The first Labor Budget of the Rudd Government is a budget of missed opportunities. It is a budget that is timid and mediocre in nature.
With the global financial crisis allowing criticism of the Anglo-American economic paradigm to become mainstream this was the opportunity to turn Kevin Rudd’s rhetoric into a vision to transform Australia.
Australia is facing an issue with an ageing population, this is undeniable. What solution was proposed by the Nambour graduates - raise the retirement age from 65 to 67. This is a solution out of Sir Otto Niemeyer’s playbook. Labor Treasurers like Ben Chiefly and Edward Theodore would be turning in their graves.
What alternatives are there?
We already have the vehicle to address this issue, compulsory superannuation. The failure of the Howard/Costello government during the boom period in not increasing the superannuation guarantee levy to 12 per cent will haunt Australia. However that dismal policy failure is not an excuse for this retrograde policy decision.
What the Nambour graduates should have done was simply, over the next three years, phase in a 3 per cent government contribution to workers superannuation for those earning less than $90,000, followed in the following three years a phased increase of the Superannuation Guarantee Levy to 12 per cent. Thus in six years time workers earning less than $90,000 would be having 15 per cent of their income going to superannuation and those above the threshold would be having 12 per cent of income going to superannuation.
We are seeing a market failure in finance not being available for certain sectors of the economy. Government intervention is necessary, however the method used by the Nambour graduates transfers all risk to taxpayers.
Why should the risk of providing capital to car salesmen and property developers lie solely with the taxpayers?
What is the solution?
Accept reality that trading banks are a critical part of the economy and that a government-owned trading bank is required, so that in times of significant market failure the risk and cost of providing social capital can be spread among depositors as well as taxpayers.
It is not the Labor way to ask a worker on $30,000 to provide the cost of social capital to property developers and car salesmen and bear the burden of the investment risk when their employment future is uncertain.
To that end the Commonwealth should look at nationalising Suncorp, ensuring that shareholders are properly compensated. Thus providing a commercial framework to make available social capital to key economic sectors.
Thus banking activity could be influenced through the use of competitive pressures within the banking prudential framework without the need for increased regulation and compliance costs.
Finance sector reform
Australia needs to grasp the opportunity provided by the global financial crisis to not only become a financial player in the South-East Asia region but to become a major player in the world financial sector.
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