Australian economy 'heading towards socialism' claims former Business Council of Australia president Tony Shepherd
Ahead of the Albanese government's economic roundtable, Sky News Business Now hosted a panel of leaders across business and industry to offer insight into issues plaguing Australia's economy.
Mr Shepherd, a business heavyweight who spent decades at infrastructure giant Transfield, made the extraordinary claim about the Albanese government's approach during a discussion on how best to address flagging productivity and growth.
Citing a growing concern among many economists, the former BCA president argued change was needed to ensure Australia retained a health private sector.
"The government is actually crowding out the private sector now," he said.
"The government has grown in terms of employment far more than the private sector over the last three years and we're now in that lovely state where on a world scale of reasonably established countries we have the highest proportion of public servants to workers in the world."
Treasurer Jim Chalmers has been keen to talk up the growth in the public service, claiming Labor had moved to restore it after years of neglect and outsourcing to consultancies.
However, many economists have argued the expansion, coupled with the government's focus on growing the care economy, is dampening growth and could have long-term impacts on the viability of private businesses.
That view is shared by Mr Shepherd, who argued Labor's policies were "pushing down" the biggest driver of economic growth and prosperity.
"The bottom line is, basic economics 101, the private sector is what brings us prosperity and growth and the public sector's job is to distribute it equitably and fairly, which Australia has got a very good record on," he said.
"So what we're doing now is we we're pushing down the private sector, which is the generator of wealth not the government, and we're growing the government side.
"That's heading towards socialism, which has been shown economically throughout the world to be a disaster."
Mr Chalmers has insisted in the lead-up to the government's economic roundtable he wishes to see more private investment and that he was keen to help enable the sector in order to generate more growth.
However, a new tax proposal from the Productivity Commission, which the Treasurer is expected to discuss when the roundtable begins on August 19, may split the business community and could generate questions from big companies over the government's long-term plans.
Under the proposal the government would create a two-tier tax system for business, with cuts for smaller operators funded by hikes for big companies.
The corporate tax rate for businesses with revenue under $1 billion would be slashed to 20 per cent, while around 500 companies, including major banks, miners and supermarkets, would miss out on a cut.
Instead, Australia's biggest businesses would face a new five per cent net cashflow tax in order to ensure the changes remain budget-neutral.
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