Productivity Solutions Missing From Recent Jobs Summit: Economist

Australian Prime Minister Anthony Albanese addresses the Jobs and Skills Summit at Parliament House in Canberra, Australia on Sept. 1, 2022. Martin Ollman/Getty Images

While the recently concluded Jobs and Skills Summit saw the prime minister announce an increase in Australia’s migration intake and nearly half a million free TAFE training positions, it failed to offer a true long-term productivity solution, according to one economist.

“The first, second, and third priority of the Summit was productivity, productivity, and productivity—and there wasn’t a lot of that being discussed,” said John Humphreys, chief economist of the Australian Taxpayers Alliance.

“The fact that’s not being discussed means they might come up with a few little ideas that are nice in the short run, but they’re not fixing the underlying problem,” he told The Epoch Times.

Prime Minister Anthony Albanese chose the Summit as the opportunity to lock-in several slated policies to deal with worker shortages in the Australian economy, including upping the annual migrant intake from 160,000 to 195,000 a year and allowing retirees to work extra hours without having their pensions impacted.

Another move was to invest $1 billion (US$750 million) into offering 465,000 free TAFE positions.

However, Humphreys said that while more training opportunities “sounded good” and would “buy votes,” there was no real evidence it could increase productivity in the long term.

“Domestically or internationally—the elephant in the room—the ongoing problem that no one wants to talk about is there isn’t any society where there aren’t people on the low productivity [end of the spectrum],” he said.

Back the Tax Cuts, Give Money Back to the People

The chief economist instead called on the federal opposition to work with the Labor government not to unwind Stage Three tax cuts that will simplify Australia’s income tax system by merging two brackets ($45,001 to $120,000 a year and $120,001 to $180,000) into one.

Slated to kick in from 2024-25, those that fall into this bracket ($45,000 to $200,000) will pay 30 cents on every dollar earned, while those making under $45,000 will pay 19 percent on their earnings, and those making over $200,000 will pay 45 percent.

Currently, in the tax system, Australians who earn up to $18,200 pay zero tax, while those who earn between $18,201—$45,000 pay 19 cents for each $1 over $18,200. Those who earn over $45,001—$120,000 pay $5,092, plus 32.5 cents for each $1 over $45,000.

Meanwhile, Aussies earning over $120,001 up to $180,000, currently pay $29,467 plus 37 cents for each $1 over $120,000. High income earners whose annual pay is $180,001 and over pay $51,667 plus 45 cents for each $1 over $180,000.

The move will result in Australian families, who mostly fall within the large middle bracket, paying less income tax and keeping more of their earnings to themselves.

Yet the reform, introduced under the previous centre-right Coalition government, has been under sustained attack from media outlets, commentators, think tanks, and the left-wing Australian Greens, who claim it is the “biggest attack on equality in a generation.”

Humphreys said the focus on tax cuts as a wealth redistribution mechanism was a mischaracterisation of the issue.

“The Stage Three tax cuts are one of the only examples we’ve had in the last 20 years of actual productivity reform,” he said. “Once people earn above $60-$80,000 a year, you see much higher behavioural response rates.”

“They change how much tax they minimise, how much they'll invest, how many risks they’re willing to take,” he said.

“Long term, a lot of productivity comes from innovation in business and entrepreneurship, and that, in turn, comes down to how many risks you’re willing to take. What that comes down to is, ‘Well, if it fails, I go bankrupt, or I lose my money. But if it succeeds, I make this money minus the tax rate.’”