Latest news with #StevenKennedy
The Age
4 days ago
- Business
- The Age
Let's stop kidding ourselves. Taxes will have to go up
Before the election, the business press was terribly concerned about the decade of budget deficits and ever-rising public debt the Albanese government had clocked up. Something must be done! After the election, however, when the government pressed on with a move to save up to $3 billion a year by making rich men pay more tax on their superannuation, it was appalled. The sky would fall. What the two contradictory positions have in common was that both are criticisms of a government few of its business readers would have much sympathy for. But the episode also shows the way voters' attitudes towards the budget abound in wishful thinking – something the pollies encourage. 'You want more, but don't want to pay for it? Sure, I can do that.' In Treasury secretary Dr Steven Kennedy's speech to the Australian Business Economists last week, he showed a graph of the budget's 'structural' deficit stretching all the way out to 2035-36. (The structural component of the budget balance is the bit that's left after you've allowed for the effect on the balance of where we happen to be in the business cycle of boom and bust.) The structural deficit for next financial year is estimated to be 1.5 per cent of gross domestic product. Kennedy noted that spending on the National Disability Insurance Scheme is expected to reach more than our spending on defence. But he reminded us that (thanks mainly to our good friend Mad King Donald) defence spending is likely to grow a lot in coming years. And that's just the feds. The combined state and territory budget deficits are likely to be 1.8 per cent of GDP in the financial year just ending – which is 1.5 percentage points higher than their pre-pandemic long-run average, Kennedy said. So the states have been really going at it, with their combined debt at the end of this month expected to reach 18.9 per cent of GDP, its highest in the 30-plus years they've had control over their own finances. 'We are sitting on a wretched generational bargain, and it has gone on for long enough.' Aruna Sathanapally, Grattan Institute And yet politicians, federal and state, persist in running election campaigns where they promise bigger and better spending on this, that and the other, without any mention of how it will have to be paid for. Worse, no matter how much they've promised, the Liberals always claim that their taxes will be lower than Labor's, without this having any effect on their spending on 'essential services'. (Perhaps this boils down to a promise not to rely on bracket creep – the 'secret tax of inflation' – quite as much as Labor does.)
Sydney Morning Herald
4 days ago
- Business
- Sydney Morning Herald
Let's stop kidding ourselves. Taxes will have to go up
Before the election, the business press was terribly concerned about the decade of budget deficits and ever-rising public debt the Albanese government had clocked up. Something must be done! After the election, however, when the government pressed on with a move to save up to $3 billion a year by making rich men pay more tax on their superannuation, it was appalled. The sky would fall. What the two contradictory positions have in common was that both are criticisms of a government few of its business readers would have much sympathy for. But the episode also shows the way voters' attitudes towards the budget abound in wishful thinking – something the pollies encourage. 'You want more, but don't want to pay for it? Sure, I can do that.' In Treasury secretary Dr Steven Kennedy's speech to the Australian Business Economists last week, he showed a graph of the budget's 'structural' deficit stretching all the way out to 2035-36. (The structural component of the budget balance is the bit that's left after you've allowed for the effect on the balance of where we happen to be in the business cycle of boom and bust.) The structural deficit for next financial year is estimated to be 1.5 per cent of gross domestic product. Kennedy noted that spending on the National Disability Insurance Scheme is expected to reach more than our spending on defence. But he reminded us that (thanks mainly to our good friend Mad King Donald) defence spending is likely to grow a lot in coming years. And that's just the feds. The combined state and territory budget deficits are likely to be 1.8 per cent of GDP in the financial year just ending – which is 1.5 percentage points higher than their pre-pandemic long-run average, Kennedy said. So the states have been really going at it, with their combined debt at the end of this month expected to reach 18.9 per cent of GDP, its highest in the 30-plus years they've had control over their own finances. 'We are sitting on a wretched generational bargain, and it has gone on for long enough.' Aruna Sathanapally, Grattan Institute And yet politicians, federal and state, persist in running election campaigns where they promise bigger and better spending on this, that and the other, without any mention of how it will have to be paid for. Worse, no matter how much they've promised, the Liberals always claim that their taxes will be lower than Labor's, without this having any effect on their spending on 'essential services'. (Perhaps this boils down to a promise not to rely on bracket creep – the 'secret tax of inflation' – quite as much as Labor does.)
