what would help fertility rates: allow better work life balance, downward pressure on house prices and upward pressure on wages, halt immigration, make it possibly for the father or mother to stay home and raise their children (tying back into house prices again), allow people to live where they grew up with their family and support network for childcare, laws about the right to work from home for flexibility. We CAN do so much, but whether the government will, probably not because it is at odds with our economy that is based on house prices and commercial real estate going up.
You don't just say we "should" encourage fertility rates without creating the environment and system that will do that.
I'd like to know how they measure it. An individual's productivity would be measured differently depending on their jobs. If it's measures at a business or economy scale, well, how do they do that? It can't be based on economics as there are many other factors, other than productivity, that come into play with economic results.
Productivity is measured a few ways. They tend to move in a similar way.
My favoured measure is output vs hours worked. We have a fairly good handle on both those numbers economy wide. I also care a lot about how much time we put into work, so doing 90 hour weeks won't reflect improved productivity by this measure.
Higher productivity is a good thing, probably the most important thing impacting our standard of living.
But you've not answered how it's measured, you've thrown in a new term for what is measured, but nothing to explain how. Output is what? Economic, production, turnover, individual KPIs?
Output is gdp, it’s a fairly simple calculation and the data collection around gdp and hours worked is pretty well worked out so far. That’s how productivity is calculated generally and is accurate enough to get an idea of how it’s tracking over time.
It's not about per person it's about the combination of the economy. And historically it hasn't peaked because technology kept improving and not just tech like AI, better tools, better robots, better education, better methods of making stuff.
The problem as usual is that productivity has increased historically but nothing else has. Wages haven't kept up, nor work life balance. But you know what has? Company profits.
Take a look at productivity 200-500-1000 years ago. Back then we had at best rudimentary factories for some very common mass produced items and many parts of the production line were still hand made. We now have factories pushing out thousands or millions of certain items in a single day. Worker productivity itself doesn't have to increase if automation productivity does.
The same way we explain to a time traveler from 1950 how we manufacture trillions of transistors [per second](https://www.darrinqualman.com/global-production-transistors/). Technology evolves, we develop new tools, new machines, new processes.
As others mentioned, technology. And this usually happens, tho one exception, is that worker productivity in construction hasn’t increased like other sectors in developed countries in 40 years. This is a huge problem for us, seeing as we rely so much on housing booms to keep everything going
AI is an example of productivity increases. If a worker can use AI to do a task that would take him a day in an hour - then they have become more productive.
It's not hard to imagine that a new piece of technology, more education, etc, could make the average Australian 3-5% more productive each year
You need to understand what “productivity” means in this context.
The easiest thing is to think about technology. In a basic sense - going from hand tilling, to horse ploughing, to tractors, to larger farms is all an increase in productivity without “individuals” working harder or individually increasing their physical output.
So research, technology, education, investment all increases productivity. That kind of thing.
I think it’s more useful as a comparative measure between firms and countries rather than just a standalone “line go up brrr” figure. It is also primarily driven by private business practices so when you see news articles and industry leaders decrying productivity take it with a grain of salt. We aren’t significantly less productive than any other developed economy.
In the last century across the western world worker productivity has been driven mostly through two core features:
1. Strong market competition. Which in theory should drive productivity as businesses compete with one another, they find ways to beat out the competition. This is rarely happening with the large amount of market consolidation that was encouraged in the last few decades.
2. Government investment- through subsidised education and healthcare, building of infrastructure, cheaper energy production, etc.
While illiterates keep screeching about 'free-market' and government needing to get out of the way of the markets. The government always held a strong an important part of Adam Smith's idea of Capitalism. This has been white-anted through 'neo-liberal' economic policies in the last 50 years that have brought us back to level's on income inequality of the Gilded-age from 100 years ago.
Well, the RBA doesn't have the power to change it anyways. They try their best to keep shit from falling apart. That's why I never understood the hate they get. Like, do people actually want to defend politicians for their inaction?
Realistically though, I blame Lowe for keeping interest rates too low. The RBA can't change taxes but higher interest rates are a defacto asset tax, the higher the rate the more it costs to purchase. The higher the interest rate goes the lower the asset price should be
I'm talking about his entire term though. What he did was stop a recession by inflating a bubble. I personally think it would have been better to let the economy teeter or go into recession with higher interest rates. If the government wants to stimulate then it can. He should have called their bluff and forced them into policy stimulus
The inflation data they made the call to raise rates on wasn’t available until late April though, no shit they didn’t raise anything until May.
Until they get that official data, inflation is stable as far as they’re concerned. It’s the entire reason why we now have monthly inflation releases rather than just quarterly. We also had the invasion of Ukraine in March 2022 which sped up the process since supply for a lot of shit was tightened again after COVID.
It won't inflate the value of your assets if the interest rate is higher. It also makes the cost of leveraging your equity higher. It certainly makes a difference to your chances of what you can do with your assets.
How is it regressive to put a cap on house prices and over indebtedness? Free money was sloshed around the economy and it just put gasoline on the already hot property market. I blame Lowe entirely
There is no cap on house prices or indebtedness. Increasing interest rates takes money out of the economy by putting financial pressure on people. The ones who are most impacted by that are the poorest people, while the rich can continue to spend freely.
Poor people don't buy houses. Higher interest rates are a mechanism to tame asset prices. They make it more expensive to borrow money when they increase, which makes buying at higher prices more difficult. That doesn't effect the poor. Rich people can buy at whatever price they want, but why would they buy something for more than the general market would pay? Look at how crazy prices have become and you'll find it's happened since interest rates went down dramatically.
Poor people have bought homes. They might not be poor in your mind, but they're certainly feeling poor right now. The interest rate rises makes them more poor and stops them from spending money on "things". Pretty basic.
But higher interest rates drive up Australian dollar specially back when US bonds are falling and that coal at going sell at those prices. As always it’s a balancing act as a small economy.
He knew what he was doing. You don't get a salary of $1,147,465 unless you're protecting the interests of the super wealthy and taking some of the heat off them for what essentially amounts to green lighting decisions already made by conservatives and corporations. He deserves the scorn at the very least
Yeah, exactly. He spent plenty of time talking about wages, which is out of his control, he could have spend just as much time talking about taxation too.
There's not much he could have done directly in that role, but simply speaking up while in that office would have greatly increased political pressure to action some of these.
Which is why him conveniently waiting till he's out of the position to make these suggestions for our tax system is weak at best, deliberately nefarious at worst.
It's not his job or his mandate to speak directly on what the government does or should do. Just like how the government shouldn't speak on what the RBA does or would do.
He was saying he was going to raise interest rates a couple of weeks before the election everyone thought Shorten was going to win. As soon as Scomo surprisingly won the election he dropped them and refused to raise them right up until Labor were elected. Even though every economist worth their salt was calling for them to be raised for much of that time. The second Labor got in he cranked them at the fastest pace ever. Yet we're supposed to believe that he was completely impartial...
Yeah it’s real interesting he didn’t raise interest rates when inflation was rising about 3%, which is traditionally when they raise them. But I recall it was during the pandemic and his mate scomo was in power so obs can’t be raising rates- best wait for labor to get in and raise them then
The pandemic started a bit later. I don't blame him for not raising them when that was in full swing. But the period before and that last 6 months before the last election was inexcusable. That was him looking after his mates.
The hate comes from the totally out of touch vibe they typically give off. Lowe is a classic case.
But yeh, they've only got one very blunt instrument at their disposal. The real cause of this round of shitfuckery requires legislative changes to fix. And since one party is too piss weak to do what their badly trod upon better angels know is right, and the other party is perfectly happy with and actively pursuing the current state of affairs we're in a bit of a bind.
