Economist urges Labor to follow in footsteps of Curtin and Hawke with ambitious reformBy business reporters Gareth Hutchens and Rhiana Whitson, and The Business presenter Kirsten Aiken.Topic:Tax1h ago1 hours agoTue 6 May 2025 at 2:54amProfessor Ross Garnaut says the returned Labor government has a major opportunity to grasp. (AAP: Lukas Coch)abc.net.au/news/labor-historic-election-win-opportunity-economic-reform-garnaut/105254488Link copiedShareShare articleThe Albanese government has an opportunity to "change Australia forever" in the next three years, economist Ross Garnaut says.He says Labor's historic election victory on the weekend was reminiscent of John Curtin's famous victory in 1943 that paved the way for policies that led to decades of full employment with rising incomes after World War II, which permanently altered Australian history."There's an opportunity to do something like that again," he told the ABC.Historic opportunity to reshape AustraliaProfessor Garnaut was a key member of Australia's last generation of genuine economic reformers.He was principal economic adviser to Labor prime minister Bob Hawke from 1983 to 1985, a period in which Australia's dollar was floated, Australia's first affordable and universal system of health insurance was introduced (Medicare), and wages and income policies helped to finally rid the economy of stagflation.He said the Albanese government had a lot of work to do and it would not be able to do everything in this next three-year term.We need better resource rent tax, Garnaut saysPhoto shows Ross Garnaut leans on a dead tree.Ross Garnaut says we have an opportunity to pursue "transformational economic reform" by tackling the rising problem of economic rents, writes Gareth Hutchens.But it could still do "a lot of big reform" with the policy framework it put to the election on the weekend, and it could build on that foundation.And, he said, its desire to deliver productivity-enhancing reforms would benefit from focusing on two things in particular in the next three years: a return to full employment, and getting the energy transition right."Australia's had unnecessarily high unemployment for too long, certainly since 2013, and we can take unemployment lower without risking inflation," Professor Garnaut told the ABC's The Business."I think the Reserve Bank's been learning lessons about mistakes it's made over the past 12 years, and it's ready to support the government in moving to genuinely full employment."That will do wonders for the budget deficit. It will also lay the foundations in the community for acceptance of the structural change that's necessary for rising incomes," he said.You can see his interview in the video below.Loading YouTube contentProfessor Garnaut said the Albanese government had to get the energy transition right in this term, and grasp the opportunities to build new zero-carbon industries that would be in great demand in coming decades."These are the most important things that have to be done, and the government has laid a foundation in its first term for doing them," he said.He said the government was now free to push ahead with its Rewiring the Nation plan to modernise Australia's electricity grid and accelerate the green transition, and it wouldn't need much gas to do that."Some will be necessary, but we're actually using less gas now than we did a few years ago, and we will need less in a few years' time than we need now," he said.There is ''extraordinary intergenerational inequity' in the tax systemPhoto shows Mining haul trucks working in an open cut mine. Australian policymakers have blown the mining boom, and it will take years to turn things around, says former Treasury secretary Ken Henry.And on the topic of tax reform, he said there were great ideas sitting in the Henry Tax Review that could be implemented, especially the idea of a minerals resource rent tax, and Australia's economy would benefit from having a carbon price, but those could be ideas for down the track."They'll be in no hurry to add new things to what's a pretty big agenda," he said."I don't think they'll start with that, but let's let the policy discussion run, and if we have a good discussion about what's necessary for raising productivity in Australia, raising Australian incomes in the longer term, if business talks the truth and is prepared to point out the advantages of carbon pricing so we can let markets work, if all those things happen, then a foundation can be laid for carbon pricing sometime in the future," he said.In late 2023, Professor Garnaut pointed out that Australia's government would now be collecting $70 billion a year in revenue from its emissions trading scheme if the Abbott government had not dismantled that scheme in 2014.He said that money could have been used to pay for a lot of important tax reform in the last decade.Time for major tax reformOther economists say the time is ripe for Australia to have a genuine conversation about tax reform.Sally Auld, NAB's chief economist, says the first nine months of last year were "pretty