OPINION | Australia’s next tax reform needs more than Treasury and the teals. Experts argue citizens’ assemblies could rebuild momentum and public trust in tough tax decisions.
‘Would a child’s birthday cake be GST-free?’
That was the question Mike Willesee put to John Hewson in the 1993 election. Paul Keating labelled the plan to introduce the GST as alternately: ‘discriminatory, anomalous, inflationary unworkable or fiendish.’
Theoretically tax reform should be much easier now: an election isn’t pressing and Labor need only concern itself with a handful of Greens in the Senate. That’s assuming that the tax professionals, the bureaucrats, think tanks and financial commentariat find agreement amongst themselves. And the public buy the plan.
Last Friday, at Allegra Spender’s roundtable in Canberra, tax experts convened to put their proposals forward. The last speaker, Aruna Sathanapally, CEO of the Grattan Institute, discarded her notes to pronounce that there seemed to be’ broad consensus’ around the need to incentivise work and productivity, which suggested lowering PAYG income tax, reducing the CGT concessions on passive assets; and lifting the tax on income from trusts.
Greg Kaplan, from the e61 Institute had said, “The absolute worst case that you could be in is to earn all of your income as an employee working for someone else. The message that we are sending to our young people is that if you want to be rich, choose a career plan where you can generate capital gains – strive for property development or funds management, not for engineering that matters for productivity.”
Others urged the participants ‘to explain ourselves as best as possible; to make the public understand; and have a national conversation.’ The economist and adviser Chris Richardson made some concluding remarks. “The obstacle, in my experience – and I’ve seen a few of these – isn’t normally what to do, but how to do it: how to survive the political process and the contact with the public”. The former CEO of the Grattan Institute, John Daley, also weighed in. “The last three big tax packages didn’t have political consensus in parliament, but it was the social consensus that was the bigger hurdle.” Somebody else said,
‘Politics, sadly, doesn’t lead but follows.’
The experts won’t, of course, find common ground. Tax is as much an art as a science and, to make things worse, the opposition will hype the negatives. The proposal, for example, to reduce the CGT concessions, as recommended by Miranda Stewart, the former Treasury official, isn’t supported by the McKell Institute. Increasing (not reducing) the CGT discount for new apartments is seen as a better option to increase new housing stock. Ho hum. It’s not easy to determine or model the various interplays.
A national conversation would be helpful. Citizens’ assemblies have a twenty year long track record, beginning in Canada where the world’s first was undertaken by a sitting government in 2004. The OECD has highlighted close to 700 successful ‘representative deliberative processes’ worldwide. National citizens’ assemblies have been undertaken in Ireland, France, Germany, Belgium, the Netherlands, Norway and Finland. Permanent advisory roles for citizens’ assemblies have been established in city councils and regional parliaments in Belgium, Germany, France and Italy.
For the issue of tax reform in Australia, 100 people could be selected by-lot from around the country to hear from the tax experts. Admittedly, for those who’ve not experienced a citizens’ assembly or jury, it’s difficult to imagine how a large group of strangers can deliberate together on complex matters. For a start, a successful citizens’ assembly needs some rules of engagement. Firstly – and lastly – if participants are not convinced that the output of their work will be influential on a decision, they will neither be interested to answer the invitation nor —once accepted — apply themselves to the task. The assembly members also need to be generously reimbursed for their time and effort, including having childcare and travel considerations accounted for. Anyone who receives an invitation must be encouraged to say YES, and to keep wanting to be involved. The job of assembly members is not to become experts themselves, but to engage and think critically about the information from academics, economists, advocates, and sector professionals— as a jury does weighing up the evidence.
“Are citizens more engaged and competent when they’re offered a chance to play a decisive role in political decision-making?” This consideration was paramount for the first citizens’ assembly in Canada. “This question is quite possibly the central query in representative democratic thought” said the authors of the Report on the Canadian experience. “Answering this question has not been possible because, in the absence of cases where citizens could contribute decisively to the development of public policy, we have lacked appropriate evidence. The situation has now changed. Ordinary people rose to the occasion, well briefed, and well discussed. In the right conditions, you could absolutely trust the people.”
This article appeared in The Mandarin.