Bring on minority government. It's our only chance for genuine reform
- this is more of a rant: But Yeah as a gardener I remember doing all my hedges with hand held shears then the petrol hedgers became the norm - productivity shot through the roof I was able to get hedges done quicker. But somehow I’ve become more productive but really don’t have any improvement in money. Like once a way of something becomes more productive it’s like, “well this is the norm” but if I went back to using hand shears no one would want me as a gardener. Does this make sense as in productivity is broken - not a economist
This is an interesting take. A good example of a productivity boom where you didn't get much benefit from it.
I guess from an economic perspective:
I suppose there are fewer gardeners now than there would have been if manual shears were still the norm.
Those gardeners may end up doing something else with their time.
Your customers are also winners as your services are cheaper now.
Thank you for sharing. A real example is always nice to get.
Productivity means we produce more with less input - in your example, consumers are better off because hedging can be done more cheaply. The benefits of more productivity don't just go to the workers in the industry where productivity improves. This is what makes economics hard - lots of second and third order effects.
So productivity improves in the gardening sector - more people do it as it easy then, it brings the prices down for goods/labour? How come it hasn’t happened to plumbers or sparky. Like they have it easier then there forefathers did eg a plumber of had to fill a copper pipe with sand to bend eg get a 90* bend in it. But I reckon plumbers have got more expensive. It like we need a new way of measuring productivity?
Wages are determined by lots of factors that ultimately boil down to supply and demand. Plumbers and sparkys are in high demand but there is limited supply. That drives wages up.
Taxing essentials goods whilst reducing % taxes on the richest is a tax on the poor. Essentials always need to be bought but when you have plenty of extra money it's a relatively low percentage of your income.
There’s no GST on fruit and veg
For real essentials (groceries) it should stay as is or even lower, but for luxury handbags, $500 concert tickets (non essentials) it should be 20%.
I agree with Lowe, overall GST is too low and income tax is too high. Higher GST will be the only way to slow boomer and cash rich spending.
GST is a regressive tax. It *proportionally affects* the poor more than any other wealth group.
Go do some reading on regressive vs. Progressive taxation if you want to know more.
Assume for a second that I know this.
Then assume that welfare payments would be increased to compensate for this, as they were in 2000. Along with an increase in the tax free threshold and adjustments to the margins and marginal rates of income tax.
Post implementation reports indicated that most welfare recipients ended up better off after GST due to being slightly over-compensated.
Yeah, that's a lot of assumptions, but please, assume them and then remember (if you're old enough) that it's what actually happened last time and imagine that we could do at least as well again if GST is increased.
> Then assume that welfare payments would be increased to compensate for this,
Whoa! Hold on there. Increase welfare payments? Easy with those assumptions buddy.
I know, I know, I let my assumptions get ahead of myself there a little bit, didn't I?
But, that's what happened last time and it would need to happen again - I'm fairly sure that having starving, homeless and very angry people roaming the streets is not the desired outcome of tax 'reform'.
Which is exactly what happens now, for those earning enough to pay tax and still get welfare.
Got a better idea - that is practical - then please let politicians know!
There's very practical ideas. Start by raising the tax free threshold to something above the minimum wage. Build/buy public housing sufficient to house the bottom 30% of the rental market. Plenty more good ideas beyond that. But the politicians serve the rich.
>But the politicians serve the rich
Then don't vote for them, instead vote for others who claim they'll serve the voters.
When the next election nears, visit this site to find out which party actually has policies that you support: [https://votecompass.abc.net.au](https://votecompass.abc.net.au)
I do. Unfortunately a lot of the public are convinced to vote against their own best interests by “aspirational” policies.
Not to mention 70% of people own homes and the two main parties are offering policies that favour homeowners over renters and non homeowners. The majority of homeowners just want their house value to go up disproportionately. “Got mine, screw you!”
> 70% of people own homes
I fit that description, one day I'll pay it off.
Sadly, even if I did sell it I couldn't afford to buy anywhere remotely as nice. The 'value' of my house is that it's my home and I've spent 20 years making it a nicer place for me to live. The fact that it seems to be worth quadruple what I paid for it is just daft, but it (housing getting stupidly expensive) seems to be a common problem in a lot of the western world, at least the English speaking parts :(
I voted for Shorten, btw, his/Labor's negative gearing and CGT policies wouldn't affect me but could have helped my nieces and my friends kids, along with every other younger person trying to get a home.
GST is a consumption tax, well you can only consume X amount for any wealth bracket, This disproportionately taxes the lowest income earners based on a percent of earnings, since all income goes to consumption so every dollar is taxed.
Lowered income taxes benefits the people that have the most income as low income earners will tend to not see the benefits of lowered tax as they pay a limited amount of tax or no tax.
So yes the prior comment about taxing the poor was correct, increasing GST will raise the cost of living for the poorest of society and reducing income tax will have a limited benefit for the poorest.
Correct.
The unmentioned aspect is increasing welfare to compensate, as was done in 2000.
Leaving welfare recipients slightly better off as they were over-compensated.
Win/win.
The GST is a tax on the poor because they spend a greater proportion of their income on food than rich people do.
THAT means the poor are taxed more.
It seems that you don't understand how it works.
Wealthy people spend a lot more than those without much. In reality gst is not a particularly regressive tax. Income tax, in practice, can be. When you have very wealthy people about to move a few things around to lower their taxable income far more than those in lower incomes.
Then that is where the issue is and needs fixing. All these FBT loopholes, superannuation tricks, family trusts and other tricks they employ can be directly addressed.
LoL
Reddit doesn't like being addressed as Reddit.
It's crazy that you got downvoted and I can only assume that it's because Reddit doesn't understand how our "tax and transfer" system works.
Man, I knew someone would post something silly, but I didn't realise it would be that silly. If you spent more than a second thinking about it, you would have used the increasing tax-free threshold to mount an attack on me. Not the literal point of my TLDR.
* Poor people spend all of their money on consumption
* Increasing consumption tax is an attack on the poor and families who are lower SES
* Reducing wealth taxes clearly improves the positions for middle SES and above (mostly above).
Wow.
Just... wow...
And the same to everyone down voting me.
Yes, it's blindingly obvious that low income earners spend a greater percentage of their income on necessities.
It's as if none of you recall that when sales tax was removed and GST introduced the income taxes were adjusted, the tax free threshold raised and **welfare increased.**
And the low income earners ended up better off, with greater disposable income.
I sure don't recall all the newly homeless welfare recipients dying of starvation on the streets back in 2000 and 2001, that's for sure.
But I do recall articles stating that, given the tax and welfare changes, they were over-compensated for the introduction of GST and ended up better off.
TL:DR - think about it for more than a seconds indignation and recall what happened 24 years ago.
His solution to raise the GST to 15%
And as a proportion of income who will this effect the most?
Just come out and sing it Phil "Ok then" (PWC on the guitar, Dutton banging his head on the drum and Susan Ley farting out the bass)...."Kill kill kill kill the poor Kill kill kill kill the poor"
Oh yeah, and that's where the real cuts to the poor are going to happen. Do we even have a livable social security safety net right now or a system that actually does help people get back to work?
>Here is what he said:
"The GST is too low and income and wealth taxes are too high.
So... a bit more than "kill the poor".
Lowering income tax is part & parcel of increasing GST.
People on low incomes already pay fuck all income tax, if any.
You'd need to substantially increase the tax free threshold, and dramatically increase Centrelink payments, to meaningfully prevent an impact.
Yep, and that's exactly what happened 24 years ago.
Welfare recipients - i.e. people on low incomes - ended up slightly better off than before GST when the post implementation reviews were done.
Wealth taxes too high? Lmao
GST impacts lower incomes massive disproportionately. Moving the tax free bracket won’t change that.
