1. Do you think bringing forward income tax cuts would give the economy a much-needed boost?
Luxury Escapes co-founder, angel investor and former corporate lawyer
Tax cuts are not only a gift to the rich from the poor, but they’re also a terrible way to stimulate the economy. The wealthy (who are the beneficiaries of tax cuts, given poorer people don’t pay that much income tax anyway) are less likely to spend the largesse so the stimulatory effect is minimal (we saw that in the US).
Moreover, the federal government has already undertaken the largest discretionary spend ever with Jobkeeper (not to mention the hundreds of billions of dollars of other handouts) such that we are incurring massive debts that will inevitably need to be paid down (or inflated away).
But of course, those who aren’t yet born, don’t vote.
The 1918 Spanish flu may have killed up to 1% of the global population.
In just over 100 years since, we’ve managed to land on the moon, map the human genome and invent the game of pickleball.
Our economy and indeed the world will inevitably recover. How this occurs comes down to our willingness to be forward-thinking.
With the caveat that I am not an economist, I feel that in times of economic uncertainty, people may have a propensity to save money rather than spend it. I am sure economic data may prove or disprove this, but principally, I have a firm belief that a key role of government is to help restore and build consumer and economic confidence.
Though I am sure income tax cuts are one of many levers at the government’s disposal, I believe it’s also important to look at measures that inspire, encourage innovation and empower investment.
From investing in everything from skills and education, through to life-changing public housing, digital infrastructure and new industries (foodtech, space and cleantech to name a few), the government has an opportunity to use this crisis as a hard reset to inspire a generation of businesses, workers and communities.
One would hope so.
Yes. There’s never been a time where more cash in some pockets will assist people to feel more confident in knowing what they can and cannot spend.
While some might save the money and not spend it, it’s a risk worth taking, and was planned to happen at some stage.
This year has been full of extraordinary events, so giving people the opportunity to access extra cash, as well as in the lead up to Christmas, could really give the economy and overall morale a much-needed boost.
Financial strain is also a huge indicator of mental health decline.
By boosting the economy, this will also hopefully have a positive impact on people’s wellbeing and allow them the momentum they need to get back on their feet
Q2. Do you think that the corporate tax rate should be cut?
Readings managing director
Not at the moment.
It absolutely shouldn’t be cut — our tax system is a mess with countless problems, lest of all complexity (which is essentially a further tax on the poor who can’t afford expert tax advice).
The changes needed to the tax system go far beyond the scope of this Q&A, but in general, a system based on taxing wealth (i.e. land and inheritance taxes) rather than earnings (income taxes) would be far more equitable and productive.
The problem with cutting corporate taxes is that it also benefits the rich, who are far more easily able to avoid tax at a personal level.
Absolutely. So long as in each case, the company can clearly illustrate that jobs have been preserved, or even better, created!
We have to remember that corporate tax is essentially paid on profit. Therefore, keeping in mind government’s increasing burden of supporting those seeking work, perhaps a sliding scale should also be considered where companies are taxed less for job creation and more for increasing the country’s welfare burden.
I do not begrudge boards and directors of companies who have legitimately and legally worked within the rules of JobKeeper to prop up their bottom line, achieve record quarterly profits, and ultimately, use taxpayer money to pay out dividends.
Though morally ambiguous, these actions align with a board’s duty to create returns for its shareholders.
Likewise, however, it is the duty of the government to ensure they spend their citizen’s money wisely.
As a result, when it comes to measures such as corporate tax cuts, they should only be considered in the context of clear, tangible outcomes such as jobs.
Startups invest every cent we raise and make into growth and job creation. Where does support for Australia’s startups and scale-ups come into play?
Probably a question for another time.
Providing business with additional cash could encourage wage increases, expenditure on products and equipment, and also businesses and employers being more prepared to up the ante on spending for programs to enhance, educate and encourage their teams.
Examples include programs to assist with transitioning in and out of the workforce — such as, working from home, for mental health, emotional intelligence, productivity and more.
3. If you could pick one priority area for government spending this budget time (such as infrastructure, public housing, JobSeeker, wage subsidies and funding for education), what would it be?
Go1 co-founder and head of growth
The key unit of economic recovery and success will ultimately be jobs. There is no silver bullet to growing jobs, and therefore, everything from investing in world-class infrastructure projects, through to life-changing public housing projects and wage and welfare subsidies will all play an essential role.
Taking a ‘glass is half full’ perspective on what is happening in the world at the moment, I believe this is an ideal catalyst for change in how we want to shape our country’s future.
As a founder of Go1, an education-focused company, I am biased towards the topic of learning, and for me, never has the concept of ‘earn or learn’ been more pertinent.
At Go1 we’ve seen a phenomenal uptake of learning from our userbase with an unheralded thirst for upskilling and reskilling globally.
We should therefore be asking ourselves: ‘How do we emerge from this changing environment with more skills than we went into it with?’
I believe the government needs to keep a clear focus on how skills will be essential, for not just the jobs of today, but for the industries of tomorrow.
The idea of teaching a person to fish is now more relevant than ever.
In the long term, it would be education and infrastructure which are probably the ‘least bad’ areas of government spend (in terms of waste).
JobSeeker is also too low so seeing that increase would be a positive.
It’s hard to pick one — but boosting Jobseeker would put all the money back into the economy, and it would be fair.
We know that mental health has seen a steep decline for many during this pandemic, and unfortunately, the ramification of this will be seen over the long term — well and truly after the pandemic crisis has passed.
In order for workplaces to not only survive, but maintain productivity and profit, they need to support their most important asset: their people.
Workplaces need to invest in wellbeing programs, training, transition support courses and coaching to assist their people through this time.
4. And finally, as Australian businesses grapple with closed borders, disrupted supply chains and a trade war with China, what countries and markets should the government be helping businesses access?
Transitioning Well director and psychologist
Looking to our own great nation to encourage more here. We need to increase support for local manufacturing, local education and research.
Governments can help most by simply getting out of the way — picking winners and wasting public funds to benefit certain businesses is the definition of cronyism, which sadly, is very much alive and well in Australia.
Asia and Europe.
I can only speak of my experience at Go1 as a global company that sells B2B, but for many Aussie startups, this is the right time to take on the world.
No one else views travelling 18 hours to get somewhere as normal, except Australians.
The tyranny of distance has long been our enemy, but in the face of COVID-19, and the resultant rise of virtual meetings, we finally have the chance to even the playing field.
In almost every primary market you can think of — whether it be the US, the UK and Europe or South East Asia — the barriers to entry requiring boots on the ground has lowered significantly.
In an intra-COVID-19 world, whether your team members are down the street from the customer or on the other side of the world, it is highly likely you’ll still be meeting virtually.
In terms of what government should be doing to assist this, I believe that with finite resources, the government should be focusing on working to its strengths, leveraging existing relationships, networks, opportunities available to them to bring Australian companies to these new markets and open doors that will ultimately lead to the growth of Australian businesses in overseas markets.