Michael Keating. The role of government in policy renewal.

In thanking Ross Gittins for launching ‘Freedom, Opportunity and Security’, Mike Keating explains the reasons why he and I decided to launch this series, first online and now in a book. Mike Keating’s book launch notes follow. I will also be posting Ross Gittins’ comments. John Menadue.

Thank you Ross Gittins and thanks to you all for coming

Why we embarked on this project

  • Concern about the poor quality of public debate on many public issues
  • The failure of political leadership to change that situation, or even be willing to try

Instead we think there is a role for public conversation in developing and prosecuting a genuine reform agenda

  • History of past reforms is a long gestation period, with expert opinion often playing a key role in establishing the policy agenda
    • Eg tariff reform and de-regulation of financial markets
  • Too often calls for reform these days are little more than slogans – tax reform; industrial relations reform – but no content.

Have been fortunate in attracting people who are experts in their field and who are able to support their arguments with evidence. This evidence and logic is I hope one of the strengths of this book.

Timing of the book is also fortuitous, coinciding with advent of a new and different government

  • More open, less negative and more optimistic
  • Most importantly good ideas are not being ruled out without any consideration

Labor needs to respond accordingly. 

The book itself

Not my job to summarise the book.

  • Ross has done that, and we would rather you buy it now if you want to know more – as I am sure you do

Just a couple of observations

  • Despite apparently deep divides between our political parties, judging by the articles in this book there is considerable consensus about the policy prescriptions for moving forward
  • This consensus may just reflect the company that John and I keep
    • Don’t think so
  • Foreign policy is a good example, of how there is more consensus than I expected
    • Used to think there were more opinions in DFAT than there were senior staff members
    • But the five different authors here – all former senior member of DFAT – agree that
      • we need to focus more on the opportunities and less on the threats – should appeal to Turnbull –
      • we need to achieve a more independent balance in our foreign policy
  • Most importantly, all the authors see an important role for government in our future
    • Consistent with past Australian traditions, general presumption among all the authors that we should maintain government responsibilities, even if we think their effective achievement requires changes in the means used
    • Want better government, not less government
    • Contrast with the US

Given that conclusion, one issue in particular seems to me to be most important and that is taxation and the Budget

  • Perhaps I am biased, but naturally I don’t think so. Taxation and the Budget encompass so many of the other issues.
  • Critical issue is that we will need to raise more tax to preserve let alone enhance our sort of society
    • Market economy is likely to deliver greater inequality unless government acts to counter-act a wider distribution of earnings
    • State Premiers all want more tax beyond the cuts that the Australian Government has imposed.
    • Considerable expert opinion, including in this book, that Budget repair will require action on the revenue side as well as on the expenditure side, but hard to raise additional revenue if expenditure is not efficient, effective and equitable.
    • Do we think we can raise the additional revenue needed without increasing the GST?
      • Removal of tax concessions may not raise as much as some seem to expect
      • ALP proposal to reduce super concession will not raise much
    • My article in this book suggests that such actions will not be sufficient, and raises the option of increasing the GST to obtain the extra revenue needed. Progressive and even realistic thinkers need to support this option if it is the best way to obtain a consensus in favour of higher taxation
      • Can protect the poor
      • Income tax scales need adjustment to offset fiscal drag
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