What's missing from this election

Since 2013, PwC has taken a strong stance on the need for meaningful, substantial tax reform to ensure Australia’s future prosperity. We are not alone in doing so - in recent years many different businesses, industry and community organisations have been active in the arguments for and against comprehensive tax reform.

Yet three years later, our underlying deficit problem is no closer to being solved. As it is now, we spend more servicing our debt than we do on higher education.

It’s true that our current fiscal problems pale in comparison to those being experienced in parts of Europe and even the US, but the problem with debt and deficits is that by the time the situation becomes urgent, it’s often too late to have much control over how you fix the problem. Markets demand immediate and significant corrective action (that is, cuts) leaving leaders with little discretion to protect the vulnerable, and no time or money to invest in ways that may help the country grow out of the problem. That’s why it’s so important we focus now on how we remedy this problem before it overwhelms us.

In an ideal world, a federal election would be the perfect platform for an exchange of ideas on how best to address the tax reform challenge facing our nation. But if anything, the months leading up to this election have seen both sides competing as to who is least likely to take action on tax reform.

It started with the budget. It’s perhaps not surprising that after the controversy-filled budgets of recent years, last month’s offering was a no-frills, responsible budget that didn’t rock the boat.

That’s not to say there weren’t things to admire about it. Given how close it was to a federal election, I was pleasantly surprised by the restraint shown in bypassing the traditional sweeteners you would expect at that stage in the cycle. And after the divisiveness of previous budgets, I was also impressed by the general fairness with which the measures were meted out. Nobody can say that this was a budget that unduly increases hardship for the less well-off - or soaked the rich for that matter.

I do understand the pragmatism underlying the budget, and I don’t want to downplay the positive aspects mentioned above. Nonetheless, I hope that isn’t ‘it’ as far as meaningful fiscal reform goes.

Solving our debt and deficits problem, and moving our inefficient tax system into the modern era, will require big, difficult calls to be made on topics that are currently off-limits to the political establishment - topics like the GST and land taxes. Instead, we see our leaders competing over who is least likely to change anything.

It was great to see the Government move on corporate tax, another topic that is a hard sell politically but essential to our future competitiveness. And I think it’s brave of the opposition to take a position on negative gearing - a reform with the potential to be deeply unpopular due to how ingrained housing is as a wealth creation vehicle for many Australians. But apart from these gestures, it’s hard to think of many other policies floated ahead of this election that have the potential to really move the dial on the major structural challenges facing Australia.

I believe the lack of substantive action on our fiscal future stems from our current political and media climate - a climate where any mention of serious reform can quickly descend into headline grabbing, alarmist statements from all sides, without any detailed discussion about the issues.

I look at the entrenched opposition and deeply divisive rhetoric that has dominated recent years in the US political system, and the legislative gridlock that has resulted, and worry that this is where we too are headed. I know I’m not alone in worrying about the constant churn in our political system. Australian Institute of Company Directors Chief John Brogden recently issued a statement calling for a referendum for four-year fixed terms of Parliament - enabling our leaders to implement long-term reform rather than constantly run for re-election.

At the end of the day, part of being a leader is making tough calls, regardless of the noise that is generated. It’s also about listening carefully to criticism, engaging in respectful debate with your opponents, and learning from them where you can. I realise this might seem naive in light of the horse-race style of campaigning that has come to dominate modern elections. But I want this to be a country where our leaders aren’t afraid to give voice to big ideas, because it’s going to take big ideas to ensure Australia’s future in a changing world. Let’s hope we see some more of them.