difficult" for the economy but things did seem to pick up in the fourth quarter, and she expected that momentum to continue into this year.She said the improvement in the economy would provide a decent foundation for 2025 and beyond.NAB chief economist Sally Auld says we need to fix the tax system and improve productivity. (ABC News: John Gunn)"One of the good things we have going for us in Australia at the moment is the government starts its second term with the unemployment rate very low, [and] with inflation … almost where the Reserve Bank wants it to be," she told the ABC."That's a really encouraging starting point for us."The global backdrop is clearly more challenging, and you know, a lot of that has come about through quite a significant shift in US trade policy. Businesses that are exposed to that global environment are clearly facing into very elevated levels of uncertainty."But all else equal … we do think the Australian economy is probably well-placed to navigate some of those challenges," she said.Ms Auld said the Albanese government's election win, which resulted in an increased majority, would provide financial markets, investors and forecasters with a sense of certainty and predictability about the near-term future.She said the Reserve Bank had capacity to cut interest rates "quite aggressively" in coming years if the global economy were to deteriorate a lot.Australia's tax system getting worse, warns HenryPhoto shows Ken Henry #2Australia's tax system is stacked so heavily against younger people that it's threatening the social compact, former Treasury secretary Ken Henry has warned.And on the topic of tax reform, she said Australia needed to talk seriously about ways to lift productivity and fix the structural problems with the federal budget.She said we needed to find ways to redistribute some of the tax burden away from taxing incomes so heavily, to taxing other parts of the economy."We know we have to raise tax revenue, because that's how we fund many of the things that you know are important to Australian voters, whether it's the health system or, you know, tertiary education, or whatever it might be," she said."We have to have a discussion about, like, what is not just the most efficient way to do that, but what is also an equitable way to do that."We know from many years ago when Ken Henry did the White Paper on tax reform that there's a lot that … could have been done, but, you know, governments of both sides of politics have, up until now, not really decided to front up to the challenge," she said.Posted 1h ago1 hours agoTue 6 May 2025 at 2:54amShare optionsCopy linkFacebookX (formerly Twitter)Top StoriesErin 'very reluctant' to let lunch guests near pantry, court hearsLIVEPhoto shows A digital drawing of Erin Patterson wearing a pink shirtNationals deputy leader 'shattered' she will likely lose Senate seatLIVEPhoto shows Perin Davey listens to a press conference by Water Minister Tanya Plibersek at Parliament HouseGrandmother in custody as town reels after deaths of two young boysLIVEPhoto shows CoonabarabranGreens' Adam Bandt in danger as seat of Melbourne remains on knife's edgeTopic:ElectionsPhoto shows A composite photo of a brunette woman, brown haired man with glasses, blonde woman with glasses and dark haired man.Rihanna, Janelle Monáe, Diana Ross and dramatic suit reveals at this year's Met GalaLIVEPhoto shows rihanna metRelated storiesCan these economists turn things around for Australia's betrayed generations?GAnalysis by Gareth HutchensPhoto shows A man sitting on a stage wearing a suit and tie.The widespread delusion that obscures what's at the heart of all real politicsLAnalysis by Laura TinglePhoto shows A close-up photo of John Howard pointing to an audience, with Australian flags in the backgroundRelated topicsAustraliaAustralian Federal ElectionsEconomic GrowthEconomic Trends and IndicatorsElectionsFederal GovernmentInflationMonetary PolicyTaxTop StoriesErin 'very reluctant' to let lunch guests near pantry, court hearsTopic:Law, Crime and JusticePhoto shows A digital drawing of Erin Patterson wearing a pink shirtNationals deputy leader 'shattered' she will likely lose Senate seatTopic:ElectionsGrandmother in custody as town reels after deaths of two young boysTopic:CrimeGreens' Adam Bandt in danger as seat of Melbourne remains on knife's edgeTopic:ElectionsRihanna, Janelle Monáe, Diana Ross and dramatic suit reveals at this year's Met GalaTopic:Arts, Cultural and Entertainment EventsJust InSeven West Media to buy Tasmania's Channel 7 and other Southern Cross TV assetsTopic:Media Industry11m ago11 minutes agoTue 6 May 2025 at 4:12amLocals torch WA council's 'silly' blanket ban on fire pitsTopic:Local Government23m ago23 minutes agoTue 6 May 2025 at 4:00amMushroom meal survivor takes the stand in Erin Patterson's trialTopic:Law, Crime and Justice19m ago19 minutes agoTue 6 May 2025 at 4:03am'I could have been a Steve Irwin': Woman barbed by stingray near artery in armTopic:Marine Incidents53m ago53 minutes agoTue 6 May 2025 at 3:30amMore Just InBack to top