Notes From the Tax Forum

Another talkfest, another chance to recycle the same old ideas, another failure to act in a substantial way: is that all there was to the recent tax forum? Alexander McLaren reflects on the good, bad and indifferent following his participation in the event.

The last time we decided to talk tax, Eurhythmics were all the rage and Madonna had scored her umpteenth hit by getting into the groove. Live Aid brought pictures of famine and rock stars into living rooms and the Hawke government had hit a rocky patch in their relationship with the unions. Twenty-six years after the Tax Summit of 1985 and everything old suddenly seemed new again.

Last month’s Tax Forum, downgraded from a Summit for semantic reasons, presented itself as an opportunity to reinvigorate the debate about our increasingly dysfunctional tax system. While the invitations promised a no holds barred review of the tax system, the end result more closely resembled a two day parody of Geoffrey Robertson’s Hypotheticals rather than delivering on the forum’s instigator, Rob Oakeshott’s, demands for “outcomes, outcomes, outcomes”.

The guest list was generously peppered with seasoned academics and some of Australia’s best thinkers on financial reform. However, the dominance of unions and business groups amongst those attending rightly saw the forum described as a talkfest. For many, it was simply another opportunity to spout the same old tired lines that haven’t changed since they last met at Old Parliament House.

Ken Henry’s announcement mid-way through the first day that he could have scripted the event seemed to sum it up. Working families were still struggling, businesses were paying too much tax and every community group at the table believed that they weren’t getting enough of the pie. We wanted the standard of living had by the Scandinavians but with the tax rates of a European principality. For those falling asleep after lunch, you could have easily forgiven them for having heard it all before.

Most discouragingly was the limited time given to challenging the current system. Those that descended upon Canberra in the hope of raising even the slightest of contrarian viewpoints were given the quickest of airings. My 30 seconds of fame came after five other speakers suggested a similar proposal to introduce, amongst other proposals, road congestion charging. Our tabled submissions meant little to those that hadn’t read them and the pace at which our ideas were dismissed gave little chance for considered thought or analysis from those that disagreed. Such was the theme of the forum: everyone knew what they wanted, they just didn’t understand why the others wouldn’t.

The forum seemed to suffer the symptoms of the slow death of an economic reform agenda. Many of the experts gathered knew precisely the flow on effects that a change in tax rates would have on the economy as a whole, but worryingly, many others didn’t seemed to care. As long as there was more money in the pocket at the end of the day, everyone was meant to be a winner. Perhaps a few micro and macro economic classes wouldn’t go astray.

The demand that our proposals all be revenue neutral seemed to ignore the need to meet future revenue requirements. As seems to be the case with the ongoing discussion about the budget deficit, there appears to be no acceptance that it’s okay to occasionally be in the red. Likewise, is it necessarily wrong for a government to be holding more than it needs and investing for a rainy day? Trying to balance the books each and every year will never equate to sound fiscal decisions, let alone trying to reform an economy.

As tends to be the case at these events, the real discussion happened away from the cameras and microphones. Remove the facilitators and replace with a generous serve of Canberra hospitality and your end product is an engaging and at times exciting discussion about the future of our tax system. Once the veils of rent-seeking were removed, the collection of ideas that were present at lunch were the true highlight of the forum. But of course, once the bell goes and the walk back to the Great Hall begins, the self-interest that marred the two days quickly emerged again. Just like a great actor, the speed at which the ideas disappeared and the participants fell back into character was seamless.

My youthful cynicism aside, there emerged a glimmer of hope from the two days of proceedings. To merely assemble such a diverse range of opinions in one room is to at least show some initiative. Peel away the agendas and there is a real sense that the system needs an overhaul. A renovator’s delight, if you will. Even at the most superficial of levels, from rectifying the dreaded ‘horizontal fiscal imbalance’ to simplifying the process of completing a personal tax return, it is clear that we will have to change the way we levy tax.

We’ve had our fair share of summits in the past few years. Visions for the future are great but what is required is true political leadership. The Henry review is a visionary document that has been cherry picked and bastardised to suit the whims of those in power. A simple act, one that would go far beyond forming a new think-tank or steering committee, would be to implement the review in its entirety by 2020.

Like Live Aid in 1985, the message is there but the actions thus far leave a lot to be desired. The same can be said for Madonna as for the interest groups that dominate our public discussions: twenty-six years on from when we last took notice, they’re still spouting the same old hits.

Alexander McLaren is Queensland Policy Manager at Left Right Think-Tank, Australia’s first independent, non-partisan think-tank of young minds with a mission to involve young people in public policy.