Orange Book 2022: Policy priorities for the federal government

by Danielle Wood, Brendan Coates, Stephen Duckett, Jordana Hunter, Marion Terrill, Tony Wood, Owain Emslie

27.02.2022 report



Australia needs bold policy reform to build back better after the COVID recession.

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Our 2022 Orange Book maps out a policy blueprint to reignite wages growth and boost Australians’ living standards.

It calls for major tax reform – including increasing or broadening the GST and winding back tax concessions to fund income tax cuts – as well as cheaper childcare, lower patient payments to medical specialists and dentists, higher-density housing in the major capital cities, a boost to the JobSeeker payment, stronger action on climate change, and a Commonwealth Integrity Commission with teeth.

It’s an ambitious agenda, but decades of policy gridlock mean there are many opportunities to improve Australians’ living standards through better policy.

Whoever wins the 2022 federal election should get the ball rolling, so Australia can emerge from the pandemic as a fairer, more prosperous, and more optimistic nation.

The Orange Book is named after Grattan’s signature colour. Like the ‘Blue Book’ (for the Coalition) and ‘Red Book’ (for Labor) that public service chiefs prepare for incoming governments, the ‘Orange Book’ sets out policy recommendations for whichever party wins the election.

Building on research and analysis published by Grattan Institute since it was founded 13 years ago, Orange Book 2022 identifies reforms to boost incomes, improve health and education, create better transport links, make housing more affordable, generate meaningful progress on climate change, and strengthen Australia’s political institutions.

To arrest declining student performance, teachers should be given more time to prepare for class, and the next federal government should commit to doubling within 10 years the proportion of high achievers who choose teaching as their career.

To reduce the number of Australians who delay or skip getting needed healthcare, the government should ensure patients pay less out of their own pocket when they see a medical specialist or the dentist.

To tackle the scourge of poverty and homelessness, the government should boost Commonwealth Rent Assistance by at least 40 per cent and JobSeeker by at least $75 a week.

To create job opportunities as Australia pursues its target of net-zero carbon emissions by 2050, the government should collaborate with industry to build on our comparative advantages in renewable energy and critical minerals, and target emissions-reduction policies across the economy.

To boost the bang for buck from transport spending, the federal government should fund only nationally significant infrastructure projects, avoiding projects that are poor value for money.

And to revive Australians’ trust in their political system, the next government should tighten the rules on political donations and lobbying, and create an anti-corruption commission with sweeping powers.

No government could implement in a single term all the reforms we recommend in the Orange Book. But if governments were to tackle a reasonable number of them over the next decade, it could transform Australia, with higher incomes, less poverty, better-quality and more efficiently delivered services, a liveable climate, and stronger democratic institutions.

The 2022 election campaign should be the starting gun for the race to build a better Australia.


Tax reform

  • Broaden the GST base and/or increase the GST rate (in a package with reducing income taxes and boosting welfare payments).

  • Make the accelerated depreciation scheme permanent and explore wholesale reform of Australia’s corporate tax system, such as a destination-based cash flow tax or an allowance for corporate equity.

  • Reform income taxes by packaging the Stage 3 income tax cuts with a redesign of tax concessions that are not meeting their economic aims – the capital gains tax (CGT) discount, negative gearing, and super tax concessions.

  • In the longer term, align the tax treatment across different types of savings by reducing taxes on other savings income such as net rental income and bank deposits.

  • Encourage the states to replace stamp duties with general property taxes.

  • Wind back age-based tax breaks:

    – Limit the Seniors and Pensioners Tax Offset so that it is available only to pensioners, and so that those who do not qualify for a full Age Pension pay some income tax.

    – Impose the Medicare levy on seniors at the level where they are liable to pay some income tax.

Labour force participation

  • Increase the maximum Child Care Subsidy to 95 per cent, gradually tapering for families with incomes above $70,000.

  • Add six additional weeks leave to the current 20-week paid parental leave allowance, through a 6/12/6+2 structure – six weeks ‘use it or lose it’ provision for each parent, 12 weeks to share between them as they choose, and an additional two weeks of bonus leave, which could be used by either parent provided both parents take at least six weeks leave.

  • Increase the superannuation preservation age from 60 to at least 65.

  • Increase the rate of Jobseeker by at least $75 a week and bench-mark the payment to increases in wages to keep pace with community living standards.