West Australian
29-05-2025
- Business
- West Australian
Productivity Commission backs hybrid work from home model
A major new report by the Productivity Commission has found working from home, in moderation, is actually more productive than being in the office full-time, debunking claims that the national shift to remote work is dragging down Australia's economy. The landmark report, released this week, concludes hybrid arrangements, where employees split time between home and the office, tend to benefit both productivity and job satisfaction, especially by cutting down on lengthy commutes. 'Allowing workers to work from home some days can improve worker satisfaction and allows people to benefit by avoiding the commute to work, meaning they have additional time for other purposes,' the Commission said. It found the rise in working from home since the Covid-19 pandemic is not to blame for Australia's recent productivity slump. 'Remote work also reduces breaks and sick days, and results in less distractions, all of which are typically found to be beneficial for productivity,' the report said. By August 2024, 36 per cent of Australians with a job reported they usually worked from home, up from just 12 per cent before the pandemic. During peak lockdowns in 2020, more than 30 per cent worked from home on most days. Despite fears that staff would be less productive at home, the Commission found hybrid work (working some days remotely and some days in the office) tends to be beneficial to productivity, or at least, not detrimental to productivity. However, the report noted not all workers benefit equally. While working from home is especially popular with women, many who juggle childcare responsibilities, less experienced workers may lose out. 'For less experienced workers, in-person interactions may be an important avenue for skill development as there may be a greater knowledge transfer from senior workers and junior workers through informal in-person interactions,' it said. 'A key reason for this is that in-person interactions may be better for collaborative tasks and idea generation.' The Commission cited evidence from engineering firms showing in-person meetings sparked more creative ideas, although remote and hybrid teams were just as effective when it came to evaluating and selecting those ideas. The broader productivity crisis, which saw national labour productivity fall by 1.2 per cent in 2024, is instead being driven by a lack of new investment in technology. 'Capital matters for productivity because more capital (the machines, equipment and other durable goods that are used as inputs in production) means workers can produce more goods and services,' the Commission said. Treasury Secretary Steven Kennedy, speaking to the Australian Business Economists this week, said boosting productivity growth would be a key challenge for the Albanese Government. 'Australia's 20-year average productivity growth has declined from 1.8 per cent to 0.8 per cent over that period,' Mr Kennedy said. While some employers, including the Commonwealth Bank, ANZ and Woolworths, are pushing staff back into the office three days a week, the report suggests a flexible hybrid model could be the best long-term solution. Politically, the issue remains sensitive after former Liberal leader Peter Dutton lost his seat following his support for a plan to force Canberra-based public servants back to their desks, a move that sparked widespread backlash from remote workers. The Commission said that although the evidence on working from home is still evolving, most studies find hybrid work to be either neutral or positive for labour productivity. 'There is no evidence to suggest that the trend towards hybrid working has contributed to the productivity loss phase of the productivity bubble,' the report said.
AU Financial Review
28-05-2025
- Business
- AU Financial Review
Best defence to US-China trade war is productivity
Treasury boss Steven Kennedy says the best way to insulate the Australian economy from a slowdown due to the US-China trade war is for business to get better at adopting artificial intelligence and government's to enact productivity-boosting reforms to competition, road user charges, project approvals and expand carbon pricing. He also made a veiled suggestion about expanding co-payments in low-productivity social assistance, such as the $50 billion National Disability Insurance Scheme, after user pay charges were increased for aged care in the last term of parliament.
AU Financial Review
28-05-2025
- Business
- AU Financial Review
Super tax change is ‘hard reform': Treasury boss
Mounting opposition to the government's new superannuation tax for balances above $3 million shows how difficult tax reform is, the government's top economic adviser says. Treasury secretary Steven Kennedy said the government needed to consider raising additional revenue to reduce the long-term structural budget deficit, which is forecast to remain in the red for the next decade. The cost of the $50 billion National Disability Insurance Scheme would for the first time next year surpass the cost of defence, which was also costing more, he said.