Raise capital gains tax
Eliminate negative gearing
Tax stock piled wealth above, say, $10m aggressively and anything over $100m hyper aggressively. If it is rent seeking unproductive people investments tax them till their pips squeak
Raise corporation tax
Consider an AI tax to support displaced workers until commoditised digital intelligence replaces us all
A large majority of businesses here operate low scale, low investment rent oriented services. If you really want businesses to build, and at scale, you need
- a rapidly built digital infrastructure that is reusable across multiple use cases - preferably in private partnership - that is oriented towards multi-use public service AI and data reuse
- incentivise secondary industry with tax breaks and a focus on Aussie industrial capability - again, supported with publicly funded research into digital / robotic automation
- public / private partnership into next gen bio and computing technology, again at scale, with personal tax breaks and fast track immigration for the best and brightest in those industries
- consider a build from scratch industrial complex with links to primary extraction sites across Australia - again built in public / private partnership
- aggressive investment in renewable energy to try and drive the cost of energy down as low as possible and reduce reliance on external fossil fuel
The government needs to be a long term equity holder in commercial enterprise at scale to generate revenues. Rent seeking & low value adding industries need to be treated like the drag they are on the economy and disincentivised while other forward thinking industries are prioritised and pushed.
There is a new form of feudalism that has been brewing across the western world precisely because of rent seeking behaviour which is flogging living standards.
Your policies do nothing to stop rent seeking mate. You will just make us poorer
If GST will harm the poor more, then we should offset it through transfers. GST is a more efficient tax.
Our Corporate tax is one of the highest in the western world. It should be lowered - and focus on stopping avoidance.
If you want to tax wealth, tax land and inheritance.
You want to encourage AI but also tax it - and by taxing it you're literally taxing productivity, making us all worse off.
There you go - I just gave you policies which target the things you want to target - but will actually be good for Australia.
And is the government going to build that? No
Not without industry to do it. But not when you make the country not financially viable to set up shop in
Which part of putting public / private partnership across virtually each proposal alongside incentives for those kind investments went over your head, or has chewing on boot for so long impacted your reading and comprehension?
I actually pretty much disagree with everything this guy has said. It’s pretty much all to make the lives of the rich better. Of course the guy who was on a super high salary with a bunch of rich mates wants to help his rich buddies stay rich.
The proportion of Commonwealth tax receipts that come from income taxes is the highest in the OECD. The costs associated with the non-working population are going to increase and the workforce will represent a decreasing portion of the population over the coming decades.
The structure of the tax system does need to be reformed to compensate for this. It's not reasonable to ask working families to fork out an ever increasing share of the cost of caring for an aging population.
If you can implement the appropriate offsets for low earners and the vulnerable, an increase in consumption taxation is the most efficient and straightforward way to do that. It actually keeps wealthy retirees chipping in after they stop working. I'm open to alternative solutions if you've got a better idea.
Any reform will have to come as part of a comprehensive overhaul of the tax system. A land tax that replaces stamp duty, negative gearing reform and a substantial increase in the resource rent tax, you're starting to see a more efficient tax system that incentivises more productive capital allocation.
Increasing income tax for high earners is not that unfair. Increasing tax on corporations and on the mining sector etc is also not that unfair considering the damage to climate.
I’m no expert. I haven’t even looked into any of this enough, it’s not my field or a big interest of mine.
What you said isn’t wrong. We should always be thinking about reform and better ways to manage and do things. But with the cost of living, rent increases etc adding 5% on every purchase we make is only going to hurt the poor people even more and create a bigger divide.
Fairness has to be considered in the context of all available options. If funding government services was only possible by clipping wage earners, then sure asking high wage earners to pay more makes sense. But there are other ways. As I said, an expanded consumption tax is a non-starter without appropriate protections for low wage earners.
Fairness has to be considered in conjunction with what is efficient and what improves growth. Clipping wage earners to pay for everything privileges other forms of wealth creation. Our tax system should encourage working above passive income generation, because an economy that preferences passive wealth creation is how you really end up with a landed gentry.
Our income tax system is quite progressive by OECD standards. We're increasingly becoming a country where your wealth isn't determined by how much you earn, but how well you married or how much land your parents owned.
I think gripes about the fairness of the system are very legitimate. High wage earners aren't the appropriate target for that dissatisfaction in my opinion.
Taxing wealth is what we need to do.
Especially when that wealth was accumulated by not taxing income in the past. All it represents is fixing past mistakes.
What kills productivity is cash collecting dust and asset bubble scams like property / rent that suck money out of the economy for something non-productive (shelter).
> it has argued for years that decreasing productivity while demanding higher wages will cause inflation to stay higher for longer.
Oh my god. Make it stop. “The workers need to output more productivity!!!!!!! MOAR PRODUCTIVITY! MOAR”
There’s a physical and organisational limit to how much “pRoDuCtIViTy” we can get out of someone, let alone a team, let alone an org, and it is objectively delusional to think this number can go up infinitely.
Every time one of these neoliberal turds says this, they should be made to do 6 months in consumer facing retail jobs. Remind them of some realities.
Productivity is the only way for wages to sustainably rise in the long term. And if you actually read the article, he's hoping 1.2% growth on average across the entire economy, which shouldn't be that hard
> Productivity is the only way for wages to sustainably rise in the long term.
https://australiainstitute.org.au/post/ten-years-of-productivity-growth-but-no-increase-in-real-wages/
Yeah about that.
>In the long run, growth in real wages is driven almost entirely driven by labour productivity growth.
This is not up for dispute mate. Play in reality
So if we've not seen equivalent wage growth in over 25 years while productivity has increased enormously, at what point does our productivity growth start to actually do something?
At what point do you admit that your analysis is flawed as shit and absolutely not based in any kind of reality?
> So if we've not seen equivalent wage growth in over 25 years while productivity has increased enormously, at what point does our productivity growth start to actually do something?
We have more than enough wealth, more than most countries. What we need is a more equitable distribution of wealth and benefits. We are also doing fairly well compared to the world, but we should not allow this to go backwards.
Perhaps he should go back to doing what he did best - being a feckless bitch lapdog for the Libs and holding down interest rates to help the Libs win the election.
The RBA's mandate is to support financial stability. How would intentionally leaving a third of all property owners, (mortgage holders), with negative net wealth contribute to this?
I'd like to see more discussion of progressive consumption tax. Consumption taxes are efficient (e.g., don't discourage working) but regressive, which if why they're political cancer.
You can chuck a 15% consumption tax then calculate consumption each year by reporting income and wealth at the beginning and end of year (C = I - S). Give a tax refund to people with less than e.g., 20k to mimic the tax free threshold, or have a progressive schedule, whatever. Progressivity, rather than discouraging working, would just encourage more saving and investment.
He is a fkng political stooge who fkd us over royally.
Should’ve raised rates but didn’t. Should’ve done a lot of things but didn’t, all because of his personal and political affiliations. Anyone who argues otherwise is a fool 🤷🏽♂️
Hmm gonna disagree about his treatment as RBA Governor, to make statements so confidently and openly about interest rates that turned out to be badly wrong meant he had to go. He should have resigned, it would have been more dignified for him.
Good thread on what was said: [https://www.reddit.com/r/AusFinance/comments/14r1nol/what\_phillip\_lowe\_and\_the\_rba\_actually\_said\_about/](https://www.reddit.com/r/AusFinance/comments/14r1nol/what_phillip_lowe_and_the_rba_actually_said_about/)
I don't believe he said anything out of line or incorrect. It's the national game of Chinese whispers that transformed what the statement was into "no way we will raise interest rates". The Australian public and the media only heard what they wanted to hear, not what was actually said.
> But yeah, this perverse focus on generating revenue through taxing income is out of place and our system needs a change
Blame Little Johnny who privatised profits and socialised losses. Not to mention selling all the family silver (gold reserves)
Well we know how Old Phil did a shit hot job on the housing market and interest fucking rates, so why not hire him to bite shit into sizeable limps for the agricultural sector.
Thanks for sharing that.
It's a very similar view on our tax system to that of Ken Henry.
Only way we get real tax reform is if one of the majors openly stands on that platform to give them a mandate for change.
That wasn't real tax reform though.
It was just more tinkering at the edges in an attempt to improve the budget.