  • Shift the composition of Australia’s permanent skilled migration program to better target younger, higher-skilled workers:

    – Abolish the Business Investment and Innovation visa program.

    – Scale back and independently evaluate the Global Talent visa program.

    – Expand the number of skilled worker visas allocated via employer sponsorship and the points-test.

  • Make permanent employer-sponsored visas available for workers in all occupations, provided they earn at least $80,000 a year.

  • Commission an independent review of permanent points-tested visas.

Monetary Policy

  • Commission an independent review of the Reserve Bank, to consider its mandate, policy tools, and governance structure.


Housing supply

  • Encourage the states to change planning laws and processes to allow higher-density housing in inner-urban areas and established suburbs.

  • Establish Housing Australia as a statutorily independent research body with responsibility for collecting and publishing nationally consistent data related to housing supply and demand.

Housing support for low-income earners

  • Establish a $20 billion Social Housing Future Fund to fund new social housing targeted at people at greatest risk of becoming homeless.

  • Increase the maximum rate of Commonwealth Rent Assistance by at least 40 per cent and bench-mark it to rents paid by the poorest 40 per cent of renters.

  • Establish a national shared equity scheme to level the playing field for homebuyers who don’t have access to ‘the Bank of Mum and Dad’:

    – The federal government should take up to a 30 per cent equity stake in the home.

    – The scheme should be available to singles with gross incomes of less than $60,000 and couples earning less than $90,000 a year.

    – It would be restricted to owner-occupiers who do not own an investment property.



  • Re-galvanise the Energy National Cabinet Reform Committee to implement the Energy Security Board’s recommendations on critical electricity market reforms to support the transition to net-zero emissions:

    – Develop a suite of reforms to the wholesale market structure that will ensure adequate generation resources in a system dominated by solar and wind generation.

    – Prioritise regulatory reforms to allocate costs for new electricity transmission projects, to unblock the pipeline of projects and build more transmission at an efficient cost.

    – Improve integration of distributed and renewable energy resources into the National Energy Market.

  • Plan for a future without natural gas across its current applications.

    – Coordinate state and territory government policies to drive the degasification of current natural gas networks.

    – Support the development and deployment of gas replace- ment technologies in manufacturing through the Technology Investment Advisory Council and capital replacement finance.

    – As gas use declines, use the Gas Taskforce to identify and address unexpected gaps arising from the absence of coordinated policy.

    – Do not provide public funding for gas infrastructure, such as pipelines, with long asset lives.

Related research

Climate change

  • Implement a suite of sector-based emissions reduction polices, consistent with the long-term commitment to net-zero emissions.

    – 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.

    – Amend the Safeguard Mechanism so that industrial facilities are subject to declining caps (baselines) on their emissions.

    – Establish separate emissions intensity bench-marks for new industrial facilities that are substantially lower than the industry average; and ensure they remain lower as the industry average improves.

    – Invest in a multi-decade outreach program to advise farmers on how to reduce farm emissions and secure resilient income streams.

  • Work with industry on strategies to deliver the opportunities potentially available through Australia’s comparative advantage in renewable energy and critical minerals.

    – Make funding available for a flagship project to make green steel in Australia.

    – Reorient trade diplomacy away from building markets for fossil fuel exports, and towards commodities whose markets will grow in a net-zero world.

    – Establish an Industrial Transformation Future Fund to generate the government funding that will be required to close the risk gap for transformational industrial investment in the 2030s and beyond.


Establish new transport infrastructure projects on a sounder basis

  • 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 evaluation should include the cost/benefit analysis and a priority ranking relative to other eligible projects.

    – The evaluation should be made public immediately following the decision.

  • Disclose the status of cost estimates for infrastructure proposals valued at $100 million or more, from a wide range at the concept stage, a narrower range at business case stages, and the tender and final costs. Reconcile between these estimates as projects develop and costs become more certain.

  • Collate data on completed projects valued at $20 million or more. The data should include the costs at key milestones, location and characteristics of the infrastructure, time estimates at key milestones, scope changes, and contract type and partners.

  • Require states that receive federal funding to publish post- completion reviews of all projects costing more than $100 million.

  • Reviews should include eventual costs, a rigorous estimate of eventual benefits, an explanation of deviations from initial estimated costs and benefits, contract type, and scope changes.

