Independent MP Tony Windsor’s mantra from day one was that stability was the single most important factor in deciding whom he would support to form government. It has always been the case that the people with the most to gain – and more to lose – from unstable government are the Independents. Stable government for three years is not an end in itself. Rather, it is the prerequisite for a critical economic reform agenda. The Independents brought the ALP and Coalition together to strike a series of parliamentary reforms. Their very independence, and their power, means they are able to drive reforms that neither party have the courage or desire to take on despite their importance for the continued prosperity of Australia.
This influence can and must be used to deliver a broad economic reform agenda. The reprise of the Henry Tax Review – an element of the Oakeshott/Windsor deal with Labor – is a very hopeful demonstration of the use of their power and influence to pursue a true reform agenda. It will also be a critical signal to business as to whether real reform is possible over the next three years. Australia needs a commitment to genuine tax reform that includes the rate and breadth of the GST. The Rudd Government had the opportunity to put the GST into the mix in the Henry Review. Its decision to specifically exclude it from the Review was a mistake. A review of the Australian tax system without including the GST is worthless. Further, is now clear that the introduction of the GST in 2000 has not provided sufficient funding for the states. Taxes on insurance, payroll, motor vehicles, real estate and stamp duties are among the most distortionary and inefficient in the economy. An expanded GST has the ability to finish the Federal- State tax reform agenda started by the Howard Government 10 years ago.
The government must also reject the myths that drive the calls for a small Australia. Australia – and our economy – has always benefited from mass migration. We must embrace a “Big Australia”. Increasing population, whether through higher fertility or higher net migration adds to economic demand, improves the tax payer-to-retiree ratio, takes pressure off the tax base and puts downward pressure on inflation. This is as true for our cities as it is for regional and rural Australia. On this point, the three rural Independents will bring real experience to bear. Population growth does bring serious challenges, in particular the provision of sufficient infrastructure. Regions experiencing the seachange and treechange phenomena can attest to this. However, we should not surrender to the debate on current underinvestment in infrastructure as an argument against a “Big Australia”. The answer is more infrastructure, not less population.