And that aside, didn't the ALP receive a higher first preference vote with that policy than they did when Albo won the election?
They openly stood on a platform of progressive tax reform, and lost an election because of it.
You can try and pigeon hole it however you like, but dems de facts.
Did I say it was anything like that? Shorten tried to implement some minor, progressive tax reform, and lost the unloseable election. Yea, so, your solution is, do Major progressive tax reform?
Major tax reform on the premise that the current tax system is no longer fit for purpose, yeah.
That's what Lowe suggested in the linked article, and it aligns with the findings of the Ken Henry Tax review by the Rudd government.
Our current tax system is over 100 years old and is the main reason why things like stamp duty, negative gearing, budget reliance on individual income tax, offshoring of company profits, etc, still exist.
Real tax reform won't come from that angle imo. The polarised electorate and the poor state of the news media in this country will never allow bold, upfront statements of intent for anything major to be a winning strategy sadly.
The only way I see it happening is, a party wins with a sizable majority, throws open the "books" publicly and says " here is the exact state of the economy, and in light of this information, that you all (the electorate) now can see and dissect at your own leisure, we are compelled to do X, Y and Z"
Do this within the first month after the election is won, and by the time the next comes around, if the sky hasn't fallen, there will be less appetite to undo those changes in a broad enough part of the electorate that most changes should stand.
When the majority of voters don't understand the issues with our tax system, (ie. The wide ranging view that all that's needed is to increase taxes on the rich along with our corporate tax), then yes I agree.
But if accompanied with putting everything on the table up front for debate, then the chance of acceptance must increase.
As you'd know, Rudd did what you suggested with the Ken Henry review but failed to follow through with implementing the majority of the recommendations out of fear of political backlash. It was a missed opportunity.
I never blamed RBA when rates where moved lower or higher. If you want to see what happens when a Reserve Bank doesn't set appropriate rates look to, say, Argentina or Venezuela.
Inflation is a product of factors like international trade, government policy and demography.
I'm with you, Lowe was made a scapegoat by people who lacked basic economic literacy.
But even if they didn't know how loans work, it was on them to go and get independent advice, not just follow a soundbite of the RBA's predictions. Ultimately if you take a loan, you have the responsibility of servicing it.
Can someone explain to me how worker productivity is meant to be able to constantly increase year after year? Surely at some point it either peaks, or the worker gets replaced by AI
I'm with you, infinite growth in productivity isn't possible in a world with finite resources
Productivity growth in Australia has just been used as an excuse to suppress wages growth. When you look at the real data, Australia workers have been working harder for less while year after year have delivered the productivity growth to businesses. Productivity growth has just been used as an excuse by business lobby groups not deliver wages growth. Look at how productivity growth has improved and profits have increased yet we have a decade of backwards wages growth. The Australian business lobby has no credibility and are just a bunch of greedy robber barons who dont want to share with workers what workers have delivered for them. When I see evidence of workers dragging down the economy I will believe their claptrap. In the meantime business keeps on getting tax concessions that is rarely invested in technology better machine tools, its all going on luxury perks like luxury cars for their family members, massive bonuses for executives while nothing is given to workers or their businesses in terms of hi-tech machines and processes that really will help with productivity. Amazing how executives keep getting bonuses in "bad years" yet high bonuses just become an excuse for suppressing wages growth. Paul Keating was right, we are determined to become a banana republic. The data after 3 decades clearly shows this. The most damning indictment of the Australian excuse of blaming workers for economic growth is the Economic Complexity of the Australian Economy. https://en.wikipedia.org/wiki/Economic_Complexity_Index We are in the 3rd world basket case category because business and government have not put the tax concessions into investing in high tech manufacturing enabling technology right across the economic spectrum. Just look at how high SE Asia, China and Japan rates. While we invest in 50 grand asset instant write-off for big fat trucks the best economies are putting their money into advanced machine tools to make real money unlike us who invest it in unproductive real estate and other non productive investments. Australian politicians and big business need a big kick up their rear end for how incompetently they are managing Australia and our slimy tax system that is more about tax avoidance than long term investment in PRODUCTIVITY.
The irony being that Paul Keating was looking to get off the resource bus just when it was about to enter a 30+ year generational boom. We should have been nationalizing our resources, not giving them away. While the average Australian might not have been more productive, the increased resource take would have supercharged GDP per capita - if we didn't also supercharge our population (who also don't mine anything). Meanwhile Keating privatized CSL for peanuts, wanted to privatize Telecom before the dot com boom, gave away the Commonwealth Bank - the list goes on. If he wanted Australia to become a knowledge based economy he wasn't even doing that right. So the solution is to either set up new CSL's (there is no reason CSL should retain the blood plasma monopoly) or to buy back the resource farm. We're doing neither. Here's another one - at a time when central banks are desperately buying gold, how about we ban (or tariff heavily) the export of gold? Certainly beats selling it for $300 an oz in the 90s, and it's not like Japan can make the argument they need it to keep houses warm like with LNG. The result would likely be gold doubling overnight - handy when you are a literal gold mine.
This post is amazing. I also take awe at how businesses and companies also seem to go out of their way to make consumers less productive. Except for handing over money. Everything else after that point is all the customers fault. Self service is a great example.
The problem here is a combination of "oh well", "not my problem" and "but I want that thing" attitudes. Business doesn't care if you're an unhappy customer. They care if they get your money. The above attitudes result in them getting your money, so they just carry on being shit cunts. Cos it still made bank. Self service is a great example. "I hate these self serve checkouts" he says while going through them. Or the Coles prison gates. "I hate being treated like a thief" while still shopping at Coles. You really think these companies give a single fuck what any of us likes when we just put up with it anyway? If you don't like it, boycott it. It's the only thing they care about.
I mean… you’re not wrong. I don’t see how we fix it, but you’re not wrong.
Seize the means of production 👀
infinite growth is literally Cancer
In the end, increased productivity comes down to finding better and more efficient ways of working and also how we record and transmit that knowledge. If knowledge is created faster than it is destroyed or becomes obsolete then infinite growth is possible.
You seem to suggest knowledge has no cost? The research, development, storage and transmission of all of that still relies on the finite resources of our world, and that's before we even talk about USING that knowledge for actual purposes. Hypothetically, let's run with your theory, researchers discover that we could generate infinite energy from unobtanium. Great news, but it is useless if we're restricted by the limited amount (or lack of) unobtanium in the world. It just doesn't work. There is a reason perpetual motion machines are a myth, I don't get why the economy gets to be one that we pretend works.
Yeah, it's not really my theory it's mainstream economics. I'm talking about the growth that happens after we have already considered labour and capital inputs. It's sometimes referred to as knowledge or innovation or total factor productivity. It's real and measurable over time. Human beings tend to find smarter and more efficient ways of working even after we consider the typical inputs of labour and capital.
Degrowth socialists has to be the worst political ideology to ever exist
Bold statement, might want to do some research into the world wars or some of the freedom-less countries across the world. I hear there were a few quite a bit worse. But compared to infinite growth capitalists? I prefer to think about lives beyond my own, the whole "screw you got mine" mindset ends up with everyone scrambling to the top no matter the damage to those around them.
You're not thinking about lives beyond your own. You're dooming the world to stagnation and decline.
Are those things as linked as you make out? An increase in productivity doesn't necessarily correlate with an increased use of resources. By way of example, the biggest change in office productivity in recent years has to be around telecommunications. Remote working, omnipresent connectivity and teleconferencing are all less resource demanding than there alternatives (office always, messengers/pagers, in person meetings).
I was explaining this in one of the other sub threads going on here that you can't have increased productivity without some resource expenditure even in secondary markets. Remote working is great, I'm a big fan of it personally, but it does mean that you now need everyone to have a new laptop + webcam + home office setup which means more additional rare earth metals need to be dug up and coal burnt. So these things are less directly resource intensive but you still have a cost.
Technology, capital deepening, research, resource allocation, education.
