Memo to the next government: here are your reform priorities - Grattan Institute

The 2022 federal election comes at crucial moment.

Rebuilding after the pandemic will require bold reforms. And the problems we had before the pandemic haven’t gone away either.

The new government, whether Coalition or Labor, will face a shopping list of problems to solve, from issues thrown into focus by the pandemic (failures in aged care, holes in our social safety net) to problems that remain unsolved from before the pandemic (stagnant income growth, low productivity growth, unaffordable housing, falling educational results).

Governments that try to do too much all at once risk achieving very little of consequence.

Big reforms are difficult because they take time to design, advocate, legislate and implement. Without prioritisation there is a real risk that only easy but trivial reforms will succeed.

The new federal government should adopt a framework that weights both the value of each reform and its practical ‘‘doability’’. It should give highest priority to the reforms that are of high value and can be feasibly achieved by the federal government.

The value of a reform measures how much the policy change improves people’s lives: a boost to incomes, better health, a cleaner environment, increased opportunities for disadvantaged groups or improved functioning of government.

The ‘‘doability’’ of a reform relates to the cost it imposes on government in terms of time, energy, and political capital. Practical complexities can make a reform less doable, especially if the co-­operation of state governments is required.

Barriers such as strong public opposition or a high budgetary cost can be overcome but require strong political will and a solid evidence base. The new government should prioritise reforms that are more valuable and more doable. It should devote resources – public service time, ministerial attention, money and political capital – to make sure they happen.

Reforms that are less valuable but more doable are easy wins. The government should put just enough resources into making them happen. Reforms that are more valuable but less doable should be sent for review, to gather the evidence, work through problems in implementation, and build public support.

Finally, reforms that are less valuable and involve some complexity on delivery should be delegated: left to an individual minister, department or agency. And these reforms could be sacrificed if they interfere with priority reforms.

Grattan Institute’s Orange Book 2022 identifies policy priorities for the incoming federal government.

Firstly, economic policy. Childcare should be made cheaper, to encourage parents and especially mothers to return to the paid workforce. Supporting the states to swap stamp duty for land tax is also a high priority. The Stage 3 income tax cuts should be funded by winding back tax concessions that are not meeting their economic aims – the capital gains tax discount, negative gearing and super tax concessions. Australia’s permanent skilled migration program should better target younger, higher-skilled workers. JobSeeker should be increased by at least $75 a week.

And to support economic recovery, the new government should continue to provide temporary fiscal support until the economy’s health is secured and wages are growing.

To help tackle the scourges of poverty and homelessness, Commonwealth Rent Assistance should be boosted by at least 40 per cent and more social housing should be built.

The new government must also fix the climate-policy gridlock. It should collaborate with industry to build on our comparative advantages in renewable energy and critical minerals, and target emissions-reduction policies across the economy.

The federal government should fund only nationally significant transport infrastructure, avoiding projects that are poor value for money. It should impose an emissions ceiling for light vehicles, as the most efficient way for the transport sector to do its share of emission reduction.

To help deal with the continuing Covid-19 crisis, the new government should remove the cap on hospital funding to the states and plan an ongoing, long-term Covid-19 vaccination program.

To address aged care workforce needs, the imminent Fair Work Commission determination on wages for aged-care workers must be quickly incorporated into funding. In education, the federal government should focus on boosting the evidence base for reforms and improving initial teacher education.

The incoming government should freeze compulsory superannuation at 10 per cent of wages, and curb super tax breaks. It should create a ‘‘best in show’’ shortlist of up to 10 super funds, to help curb excessive super fees.

To help revive Australians’ trust in their political system, the incoming government should establish a Commonwealth Integrity Commission with teeth. And it should cap expenditure on political advertising during election campaigns.

Decades of policy gridlock in Australia mean there is much to be done. But if the winner of the 2022 federal election gives priority to the right reforms, Australians should be able to look forward to higher living standards and a fairer, more optimistic nation.

Owain Emslie

Senior Associate
Owain Emslie is a Senior Associate at Grattan Institute. He has worked in the Transport and Cities, Household Finances, School Education, and Budget and Governance programs. He has co-authored reports on transport infrastructure procurement, female workforce participation, retirement incomes, and measuring student progress.

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