Take seriously the national coordination role

  • Publish annual advice on the discount rates regime that will apply to transport infrastructure projects for the year ahead.

    – The advice should include the risk-free rate and the basis on which it is calculated; the market risk premium; the range of systematic risk of public infrastructure projects and their typical values; and the project characteristics that should legitimately license a project proponent to argue for a discount rate outside the standard ranges.
  • Encourage states to devote more resources to identifying modest- sized transport infrastructure projects with higher net benefits than very large projects. Megaprojects should be proposed as the last, not the first resort.
  • Assist the states to pay more attention to costs of building new transport infrastructure:

    – Make a long-term commitment to regularly update a bench- marking series of road and rail costs;

    – Report to the Infrastructure and Transport Ministers’ Meeting of the National Cabinet on the means by which similar countries overseas build high-quality transport infrastructure more cheaply;

    – Ensure that state governments adhere to federal government procurement rules where there is federal funding, avoiding giving preference to bidders for local transport infrastructure construction projects who pledge to use Australian-produced materials.

Reduce harmful emissions from cars

  • Impose a single annual average emissions standard, or ceiling, covering all new light vehicle sales. The ceiling should come into force no later than 2024 and not exceed 143 grams of carbon per kilometre (g/km). It should not exceed 100g/km by 2027 and 25 g/km by 2030. Carbon emissions from vehicles under the ceiling should fall to zero by 2035.

  • Improve the quality of Australia’s petrol, so that vehicles here can meet international pollutant standards by mid-2024.

  • Tighten vehicle pollution standards so that they are consistent with current international standards, immediately for diesel vehicles and by at least mid-2024 for petrol vehicles.


Plan for the continuing impacts of COVID

  • Provide additional support to the states, including removing the federal government cap on hospital funding, and continuing the 50:50 arrangement in 2022 and perhaps 2023.

  • Plan an ongoing, long-term COVID vaccination program to protect against waning immunity and any new variants.

  • Commission a comprehensive review of all aspects of Australia’s COVID response.

Create a more equitable health system

  • Fund universal dental care, starting by taking over existing dental schemes and providing them with an extra $500 million per year.

  • Establish a national secondary consultation scheme (between GPs and specialists), funded through Primary Health Networks (PHNs), to reduce unnecessary specialist consultations.

  • Initiate discussions with states to introduce public reporting of clinical waiting times by specialty type for public outpatient services.

  • Establish bulk-billing specialist private clinics to expand access to affordable care.

  • Minimise low-value prescribing to reduce pharmaceutical out-of-pocket costs, and lower the (post-review) safety net for non-concession card holders who are on five or more drugs.

  • Abolish out-of-pocket payments for pathology, radiology, and radiotherapy services by switching from fee-for-service to a tendering arrangement.

Fix private health insurance

  • Negotiate a plan for the future of private care.

Improve the primary care system

  • Introduce voluntary enrolment and ‘participating practices’.

  • Fund new out-of-hospital services.

Improve hospital quality

  • Ensure the Independent Hospital Pricing Authority calculates and publishes information on the cost of adverse events in hospitals.

  • Ensure hospitals get information about their relative quality performance and the estimated cost of adverse events in the hospital.

  • Share between the federal government and the states the savings from lifting the performance of all hospitals to that achieved by the best 10 per cent of hospitals – estimated at $1.5 billion annually.


Improve oversight and stewardship

  • Establish new independent bodies to act as regional ‘system managers’ of the local service system, monitor quality, and enhance social participation and healthy ageing.

  • Introduce a new public reporting system that provides information on the quality and prices of service providers.

  • Ensure better training and regulation of aged care staff, and phase in a requirement that personal care staff have a (revised) Certificate-III level qualification.

Meet home care need

  • Supply the number of packages required to meet independently assessed need, with a maximum wait of 30 days for home care.

Address aged care workforce needs

  • The Independent Hospital and Aged Care Pricing Authority should introduce a sped-up process so the result of the imminent Fair Work Commission determination on wages is quickly incorporated into prices.


Keep the federal government’s role limited and well-targeted

  • Avoid new school reforms unless: evidence shows it is a good idea; governments (at any level) can make it happen; and federal government involvement will help, not hinder.

Strengthen the Australian education evidence base

  • Spend more on the education evidence base, including increased funding for the Australian Education Research Organisation.