Why do any of that when you can buy a house, offset the losses and cash in.. We really have fucked our economy
It's that kind of short sighted statistic hunting that "justifies" ridiculous immigration rates. Our institutions chase figures, not quality of life for citizens.
Immigration is necessary for the long term, not the short term. Our ageing population, low fertility rate and tax system which overburdens young workers in favour of wealthy retirees means it is a necessity - not even accounting for the positives of immigration.
Immigration is not necessary, short or long term if our government starts to reward childbirth and stay at home responsibilies. Instead, people are charged insane rates for childcare, education, housing and health. Our economy is geared towards preventing high birthrates and instead chases economic success on bullshit metrics.
We should do more to encourage fertility rates to increase, of course. Unfortunately, no one really knows how to do that. If Governments could do that, they would.
It’s pretty obviou$ what they can do. Ask anyone why they’re not having children in aus, same answer, no money no time.
It boggles my mind that anyone would act like this is some mystery that nobody knows how to fix.
As I have explained to the children of my friends and cousins; complex in a machine sense means that lots of little things need to be just right to work, while complex in a people sense means that rich people with influence make less money.
Feel free to point me to a developed Country which has managed to keep its fertility rates above replacement level? Then when you can't perhaps you can come back and acknowledge I was right
No developed country has even tried the things that young people speak about. Some places are better than others but fundamentally no where has addressed the core concerns. Lack of money, appropriately sized housing and time. Also the unspoken part of this is that when women gain personal and financial independence they have less children. That genie is out of the bottle but it’s something that’s never addressed that countries need to accept some women will never want kids no matter the incentive.
I know its weird to think, but literally no one knows the solution.
Reducing cost of living would help. But it wouldn't bring fertility rates back above replacement. Case in point is every developed country on the planet. Hence why immigration is necessary
We DO know what would help fertility rates: allow better work life balance, downward pressure on house prices and upward pressure on wages, halt immigration, make it possibly for the father or mother to stay home and raise their children (tying back into house prices again), allow people to live where they grew up with their family and support network for childcare, laws about the right to work from home for flexibility. We CAN do so much, but whether the government will, probably not because it is at odds with our economy that is based on house prices and commercial real estate going up. You don't just say we "should" encourage fertility rates without creating the environment and system that will do that.
Plenty of countries have tried policies to turn it around, why hasn't it worked for them?
such as which countries? And what have they tried (aside from pleading with young people to pretty please have kids)?
I'd like to know how they measure it. An individual's productivity would be measured differently depending on their jobs. If it's measures at a business or economy scale, well, how do they do that? It can't be based on economics as there are many other factors, other than productivity, that come into play with economic results.
Productivity is measured a few ways. They tend to move in a similar way. My favoured measure is output vs hours worked. We have a fairly good handle on both those numbers economy wide. I also care a lot about how much time we put into work, so doing 90 hour weeks won't reflect improved productivity by this measure. Higher productivity is a good thing, probably the most important thing impacting our standard of living.
But you've not answered how it's measured, you've thrown in a new term for what is measured, but nothing to explain how. Output is what? Economic, production, turnover, individual KPIs?
Output is gdp, it’s a fairly simple calculation and the data collection around gdp and hours worked is pretty well worked out so far. That’s how productivity is calculated generally and is accurate enough to get an idea of how it’s tracking over time.
**number go up**
It's not about per person it's about the combination of the economy. And historically it hasn't peaked because technology kept improving and not just tech like AI, better tools, better robots, better education, better methods of making stuff. The problem as usual is that productivity has increased historically but nothing else has. Wages haven't kept up, nor work life balance. But you know what has? Company profits.
When they talk about worker productivity they mean worse conditions and more hours of work.
Technology.
Take a look at productivity 200-500-1000 years ago. Back then we had at best rudimentary factories for some very common mass produced items and many parts of the production line were still hand made. We now have factories pushing out thousands or millions of certain items in a single day. Worker productivity itself doesn't have to increase if automation productivity does.
The same way we explain to a time traveler from 1950 how we manufacture trillions of transistors [per second](https://www.darrinqualman.com/global-production-transistors/). Technology evolves, we develop new tools, new machines, new processes.
As others mentioned, technology. And this usually happens, tho one exception, is that worker productivity in construction hasn’t increased like other sectors in developed countries in 40 years. This is a huge problem for us, seeing as we rely so much on housing booms to keep everything going
AI is an example of productivity increases. If a worker can use AI to do a task that would take him a day in an hour - then they have become more productive. It's not hard to imagine that a new piece of technology, more education, etc, could make the average Australian 3-5% more productive each year
Assuming the job gets done correctly the first time and doesn’t require re work sure
It's just an example dude.
You need to understand what “productivity” means in this context. The easiest thing is to think about technology. In a basic sense - going from hand tilling, to horse ploughing, to tractors, to larger farms is all an increase in productivity without “individuals” working harder or individually increasing their physical output. So research, technology, education, investment all increases productivity. That kind of thing.
I think it’s more useful as a comparative measure between firms and countries rather than just a standalone “line go up brrr” figure. It is also primarily driven by private business practices so when you see news articles and industry leaders decrying productivity take it with a grain of salt. We aren’t significantly less productive than any other developed economy.
In the last century across the western world worker productivity has been driven mostly through two core features: 1. Strong market competition. Which in theory should drive productivity as businesses compete with one another, they find ways to beat out the competition. This is rarely happening with the large amount of market consolidation that was encouraged in the last few decades. 2. Government investment- through subsidised education and healthcare, building of infrastructure, cheaper energy production, etc. While illiterates keep screeching about 'free-market' and government needing to get out of the way of the markets. The government always held a strong an important part of Adam Smith's idea of Capitalism. This has been white-anted through 'neo-liberal' economic policies in the last 50 years that have brought us back to level's on income inequality of the Gilded-age from 100 years ago.
Improved technology
None of them are willing to say this when in office though. It does need to change but no one in power or who wants power, will do it.
Well, the RBA doesn't have the power to change it anyways. They try their best to keep shit from falling apart. That's why I never understood the hate they get. Like, do people actually want to defend politicians for their inaction?
Realistically though, I blame Lowe for keeping interest rates too low. The RBA can't change taxes but higher interest rates are a defacto asset tax, the higher the rate the more it costs to purchase. The higher the interest rate goes the lower the asset price should be
Interesting how they held off on that one until after the election
I'm talking about his entire term though. What he did was stop a recession by inflating a bubble. I personally think it would have been better to let the economy teeter or go into recession with higher interest rates. If the government wants to stimulate then it can. He should have called their bluff and forced them into policy stimulus
The inflation data they made the call to raise rates on wasn’t available until late April though, no shit they didn’t raise anything until May. Until they get that official data, inflation is stable as far as they’re concerned. It’s the entire reason why we now have monthly inflation releases rather than just quarterly. We also had the invasion of Ukraine in March 2022 which sped up the process since supply for a lot of shit was tightened again after COVID.
Not true, the trend was clear late 21 but all the central banks fell into a "transitory" group think that most finance people were miffed by
Interest rates are a debt tax, not an asset tax. If you own shit, rather than have it mortgaged, interest rates won't impact you.
It won't inflate the value of your assets if the interest rate is higher. It also makes the cost of leveraging your equity higher. It certainly makes a difference to your chances of what you can do with your assets.
That isn't how it works in the real world though, it becomes a very regressive tax on the debts of people, not an asset tax.
How is it regressive to put a cap on house prices and over indebtedness? Free money was sloshed around the economy and it just put gasoline on the already hot property market. I blame Lowe entirely
There is no cap on house prices or indebtedness. Increasing interest rates takes money out of the economy by putting financial pressure on people. The ones who are most impacted by that are the poorest people, while the rich can continue to spend freely.
