A Liberal Party in the 21st Century

Worth remembering is that Australia is unique in the relative importance in its economy of small business, especially as an employer, compared to other advanced nations. But small business owners typically lack hours in the day and do battle with complex business tax, GST, labor laws and cash transactions reporting. Governments can help them by keeping taxes and charges low, and by ensuring precious hours that should be spent on business are not wasted on not just inflated taxes but regulation and form filling. If the government is going to insist on complex and extensive tax and regulation it must accept the corollary costs of running this system and not pass it off to small business.

Ultimately, it is impossible to continue to be a great nation without a strong economy, and in the contemporary discussion on tax reform we have lost sight of simple truths – lower taxes help businesses and grows the economy, which creates jobs, raises livings standards and increases productivity.

An ongoing national discussion on tax reform should place these ideas at its core and feed a renewed national discussion around dynamism and growth. Although the age of 'grand bargain' tax reform is no longer with us, doing so could lead to the largest deregulation and expansion of the economy since the 1980s.

Better competition

If Liberals should take less money of the pockets of Australians then we should also create room for people to take account of and manage their own money. The clearest example of this has emerged around Self-Managed Super Funds (SMSFs), which deprive the financial advice sector of an estimated $14 to $20 billion annually in fees.

Unsurprisingly, this leads to continual pressure on regulators to shake up and cloud the SMSF arena with expensive over-regulation, driven by arguments that people need to be protected from themselves, even though the Productivity Commission – and countless common sense Australians – have claimed for years that people are better at handling their own money.

This issue, or at least its intervening characteristics, reveals a contemporary trial to a timeless government challenge of 'captive regulators' – where a regulatory body of well-meaning public servants with no industry training co-op industry representatives who are more than willing to explain what needs to be done. A tendency to coalesce and monopolise is prevalent in many industries, from controlling the amount of medical specialists that ultimately expand waiting lists and expenses, to other professions with bizarre entry barriers, typically around safety, that prevent pathways for Australians to craft a career pathway and better serve consumers.

A fix on the SMSF issue, at least in the short term, is for the Australian Tax Office to cease threats of $4,000 fines for SMSF holders that do not have a written investment policy that allows property investment. This is an odd directive – individuals, let alone any public company, do not need any written investment policy before purchasing anything. Removing these requirements is a humbled but good place to start. More broadly, limiting captive regulation requires regulatory vigilance – a vigilance against monopolised behaviour and activities that prohibit choice and competition.

The index patient – a better federation

Too often we examine the politics of government and exclude how government works. But there can be great benefit in improving the mechanics of state without disruptive and uncertain wholescale constitutional furniture-shifting that reflects genuine societal change, drives accountability, and makes government more effective.

The biggest unnecessary change to our structure of government – an Australian republic – has deflated for another electoral term. Our constitutional monarchy has been fundamental to Australia's success, and the longer this debate is relegated the better.

But this enthusiasm to fundamentally change our nation, and the list of other constitutional reforms before us, misses the more tedious acts where this 'reform energy' may apply. A few years ago the Abbott government attempted the toughest reform since federation – the reform of federation of itself.

Why? In straightforward terms a more effective federation is the 'index patient' of better government – seeking to limit overlap, duplication, waste and the 'blame game' between the federal and state governments. And proper federation reform goes beyond the confusing sea of performance measures and intergovernmental agreements put in place by Labor governments.

Critics say this national debate on federation suffered from the absence of a clear starting point. To avoid a repeat here, I hope, is a clear starting point – return all education and health responsibilities to the state governments. This was the wisdom originally envisaged in the constitution that, although now exceedingly bold, could be achieved over two electoral terms with strong state and territory support.