A decentralised Australia?

The Rudd Government recently ruled out in the strongest terms any possibility that it would introduce Ken Henry’s panel’s recommendation that a comprehensive land tax should be used to replace iniquitous taxes such as payroll tax and stamp duties. This thereby ensures that Australia will continue to pay lip service to decentralisation.

Insofar as it ignores Canberra’s brilliant genesis this is most regrettable. It wrongly assumes that people can’t be educated to the fairness of revenues based on the value of relative locational benefits.

It’s worth noting that not only would an across the board higher level of rates and land taxes assist the regions - provided other taxes are reduced or abolished accordingly - but it would also act to put a ceiling on escalating land prices and the attendant mortgage debt currently being shouldered by Australian households.

The latter approach to decentralisation would, of course, be anathema to the same interests that sabotaged the successful ACT experiment, which has similarity to mining billionaires labeling the proposed Resource Super Profit Tax as “another big tax” when it is, in fact, a natural resource rent.

And the economics textbooks tell us that public capture of land and resource rents can’t be passed on in prices or affect production incentives adversely. Julia Gillard’s re-naming of the miners’ “super profits tax” a “resource rent tax” seems to acknowledge this point.

Decentralisation is clearly necessary if Australia to unclog its capital cities and utilise the infrastructure available in the regions. However, many people are beginning to wonder whether a bi-polar party-political system, funded to a large extent by vested interests, is any longer capable of acting in the best interests of the Australian people.

Recent history suggests the two major parties are increasingly in the thrall of sectional interests and paid lobbyists. This has come at a great cost to the national interest and to our regional and rural areas.