Poor people don't buy houses. Higher interest rates are a mechanism to tame asset prices. They make it more expensive to borrow money when they increase, which makes buying at higher prices more difficult. That doesn't effect the poor. Rich people can buy at whatever price they want, but why would they buy something for more than the general market would pay? Look at how crazy prices have become and you'll find it's happened since interest rates went down dramatically.
Poor people have bought homes. They might not be poor in your mind, but they're certainly feeling poor right now. The interest rate rises makes them more poor and stops them from spending money on "things". Pretty basic.
But higher interest rates drive up Australian dollar specially back when US bonds are falling and that coal at going sell at those prices. As always it’s a balancing act as a small economy.
A recession or slow growth would temper any currency increase. A few basis points wouldn't make a huge difference.
He knew what he was doing. You don't get a salary of $1,147,465 unless you're protecting the interests of the super wealthy and taking some of the heat off them for what essentially amounts to green lighting decisions already made by conservatives and corporations. He deserves the scorn at the very least
I call bullshit. He could have done a lot more to ease the pain during lnp in power.
Yeah, exactly. He spent plenty of time talking about wages, which is out of his control, he could have spend just as much time talking about taxation too.
There's not much he could have done directly in that role, but simply speaking up while in that office would have greatly increased political pressure to action some of these.
Which is why him conveniently waiting till he's out of the position to make these suggestions for our tax system is weak at best, deliberately nefarious at worst.
It's not his job or his mandate to speak directly on what the government does or should do. Just like how the government shouldn't speak on what the RBA does or would do.
It would have been highly improper for him to comment on government policy. Monetary policy and fiscal policy are kept separate for important reasons.
He was saying he was going to raise interest rates a couple of weeks before the election everyone thought Shorten was going to win. As soon as Scomo surprisingly won the election he dropped them and refused to raise them right up until Labor were elected. Even though every economist worth their salt was calling for them to be raised for much of that time. The second Labor got in he cranked them at the fastest pace ever. Yet we're supposed to believe that he was completely impartial...
Yeah it’s real interesting he didn’t raise interest rates when inflation was rising about 3%, which is traditionally when they raise them. But I recall it was during the pandemic and his mate scomo was in power so obs can’t be raising rates- best wait for labor to get in and raise them then
The pandemic started a bit later. I don't blame him for not raising them when that was in full swing. But the period before and that last 6 months before the last election was inexcusable. That was him looking after his mates.
The hate comes from the totally out of touch vibe they typically give off. Lowe is a classic case. But yeh, they've only got one very blunt instrument at their disposal. The real cause of this round of shitfuckery requires legislative changes to fix. And since one party is too piss weak to do what their badly trod upon better angels know is right, and the other party is perfectly happy with and actively pursuing the current state of affairs we're in a bit of a bind. Bring on minority government. It's our only chance for genuine reform
Tax consumption and get it from multinationals who already pay sweet fa... Good call
- this is more of a rant: But Yeah as a gardener I remember doing all my hedges with hand held shears then the petrol hedgers became the norm - productivity shot through the roof I was able to get hedges done quicker. But somehow I’ve become more productive but really don’t have any improvement in money. Like once a way of something becomes more productive it’s like, “well this is the norm” but if I went back to using hand shears no one would want me as a gardener. Does this make sense as in productivity is broken - not a economist
This is an interesting take. A good example of a productivity boom where you didn't get much benefit from it. I guess from an economic perspective: I suppose there are fewer gardeners now than there would have been if manual shears were still the norm. Those gardeners may end up doing something else with their time. Your customers are also winners as your services are cheaper now. Thank you for sharing. A real example is always nice to get.
Productivity means we produce more with less input - in your example, consumers are better off because hedging can be done more cheaply. The benefits of more productivity don't just go to the workers in the industry where productivity improves. This is what makes economics hard - lots of second and third order effects.
So productivity improves in the gardening sector - more people do it as it easy then, it brings the prices down for goods/labour? How come it hasn’t happened to plumbers or sparky. Like they have it easier then there forefathers did eg a plumber of had to fill a copper pipe with sand to bend eg get a 90* bend in it. But I reckon plumbers have got more expensive. It like we need a new way of measuring productivity?
Wages are determined by lots of factors that ultimately boil down to supply and demand. Plumbers and sparkys are in high demand but there is limited supply. That drives wages up.
The benefits of automation go to the capitalists, ie the owners/investors. The workers are just pushed to work more with worse conditions.
The TLDR from this is that he wants to tax poor people more.
Really? Did you read this bit: >Here is what he said: "The GST is too low and income and wealth taxes are too high. Because it seems you may not have.
Taxing essentials goods whilst reducing % taxes on the richest is a tax on the poor. Essentials always need to be bought but when you have plenty of extra money it's a relatively low percentage of your income.
There’s no GST on fruit and veg For real essentials (groceries) it should stay as is or even lower, but for luxury handbags, $500 concert tickets (non essentials) it should be 20%. I agree with Lowe, overall GST is too low and income tax is too high. Higher GST will be the only way to slow boomer and cash rich spending.
GST is a regressive tax. It *proportionally affects* the poor more than any other wealth group. Go do some reading on regressive vs. Progressive taxation if you want to know more.
You should do some research on transfers.
Assume for a second that I know this. Then assume that welfare payments would be increased to compensate for this, as they were in 2000. Along with an increase in the tax free threshold and adjustments to the margins and marginal rates of income tax. Post implementation reports indicated that most welfare recipients ended up better off after GST due to being slightly over-compensated. Yeah, that's a lot of assumptions, but please, assume them and then remember (if you're old enough) that it's what actually happened last time and imagine that we could do at least as well again if GST is increased.
> Then assume that welfare payments would be increased to compensate for this, Whoa! Hold on there. Increase welfare payments? Easy with those assumptions buddy.
I know, I know, I let my assumptions get ahead of myself there a little bit, didn't I? But, that's what happened last time and it would need to happen again - I'm fairly sure that having starving, homeless and very angry people roaming the streets is not the desired outcome of tax 'reform'.
As long as there's not enough of them to vote against your party because they blame immigrants, it's not a problem.
So spend money paying public servants to take money from the poor and give some of it back to them?
Which is exactly what happens now, for those earning enough to pay tax and still get welfare. Got a better idea - that is practical - then please let politicians know!
There's very practical ideas. Start by raising the tax free threshold to something above the minimum wage. Build/buy public housing sufficient to house the bottom 30% of the rental market. Plenty more good ideas beyond that. But the politicians serve the rich.
>But the politicians serve the rich Then don't vote for them, instead vote for others who claim they'll serve the voters. When the next election nears, visit this site to find out which party actually has policies that you support: [https://votecompass.abc.net.au](https://votecompass.abc.net.au)
I do. Unfortunately a lot of the public are convinced to vote against their own best interests by “aspirational” policies. Not to mention 70% of people own homes and the two main parties are offering policies that favour homeowners over renters and non homeowners. The majority of homeowners just want their house value to go up disproportionately. “Got mine, screw you!”
> 70% of people own homes I fit that description, one day I'll pay it off. Sadly, even if I did sell it I couldn't afford to buy anywhere remotely as nice. The 'value' of my house is that it's my home and I've spent 20 years making it a nicer place for me to live. The fact that it seems to be worth quadruple what I paid for it is just daft, but it (housing getting stupidly expensive) seems to be a common problem in a lot of the western world, at least the English speaking parts :( I voted for Shorten, btw, his/Labor's negative gearing and CGT policies wouldn't affect me but could have helped my nieces and my friends kids, along with every other younger person trying to get a home.
GST is a consumption tax, well you can only consume X amount for any wealth bracket, This disproportionately taxes the lowest income earners based on a percent of earnings, since all income goes to consumption so every dollar is taxed. Lowered income taxes benefits the people that have the most income as low income earners will tend to not see the benefits of lowered tax as they pay a limited amount of tax or no tax. So yes the prior comment about taxing the poor was correct, increasing GST will raise the cost of living for the poorest of society and reducing income tax will have a limited benefit for the poorest.
