Bring on proposed changes to our tax & welfare system

CEO Social Justice Blog

Former Treasury boss Ken Henry said recently that because of the significant tax cuts over the past decade, much needed reforms in areas such as NDIS, education, including early childhood and child protection were at risk. He said there was an urgent need to restore Government income to what is was 10 years ago.

Henry co-authored a report back in 2010 highlighting the need for tax reform but while the report has been treated with great respect there has been little action since.

We have been too concerned about how many dollars goes into the pockets of individuals during the recent period of affluence rather than in the bigger picture – the future of the nation.

Every democracy has to invest a percentage of its annual income (its GDP) in health and welfare services or civilisation as we know it would cease to exist.

But how much is needed.  The general response is usually as little as possible but Dr Ken Henry says we are not putting aside enough to pay for the infrastructure needs of the future.

In Australia each year the Government spends about 35% of GDP on infrastructure and services. How does this compare with other affluent countries.  Well how about:

Austria 50% France 56%
Belgium 53% Ireland 48%
Brazil 39% Norway 44%
Canada 42% UK 48%
Cuba 66% USA 41%
Finland 55% Germany 45%

The reason other countries spend more is that they have a higher income from taxation than we do.

Of course there are some developing countries which spend less on infrastructure and services than us but we should be comparing ourselves with other similar more affluent countries.

And we don’t compare well.

Bring on the proposed changes to our tax and welfare system, as suggested by Dr Ken Henry.