These days probably the best way to guarantee the federal Coalition government won’t do something is to have Malcolm Turnbull suggest it. So when Turnbull on the publicity tour for his book raised the prospect of further tax increases on superannuation and investment income, he might well have done enough to ensure they are unlikely to happen. And nor should they.
Jobs and debt are the two fundamental challenges confronting Australia in the wake of the COVID-19 health crisis.
The only way of addressing these two challenges is by getting as many Australians back into work as quickly as possible. Increasing taxes does nothing to reduce unemployment that will most probably peak at more than 10 per cent. Last month, in one week, 780,000 lost their jobs out of a national workforce of 13 million people.
And while tax rises in the short term help pay off debt, in the long term they won’t generate the productivity growth required to pay down what could be a total of $1 trillion of federal government debt within three years.
To put the federal government’s interest repayments on that number into perspective, at current rates of less than 1 per cent on government bonds, the interest cost equates to about $400 a year for every Australian. If and when interest rates normalise, at say 3 or 4 per cent, interest payments will equate to $1200 or $1600 per person to be paid every year for decade upon decade. That soon becomes real money.