carbon rebate. wher's mine?, page-29

APPLYING the GST to food, health and education, increasing the participation of women in the workplace, and extending the retirement age to 70 have been identified as three key measures to keep the economy growing.
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A paper to be released today by Melbourne think-tank, the Grattan Institute, says the measures combined have the potential to increase the size of the economy by more than $100 billion.

''There's nothing else big enough to change the game over the next decade,'' it says.

While the paper is generally sympathetic to calls by business and industry groups, it disputes the assertion linking productivity increases with deregulating industrial relations laws, saying there is no ''smoking gun''.

The paper says the ''deadweight costs'' that business groups claim Labor's Fair Work Act creates ''appear to be relatively small'' and concludes there is no evidence that quantifies the economic drag caused by the act that replaced Work Choices.

Due to the concessions forced by the Senate when the Howard government imposed the GST, the tax covers only 60 per cent of spending and excludes health, education and fresh food. The institute recommends the GST be applied to all these, which would raise an extra $31 billion a year in revenue and add $20 billion a year to the economy.

Acknowledging such a move would be politically unpopular, it says it should be made revenue neutral with income tax cuts, welfare increases and a reduction in the company tax rate from 30 per cent to 21 per cent.

Although the extra revenue would be offset by these measures, the economy would grow because of the productivity increases driven by the tax cuts, the institute reasons.

Lower income taxes would increase the incentive to work while the 9 percentage point reduction in corporate tax would boost foreign investment, creating jobs, as well as greatly benefit local business and industry.

The states, which receive all the GST revenue, would have to cede some to the Commonwealth to fund the tax cuts and welfare increases but would be no worse off because the GST would be raising more money.
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''If the Commonwealth [provides] … 8 per cent of a bigger pie rather than 10 per cent of a smaller pie, then the states would have little reason to complain,'' it says. The institute also identifies incentives to increase female participation in the workforce as vital and cites effective tax rates and childcare costs as one of the biggest barriers.

The Prime Minister, Julia Gillard, met childcare providers and unions yesterday and emerged with the pledge to put the industry on a more affordable and sustainable footing within months.

In 2009, the Labor government announced the pension age of 65 years would be phased up to 67 by 2023 and the superannuation preservation age to 60 by 2024. The institute says these changes missed ''an opportunity for much more substantial reform''.

It says to harness the most from the ageing population, the retirement age could be lifted to 70 and the preservation age to 63. Dispensation would be made for manual labourers.

http://www.bordermail.com.au/story/55028/more-gst-and-working-women-vital-for-economy/?c=44

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