on Tuesday will be another doleful reminder of just how far Australia’s fiscal stocks have fallen since the halcyon days of John Howard and Peter Costello.
It will certainly bust the Goldilocks conditions that prevail in March 2022 that has allowed for the simultaneous golden mean of low unemployment and inflation in Australia in the aftermath of the COVID-19 pandemic.The debt build-up leaves little scope for funding major structural spending fixes. Nor does it provide any buffer against other national emergencies and global risks.
At Macroeconomics Advisory, we have estimated that the cost of replacing existing thermal power with solar and wind and back-up will be in excess of $150 billion. That impost is likely to be borne by governments/taxpayers.But there is a way to avoid most of these transition costs and perhaps restore some of our old manufacturing base sourcing cheap, emissions-free, reliable energy.One little known option that is apparently ready to go is long-term thermal storage.
Second, tax reform. Distinguished economist Ross Garnaut reminds us of the prevalence of “economic rents” in the Australian economy and the need to replace company taxes and stamp duties with a cash flow tax and land taxes.A cash flow tax allows for the immediate write-off of capital expenditure by business. Workers need better machines and software to raise output, and this means immediate deductibility without debt funding.
…..or he could cut fuel excise and hand out some cash as a cynical attempt at getting re-elected…. Which is more likely? Ausvotes22
He’s had years and the biggest spend in our history . Nothing to show for it . What a fail.
Frydenberg will spend spend spend.