Home > media > Lift GST, says OECD in dismal report card for Australia

Lift GST, says OECD in dismal report card for Australia

March 19, 2017

Lift GST, says OECD in dismal report card for Australia

Peter Martin, The Sydney Morning Herald, 18 March 2017

The Organisation for Economic Co-operation and Development has castigated Australia for inadequate progress on tax, Indigenous affairs and support for business in a report card to be presented to finance ministers from the group of 20 leading industrial nations in Germany on Saturday.

Entitled Going for Growth, the report examines progress on undertakings made at the 2014 Brisbane G20 leaders meeting overseen by then prime minister Tony Abbott and former treasurer Joe Hockey.

At the Brisbane meeting, Australia pressed world leaders to pledge actions that would inject an additional $2 trillion into the world economy over five years and “create millions of jobs”.

The report says progress has slowed and is now back to where it was before the Brisbane meeting.

It says this has been the case in countries that were previously active reformers, and “also in a number of others where reform activity had not been so intense” such as Australia, Indonesia and Slovenia.

While the government’s push to cut the company tax rate was largely welcome, a wider package of tax reforms should be developed that envisages raising the rate of goods and services tax and/or widening the base in combination with further cuts in direct taxation and the removal of inefficient taxes.

Prime Minister Malcolm Turnbull rejected an income tax for GST swap in early 2016 after seeing Treasury modelling that concluded it would do little to boost economic growth.

After noting that gaps between Indigenous Australians and the rest of the population remain large, the report notes: “No action taken”.

In assessing conditions for business and competition it notes: “No action taken lately”.

On education, it says preschool enrolment rates are low and that children from disadvantaged backgrounds miss out, fuelling future inequality and diminishing the capacity of the economy.

Under “actions taken”, it refers to the Gonski reforms which began under the Gillard government in 2013 and are due to expire in 2018.

The report will be presented to finance ministers and Australia’s Treasurer, Scott Morrison, in the resort town of Baden Baden near the border with France.

Mr Morison has used its conclusions to press the Senate to pass the bill containing the government’s company tax cut within the next sitting fortnight. “Coming off the back of our 2015-16 small business package, it will provide encouragement for employers to invest and grow their businesses, providing greater job security, more employment opportunity and higher wages growth,” he said.

“This comes in addition to the personal income tax cuts that were legislated in last years’ budget. The government will continue to work with the parliament to argue the benefits of tax reform.”

In Baden Baden Mr Morrison will also hold his first discussions with the new United States Secretary of the Treasury Steven Mnuchin and China’s newly appointed Finance Minister, Xiao Jie.