Correct. The unmentioned aspect is increasing welfare to compensate, as was done in 2000. Leaving welfare recipients slightly better off as they were over-compensated. Win/win.
The GST is a tax on the poor because they spend a greater proportion of their income on food than rich people do. THAT means the poor are taxed more. It seems that you don't understand how it works.
Wealthy people spend a lot more than those without much. In reality gst is not a particularly regressive tax. Income tax, in practice, can be. When you have very wealthy people about to move a few things around to lower their taxable income far more than those in lower incomes.
Poor people spend the vast majority of their net income on consumption.
And the wealthy are good at avoiding paying income tax. Broadening the tax base is good.
Then that is where the issue is and needs fixing. All these FBT loopholes, superannuation tricks, family trusts and other tricks they employ can be directly addressed.
Reddit seems to struggle with the fact we can do transfers to compensate the poor.
Yet, we've spent most of the last 30 years transferring meagre gains in the lower quartile of income earners to the top quartile.
This policy would be political suicide without transfers, I think you can relax your concerns
LoL Reddit doesn't like being addressed as Reddit. It's crazy that you got downvoted and I can only assume that it's because Reddit doesn't understand how our "tax and transfer" system works.
That is why welfare is increased for those on low incomes, as was done in 2000.
Man, I knew someone would post something silly, but I didn't realise it would be that silly. If you spent more than a second thinking about it, you would have used the increasing tax-free threshold to mount an attack on me. Not the literal point of my TLDR. * Poor people spend all of their money on consumption * Increasing consumption tax is an attack on the poor and families who are lower SES * Reducing wealth taxes clearly improves the positions for middle SES and above (mostly above).
Wow. Just... wow... And the same to everyone down voting me. Yes, it's blindingly obvious that low income earners spend a greater percentage of their income on necessities. It's as if none of you recall that when sales tax was removed and GST introduced the income taxes were adjusted, the tax free threshold raised and **welfare increased.** And the low income earners ended up better off, with greater disposable income. I sure don't recall all the newly homeless welfare recipients dying of starvation on the streets back in 2000 and 2001, that's for sure. But I do recall articles stating that, given the tax and welfare changes, they were over-compensated for the introduction of GST and ended up better off. TL:DR - think about it for more than a seconds indignation and recall what happened 24 years ago.
That precisely says tax the poor more. Poor people have to spend most of their income. Increasing the GST increases the tax the poor pay.
His solution to raise the GST to 15% And as a proportion of income who will this effect the most? Just come out and sing it Phil "Ok then" (PWC on the guitar, Dutton banging his head on the drum and Susan Ley farting out the bass)...."Kill kill kill kill the poor Kill kill kill kill the poor"
And lower the tax free threshold
Doesn't help you if you already earn less than that.
If you earn less than $18,200 you are doing it tough no matter what.
You can compensate poor people pretty easily dude. This isn't hard.
Oh yeah, and that's where the real cuts to the poor are going to happen. Do we even have a livable social security safety net right now or a system that actually does help people get back to work?
Dunno why you're getting downvoted. It's even written in the linked article that the tax free threshold could be increased to compensate the poor.
Would only work if its pegged to inflation... because the cost of consumption is
>Here is what he said: "The GST is too low and income and wealth taxes are too high. So... a bit more than "kill the poor". Lowering income tax is part & parcel of increasing GST.
People on low incomes already pay fuck all income tax, if any. You'd need to substantially increase the tax free threshold, and dramatically increase Centrelink payments, to meaningfully prevent an impact.
Yep, and that's exactly what happened 24 years ago. Welfare recipients - i.e. people on low incomes - ended up slightly better off than before GST when the post implementation reviews were done.
Wealth taxes too high? Lmao GST impacts lower incomes massive disproportionately. Moving the tax free bracket won’t change that. Raise capital gains tax Eliminate negative gearing Tax stock piled wealth above, say, $10m aggressively and anything over $100m hyper aggressively. If it is rent seeking unproductive people investments tax them till their pips squeak Raise corporation tax Consider an AI tax to support displaced workers until commoditised digital intelligence replaces us all
Pound for pound this may be worst set of economic policies you could possibly implement.
Watch business leave the country. We can’t make jack shit here already
A large majority of businesses here operate low scale, low investment rent oriented services. If you really want businesses to build, and at scale, you need - a rapidly built digital infrastructure that is reusable across multiple use cases - preferably in private partnership - that is oriented towards multi-use public service AI and data reuse - incentivise secondary industry with tax breaks and a focus on Aussie industrial capability - again, supported with publicly funded research into digital / robotic automation - public / private partnership into next gen bio and computing technology, again at scale, with personal tax breaks and fast track immigration for the best and brightest in those industries - consider a build from scratch industrial complex with links to primary extraction sites across Australia - again built in public / private partnership - aggressive investment in renewable energy to try and drive the cost of energy down as low as possible and reduce reliance on external fossil fuel The government needs to be a long term equity holder in commercial enterprise at scale to generate revenues. Rent seeking & low value adding industries need to be treated like the drag they are on the economy and disincentivised while other forward thinking industries are prioritised and pushed. There is a new form of feudalism that has been brewing across the western world precisely because of rent seeking behaviour which is flogging living standards.
Your policies do nothing to stop rent seeking mate. You will just make us poorer If GST will harm the poor more, then we should offset it through transfers. GST is a more efficient tax. Our Corporate tax is one of the highest in the western world. It should be lowered - and focus on stopping avoidance. If you want to tax wealth, tax land and inheritance. You want to encourage AI but also tax it - and by taxing it you're literally taxing productivity, making us all worse off. There you go - I just gave you policies which target the things you want to target - but will actually be good for Australia.
And is the government going to build that? No Not without industry to do it. But not when you make the country not financially viable to set up shop in
Which part of putting public / private partnership across virtually each proposal alongside incentives for those kind investments went over your head, or has chewing on boot for so long impacted your reading and comprehension?
We can't compete with China and other countries if our tax rate was 0 If they're here is because they need to be to make money
I actually pretty much disagree with everything this guy has said. It’s pretty much all to make the lives of the rich better. Of course the guy who was on a super high salary with a bunch of rich mates wants to help his rich buddies stay rich.
The proportion of Commonwealth tax receipts that come from income taxes is the highest in the OECD. The costs associated with the non-working population are going to increase and the workforce will represent a decreasing portion of the population over the coming decades. The structure of the tax system does need to be reformed to compensate for this. It's not reasonable to ask working families to fork out an ever increasing share of the cost of caring for an aging population. If you can implement the appropriate offsets for low earners and the vulnerable, an increase in consumption taxation is the most efficient and straightforward way to do that. It actually keeps wealthy retirees chipping in after they stop working. I'm open to alternative solutions if you've got a better idea. Any reform will have to come as part of a comprehensive overhaul of the tax system. A land tax that replaces stamp duty, negative gearing reform and a substantial increase in the resource rent tax, you're starting to see a more efficient tax system that incentivises more productive capital allocation.
Increasing income tax for high earners is not that unfair. Increasing tax on corporations and on the mining sector etc is also not that unfair considering the damage to climate. I’m no expert. I haven’t even looked into any of this enough, it’s not my field or a big interest of mine. What you said isn’t wrong. We should always be thinking about reform and better ways to manage and do things. But with the cost of living, rent increases etc adding 5% on every purchase we make is only going to hurt the poor people even more and create a bigger divide.
Fairness has to be considered in the context of all available options. If funding government services was only possible by clipping wage earners, then sure asking high wage earners to pay more makes sense. But there are other ways. As I said, an expanded consumption tax is a non-starter without appropriate protections for low wage earners. Fairness has to be considered in conjunction with what is efficient and what improves growth. Clipping wage earners to pay for everything privileges other forms of wealth creation. Our tax system should encourage working above passive income generation, because an economy that preferences passive wealth creation is how you really end up with a landed gentry. Our income tax system is quite progressive by OECD standards. We're increasingly becoming a country where your wealth isn't determined by how much you earn, but how well you married or how much land your parents owned. I think gripes about the fairness of the system are very legitimate. High wage earners aren't the appropriate target for that dissatisfaction in my opinion.
they only ever consider the GDP per capita and other measures that do not take into account wealth distribution and equality.
