This evening I got a call asking if I could appear on the Price-Bolt 2GB show and talk about the five things to get the economy going – in 5 minutes times. Sure I said. So here is the list:
- Cut taxes at both the federal and state levels.
- Cut spending – especially on industry policy, subsidies and duplication.
- Cut regulation – both red tape and green tape (especially the MRET).
- Liberalise the labour market.
- Liberalise the housing market
- Actually abolish the carbon and mining taxes.
Okay – that’s six and not five and it could be counted in as cutting taxes.
Now I don’t think that list is as radical as Andrew and Steve thought.
Economic growth at the moment is sluggish – in my opinion because government is crowding out private activity on several margins. So cut intervention in, say, pre-school childcare. You don’t need a degree to entertain toddlers – just the temperament and some first aid knowledge. Let the young women who work in that industry capture some of the rents and not the regulators and reduce the deadweight losses of excessive regulation. That will allow other women to get into the workforce. That is just one example. More people working (if they want to) is always better for the economy as it increases the size of the market and increases the scope for specialisation and further division of labour. As economic activity increases so the tax take will increase too. We know this should happen. This then gives the government room to maneuver on tax cuts and spending cuts.
There must be spending cuts. There is far too much corporate welfare and far too much personal welfare and just far to much spending that occurs for no obvious reason.
I would like to see the Abbott government commit to spending cuts and tax cuts before the budget returns to surplus – simply because I think the current Liberals lack the discipline to cut spending if and when the economy picks up and the tax system hums back into its highly efficient self.