A new report from the Grattan Institute argues the winner of the 2019 federal election should defy the national mood of reform fatigue and stare down vested interests to pursue a targeted policy agenda to improve the lives of Australians.

Inspired by the ‘red’ and ‘blue’ books (the incoming government briefings prepared by bureaucrats for whichever side who wins the election), the Commonwealth Orange Book from the Grattan Institute rates Australia’s performance against similar countries and proposes various policy reforms including to budgets and taxes and retirement incomes.

It includes Grattan Institute’s new ‘International Scorecard’, which shows Australians live longer than most other people, and public debt is relatively low. But the country’s electricity supply is more polluting, less reliable and more expensive than in comparable countries. Australia also lags behind other developed economies on school results, and housing costs and homelessness are relatively high.

The report’s lead author and Grattan CEO John Daley said the challenge for the next government, of whatever political colour, is to revive Australia’s proud tradition of enlightened public policy.

“The next government needs to choose to do less, but deliver more,” he said. “We can continue to be the lucky country, but we must make our own luck.”

The Commonwealth Orange Book’s recommendations include:

  • On retirement incomes, it urges the next government to abandon the current plan to increase compulsory superannuation payments from 9.5 per cent to 12 per cent, which would force workers to accept lower living standards today even though they are already likely to enjoy living standards in retirement comparable to living standards while working. It advocates changes to the Age Pension assets test that would loosen the assets test taper but include more of the value of owner-occupied housing. And it backs proposals to select “best in show” funds for default superannuation, to drive down costs and improve returns.
  • Major tax reform is needed to support economic development. The book recommends reducing income tax and modifying welfare tapers and childcare benefits to remove barriers and increase incentives for second income earners (usually women) to participate in the workforce. It also advocates an accelerated depreciation scheme for new investment by companies. To pay for these changes (and avoid other tax increases), the next government should cut the capital gains tax discount from 50 per cent to 25 per cent; wind back negative gearing; tighten superannuation tax concessions; and broaden or increase the GST. To increase workforce participation of older Australians, the government should ask the Productivity Commission to investigate the costs and benefits of raising the pension age to 70.
  • On budgets, it suggests enshrining fiscal targets in legislation, giving the Parliamentary Budget Office responsibility for macroeconomic forecasts that underpin the budget and publishing an Intergenerational Report that includes long-term projections of both Commonwealth and state government revenues and spending.

Read the report


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