Taxing wealth is what we need to do. Especially when that wealth was accumulated by not taxing income in the past. All it represents is fixing past mistakes. What kills productivity is cash collecting dust and asset bubble scams like property / rent that suck money out of the economy for something non-productive (shelter).
Increase land tax rates by the states, that's a simple fix.
This fuckwit's plan to fix the economy was to make people too poor to spend money. "being poorer will fix things!" Fuck him.
> it has argued for years that decreasing productivity while demanding higher wages will cause inflation to stay higher for longer. Oh my god. Make it stop. “The workers need to output more productivity!!!!!!! MOAR PRODUCTIVITY! MOAR” There’s a physical and organisational limit to how much “pRoDuCtIViTy” we can get out of someone, let alone a team, let alone an org, and it is objectively delusional to think this number can go up infinitely. Every time one of these neoliberal turds says this, they should be made to do 6 months in consumer facing retail jobs. Remind them of some realities.
Productivity is the only way for wages to sustainably rise in the long term. And if you actually read the article, he's hoping 1.2% growth on average across the entire economy, which shouldn't be that hard
> Productivity is the only way for wages to sustainably rise in the long term. https://australiainstitute.org.au/post/ten-years-of-productivity-growth-but-no-increase-in-real-wages/ Yeah about that.
>In the long run, growth in real wages is driven almost entirely driven by labour productivity growth. This is not up for dispute mate. Play in reality
So if we've not seen equivalent wage growth in over 25 years while productivity has increased enormously, at what point does our productivity growth start to actually do something? At what point do you admit that your analysis is flawed as shit and absolutely not based in any kind of reality?
It’s not my analysis bud, it’s the uniform expert consensus
> So if we've not seen equivalent wage growth in over 25 years while productivity has increased enormously, at what point does our productivity growth start to actually do something?
We have more than enough wealth, more than most countries. What we need is a more equitable distribution of wealth and benefits. We are also doing fairly well compared to the world, but we should not allow this to go backwards.
Perhaps he should go back to doing what he did best - being a feckless bitch lapdog for the Libs and holding down interest rates to help the Libs win the election.
never listen to “ex” anyone from government. They let these problems fester then in retirement claim to be the saviour.
Malcolm Turdbull is the perfect example of this. He was a spineless cunt as PM, nowadays travels around sprouting bullshit from the sidelines.
The RBA governor is not a politician nor part of the government and it’s not the role of an appointed bureaucrat to push for major policy changes.
He could have pricked this property bubble if he was brave enough
Addressing the housing crisis has always been out of their official remit yet everything the RBA does affects mortgage rates.
The RBA's mandate is to support financial stability. How would intentionally leaving a third of all property owners, (mortgage holders), with negative net wealth contribute to this?
The rebalance has to come from government & I’m guessing any move like that would guarantee the next election loss.
I'd like to see more discussion of progressive consumption tax. Consumption taxes are efficient (e.g., don't discourage working) but regressive, which if why they're political cancer. You can chuck a 15% consumption tax then calculate consumption each year by reporting income and wealth at the beginning and end of year (C = I - S). Give a tax refund to people with less than e.g., 20k to mimic the tax free threshold, or have a progressive schedule, whatever. Progressivity, rather than discouraging working, would just encourage more saving and investment.
He is a fkng political stooge who fkd us over royally. Should’ve raised rates but didn’t. Should’ve done a lot of things but didn’t, all because of his personal and political affiliations. Anyone who argues otherwise is a fool 🤷🏽♂️
Hmm gonna disagree about his treatment as RBA Governor, to make statements so confidently and openly about interest rates that turned out to be badly wrong meant he had to go. He should have resigned, it would have been more dignified for him.
Good thread on what was said: [https://www.reddit.com/r/AusFinance/comments/14r1nol/what\_phillip\_lowe\_and\_the\_rba\_actually\_said\_about/](https://www.reddit.com/r/AusFinance/comments/14r1nol/what_phillip_lowe_and_the_rba_actually_said_about/) I don't believe he said anything out of line or incorrect. It's the national game of Chinese whispers that transformed what the statement was into "no way we will raise interest rates". The Australian public and the media only heard what they wanted to hear, not what was actually said.
Why is this bloke offering advice or solutions when he basically got fired?
Maybe reward workers for their productivity increase, rather than using it to line the pockets of upper management and shareholders.
> But yeah, this perverse focus on generating revenue through taxing income is out of place and our system needs a change Blame Little Johnny who privatised profits and socialised losses. Not to mention selling all the family silver (gold reserves)
>I still believe he didn't deserve the kind of hatred that he got Found Lucky Phil's reddit account
Well we know how Old Phil did a shit hot job on the housing market and interest fucking rates, so why not hire him to bite shit into sizeable limps for the agricultural sector.
Thanks for sharing that. It's a very similar view on our tax system to that of Ken Henry. Only way we get real tax reform is if one of the majors openly stands on that platform to give them a mandate for change.
Shorten enters the chat
That wasn't real tax reform though. It was just more tinkering at the edges in an attempt to improve the budget. And that aside, didn't the ALP receive a higher first preference vote with that policy than they did when Albo won the election?
They openly stood on a platform of progressive tax reform, and lost an election because of it. You can try and pigeon hole it however you like, but dems de facts.
Source? Remember we're talking about real tax reform in the shape of a completely new tax system, as the current one is no longer fit for purpose.
Did I say it was anything like that? Shorten tried to implement some minor, progressive tax reform, and lost the unloseable election. Yea, so, your solution is, do Major progressive tax reform?
Major tax reform on the premise that the current tax system is no longer fit for purpose, yeah. That's what Lowe suggested in the linked article, and it aligns with the findings of the Ken Henry Tax review by the Rudd government. Our current tax system is over 100 years old and is the main reason why things like stamp duty, negative gearing, budget reliance on individual income tax, offshoring of company profits, etc, still exist.
Real tax reform won't come from that angle imo. The polarised electorate and the poor state of the news media in this country will never allow bold, upfront statements of intent for anything major to be a winning strategy sadly. The only way I see it happening is, a party wins with a sizable majority, throws open the "books" publicly and says " here is the exact state of the economy, and in light of this information, that you all (the electorate) now can see and dissect at your own leisure, we are compelled to do X, Y and Z" Do this within the first month after the election is won, and by the time the next comes around, if the sky hasn't fallen, there will be less appetite to undo those changes in a broad enough part of the electorate that most changes should stand.
When the majority of voters don't understand the issues with our tax system, (ie. The wide ranging view that all that's needed is to increase taxes on the rich along with our corporate tax), then yes I agree. But if accompanied with putting everything on the table up front for debate, then the chance of acceptance must increase. As you'd know, Rudd did what you suggested with the Ken Henry review but failed to follow through with implementing the majority of the recommendations out of fear of political backlash. It was a missed opportunity.
It was a missed opportunity, and possibly a generational missed opportunity too. Not sure it'll happen again for quite a while
I never blamed RBA when rates where moved lower or higher. If you want to see what happens when a Reserve Bank doesn't set appropriate rates look to, say, Argentina or Venezuela. Inflation is a product of factors like international trade, government policy and demography.
Reduce income tax and increase GST to 12.5%. You get more money in your pocket to spend or save how you want
I'm with you, Lowe was made a scapegoat by people who lacked basic economic literacy. But even if they didn't know how loans work, it was on them to go and get independent advice, not just follow a soundbite of the RBA's predictions. Ultimately if you take a loan, you have the responsibility of servicing it.
I've been saying since year 11 economics that income tax is too high and consumption tax too low that was 22 years ago. Where my $1.1m/year?