  • Fund research to evaluate innovations emerging from the COVID disruptions to schools.

Attract more high achievers to teaching, and improve initial teacher education

  • Commit to doubling within 10 years the proportion of high achievers who choose teaching as their career.

  • In collaboration with the states, fund $10,000-a-year scholarships for high-achieving students who choose to go into teaching.

  • Launch a national marketing campaign to re-position teaching as a challenging and rewarding career.

  • Review the recommendations of the 2021 independent expert review of initial teacher education (ITE) and implement reforms to raise the quality of ITE programs.

Work with the states to improve the career path for top teachers

  • Work with state governments on a new expert teacher career path, with two new positions that recognise and deploy teacher expertise more effectively:

    – Instructional Specialists (limited to 8 per cent of teachers), who would work within schools to improve teaching practice and be paid about $140,000 a year; and

    – Master Teachers (about 1 per cent of teachers), who would work across schools to support Instructional Specialists and be paid about $180,000 a year.

    – Help fund pilot programs to refine the role description, training, and integration of the two new positions.

Related research

Work with the states to give teachers more time for great teaching

  • Help fund a $60 million investigation of the best ways to ensure teachers have the time they need to prepare and deliver great teaching.


Retirement income adequacy

  • Abandon the legislated increases in compulsory superannuation contributions from 10 per cent to 12 per cent of workers’ wages.

Superannuation tax

  • Reduce the annual concessional contribution cap to $15,000 per year, and put a lifetime cap of $250,000 on post-tax contributions.

  • Tax superannuation fund earnings in retirement at 15 per cent – as already applies before retirement.

Superannuation costs

  • Adopt the Productivity Commission’s recommendation to create a single ‘best in show’ shortlist of up to 10 super funds, selected by an independent expert panel, to assign a default fund for people who are new to the workforce.

  • Establish an independent inquiry into the provision of default insurance in Australia’s superannuation system.

  • Explore how best to provide retirees with high-quality retirement income products:

    – The government could directly offer a limited suite of retirement income products, such as annuities, on an opt-out basis to super fund members who do not exercise another choice.

    – Alternatively, establish an equivalent ‘best in show’ shortlist of default drawdown-phase products for super fund members as they retire.

Age Pension

  • Include in the assets test the value of the home above some threshold, such as $500,000, and raise the value of assets that do not reduce the Age Pension for homeowners to the same levels that apply to non-homeowners.

  • Withdraw the Age Pension at a rate of $2.25 per fortnight for each $1,000 of assets above the ‘asset free’ area, rather than the current rate of $3 per fortnight.

Home equity release

  • Cap the interest rate on the Home Equity Access Scheme for the life of the loan, or ring-fence a modest portion of home equity – such as 25 per cent – from the debt when the home is eventually sold.


Retirement income adequacy

  • Maintain the current fiscal recovery strategy to provide temporary fiscal supports until the recovery is secured and wages are growing.

  • Once the recovery is secured, target debt sustainability.

  • Work with the states to produce a national Intergenerational Report that contains long-term fiscal projections across all levels of government.


Improve checks and balances on the influence of vested interests

  • Make donations more transparent by lowering the donations disclosure threshold to $5,000, requiring political parties to aggregate donations below the threshold, and introducing ‘real time’ disclosure of donations.

  • Limit the influence of money in politics by capping expenditure on political advertising during election campaigns.

  • Improve the transparency of lobbying activity by publishing ministerial diaries.

  • Broaden the lobbyist register to include all holders of Parliament House ‘orange passes’ so that everyone who lobbies regularly is subject to the Lobbying Code of Conduct.

Improve checks and balances to reduce politicised decision-making

  • Advertise all public appointments and require an independent panel to select a shortlist of candidates based on merit. The relevant Minister should retain the power to select a candidate, but should be required to select from the shortlist.

  • Amend the Ministerial standards to require Ministers to make merit-based appointments.

  • Improve grant decision-making processes to reduce the opportunities for ministers to use public funds for political purposes.

  • Reinstate funding for the Australian National Audit Office to boost oversight of grants programs.

Strengthen the accountability of public officials

  • Introduce a code of conduct for all parliamentarians, to provide clearer guidance on conflicts of interest.

  • Establish a Commonwealth Integrity Commission to investigate corruption and significant misconduct, with capacity to receive and investigate tip-offs.