Grattan Institute this week released its ‘Orange Book’, its parallel to the public service’s Blue Book (for an incoming Liberal government) and Red Book (for an incoming Labor government). Grattan’s Orange Book — based on its signature colour — is non-partisan, designed to be part of either Red or Blue.
The Australian economy has proved remarkably resilient through the pandemic, helped by strong action to stop the spread of the SARS-CoV-2 virus, together with significant monetary policy and fiscal supports. The next federal government, whether Coalition or Labor, should ‘stay the course’ on the current fiscal strategy of providing temporary support until the recovery is secured and wages are growing.
Whoever wins the election will inherit a mountain of debt — net debt is estimated to peak at more than $900 billion — which makes priority setting even more critical. But this should not be an excuse for government to sit on its hands and do nothing.
Over time, stronger growth in Australia’s living standards requires increased productivity growth. Grattan’s Orange Book identifies a suite of productivity-enhancing reforms which will boost the economy and incomes and provide scope for governments to deliver more of the services Australians value.
The next federal government should make Australia’s tax system more efficient. Increasing and/or broadening the GST to fund lower income taxes, and supporting state governments to swap stamp duties for land taxes, are some of the best efficiency enhancing reforms. Reducing out-of-pocket childcare costs would free up families’ choices and boost workforce participation, particularly for women. We recommend sweeping changes to permanent skilled migration policy, to better target younger, higher-skilled workers. These include abolishing the Business Investment and Innovation visa program and making permanent employer-sponsored visas available for workers in all occupations, provided they earn at least $80,000 a year.
Improving people’s health and education would also boost productivity and quality of life.
Improving access to early childhood education and boosting the quality of school education, including making teaching a more attractive career option for high achievers, would lift student performance, which has been in decline for more than a decade.
The health system functions well overall, but improving the delivery of primary care, addressing aged care workforce needs, and reducing out-of-pocket costs for medical specialists and dentists would ensure more people could get care when they need it.
The SARS-CoV-2 pandemic has exposed deep fissures in the health system and its governance. Unfortunately, politics is still at play in funding arrangements. The Orange Book recommends that the federal government provide additional support to the states, including removing the cap on hospital funding, and continuing the 2021 50:50 COVID cost-sharing arrangement in 2022 and perhaps 2023. The federal government should be open to learning from what went wrong in the pandemic; it should commission a comprehensive review of all aspects of Australia’s COVID response.
The Royal Commission on Aged Care highlighted the many problems in this sector, brought into tragic focus with the high mortality rate in residential aged care during the pandemic. The quality problems need to be addressed urgently. The existing regulatory approach needs to be jettisoned and new independent bodies should be established to act as regional ‘system managers’ of the local service system, monitor quality, and enhance social participation and healthy ageing. A new public reporting system should be introduced to provide information on the quality and prices of service providers. And the government should introduce a ‘waiting time guarantee’ for home care — no one who is independently assessed as needing home care should wait more than 30 days to get the right level of care.
The next federal government should also boost the bang for buck from transport spending by funding only nationally significant infrastructure projects, avoiding projects that are poor value for money. The Orange Book calls for the incoming government to amend the National Land Transport Act 2014 to prohibit federal funding for a project worth $100 million or more before the Minister has considered Infrastructure Australia’s evaluation of the project. The Infrastructure Australia evaluation should include the cost/benefit analysis and a priority ranking relative to other eligible projects, and it should be made public immediately following the decision.
The next government must fix the climate-policy gridlock. Australia needs sharper incentives for carbon-emission reductions now, if we are to avoid a very disruptive and costly transition later. Specifically, the incoming government should snap out of the current policy torpor and implement a suite of sector-based emissions-reduction polices, consistent with Australia’s long-term commitment to net-zero emissions. The federal government will need to work with the states and territories to create better alignment and coordination of policies and programs to support the decarbonisation of energy use in all its forms.
Australia needs to urgently do more to tackle the scourge of poverty and homelessness. Increasing JobSeeker and other working-age welfare payments, lifting Commonwealth Rent Assistance, and establishing a Social Housing Future Fund would ‘ease the squeeze’ on the vulnerable.
The Orange Book proposes a bold new national shared equity scheme to level the playing field for homebuyers who don’t have access to ‘the Bank of Mum and Dad’. Under this scheme the federal government would take up to a 30 per cent equity stake in the home.
Finally, whichever side of politics wins the federal election should bolster the checks and balances on political decision-making. The next government should reduce the influence of vested interests by tightening rules on political donations and lobbying. And it should set up a federal integrity commission with wide-ranging powers to prevent corruption and misuse of public money.
This is an ambitious agenda. But decades of policy gridlock mean there are many opportunities to improve Australians’ living standards through better policy. The 2022 federal election campaign should be the starting gun for the race to build a better Australia.
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