Scomo's economic reform options - three effective economic weapons

Cutting public spending, particularly on industry assistance and the overlap in spending at federal state levels, should therefore form part of the new government's reform program to boost Australia's anaemic post GFC economic performance, along with tax reform, including internationally competitive company tax rates and greater reliance on revenue from the GST, as well as industrial relations reform.

The election result was also proof, contrary to another widespread view in Australian media and university circles, that free market oriented neo-liberalism, wrongly blamed for the GFC itself and its aftermath, still breathes.

Economic neo-liberalism inspired the widespread reforms implemented during the Hawke- Keating and Howard-Costello governments that opened up the Australian economy to the world and transformed it for the better. Yet little meaningful economic reform has happened since.

Advanced economies have performed poorly post GFC, with significantly lower economic growth than experienced before the crisis. Real wage growth has also generally been sluggish, a key reason being that private investment, which acts as a conduit for productivity growth by embodying the latest technology, has been anaemic.

In turn, private investment has been adversely affected by the greater uncertainty related to the huge public debt overhang, unprecedented in peacetime, that resulted from ill-considered fiscal stimulus measures implemented in response to the GFC.

Japan holds the record for excessive public debt, with net public debt over 150 per cent of its GDP. Without serious fiscal repair, other advanced economies run the risk of turning Japanese.

Commentary on Australia's economy continues to focus on how it can be managed from the demand side, more recently zeroing in on the expected cuts in official interest rates by the Reserve Bank. However, while of some use, there is little scope for significant adjustment there.

While the prospective income tax cuts have also been interpreted as a demand measure, by improving work incentives they are likely to be more effective on the supply side of the economy, which should garner much greater attention.

In Japan Prime Minister Shinzo Abe has yielded mixed results with his so-called 'three arrows' economic reform programme – known as Abenomics – aimed at increasing Japan's persistently weak growth rate. Abenomics has fallen short however because the government has not addressed Japan's staggering public debt and structural problems that persist on the supply side.

On the other hand, the reforms proposals for Australia outlined above - reduced government spending, tax reform and industrial relations reform - would constitute a more potent 'three spears' package for bolstering the Australian economy. A Scomonomics programme perhaps?