Thanks for nothing Mathias | The viewer Australia
Australian taxpayers are estimated to have contributed at least $ 1 million to support the candidacy of former Liberal Finance Minister Mathias Cormann to become secretary-general of the Paris-based Organization for Economic Co-operation and Development.
Of course, no one really asked us if we wanted to spend this money but, hey, the Prime Minister said that “Mathias would be a great secretary general of the OECD”. For this reason, we have scheduled several flights on Australian Air Force jets, including trips to Turkey, Denmark, Germany, Switzerland, Luxembourg, Belgium and Spain. It looks a bit like a Contiki tour without the fun young crowd.
Obviously, it would have been too much to expect Mathias to take commercial trips – the health risks, my dear.
The price was well worth it, at least for Mathias. For starters, there is a tax-free salary of almost $ 400,000. There are a lot of perks too, including the fact that the OECD headquarters are housed in a grand chateau in one of the healthiest areas of Paris, far from the horrible suburb. As long as he does not erase his notebook – that is to say, he accepts the left / green bunkum pushed by the organization – Mathias is almost guaranteed ten years of work.
Make no mistake, Mathias’ predecessor Angel Gurria of Mexico was a shock. He managed to stay in office for 15 years, with Australia supporting his last term (go figure). He pushed the organization further to the left, promoting inclusive growth, higher taxes, minimum global tax rates and aggressive action by member countries against climate change. If it wasn’t “progressive” and green, it wasn’t in an OECD publication.
There was faint hope that Cormann could inject an element of rational economic thought into the organization. But judging from one of his first publications under his leadership, that hope was a serious miscalculation. In its Australia Country Review released this month, the OECD served up the usual green / left pap with a long list of ridiculous and unsubstantiated recommendations.
If Cormann had done his job correctly, he would have stepped in to prevent this post from coming out in its current form. It just contains multiple and predictable demands involving high taxes / high spending and extreme green measures. It supports the pursuit of an expansionary monetary policy even though interest rates close to zero have driven up asset prices and led to greater wealth inequality, the antithesis of inclusive growth. It’s the old OECD, through and through.
Let me go over some of the silly and impractical recommendations of this country review. According to the highly paid Parisian bureaucrats, “tax reform is needed”. ‘Fortunately (I don’t know why, but what the heck), there is a clear path that will provide a more sustainable tax base, improve economic growth, and promote other government priorities such as improving housing affordability and reversal of the upward trend in income. and the intergenerational inequality common to many countries ”. It is surprising that they did not bring peace to the world.
And at the top of the list is the suggestion to increase the GST rate or broaden the base. It is clear that these bureaucrats did not bother to examine the institutional arrangements that underlie the GST. If they had realized that all GST revenue went back to the states, they would immediately have concluded that increasing the GST is not a good idea.
Undoubtedly, a higher GST rate would result in loud claims for low income people who would be affected by higher prices. But the federal government would have no additional means to achieve this, as all the additional revenue goes to the states. It also means that there is no tax room to adjust personal income tax scales that the OECD considers important.
And the fact that there is still no consensus on how the GST is distributed among states – Western Australia now has an extremely generous deal (in fact thanks to Mathias) – means there is would inevitably have more bickering if the GST rate were increased. . Can you also imagine that the GST applied to fresh food (which is currently exempt); the Greens would be on the case in nanoseconds?
By the way, we should be eternally grateful to the former treasurer, Peter Costello, who achieved the seemingly unworkable – a tax that is incapable of upward adjustment. Some of his conservative critics at the time didn’t believe it was possible, but they were wrong. The experience of other countries, especially in Europe, shows that consumption tax and income tax have increased simultaneously, resulting in extremely high tax levies overall.
Then there is the odd idea of the OECD that “the government’s fiscal strategy should be regularly assessed and monitored by an independent fiscal institution”. Who knows what such an institution would serve? After all, fiscal policy rightfully rests on decisions made by elected governments. Why should the opinions of some officials who hide behind their ears be considered “the truth” rather than others?
Unsurprisingly, the OECD review is important on climate change policy and the message that our policy needs to be “stepped up”. We are told that “faster progress in reducing carbon emissions is needed”. To do this, “a more coordinated, ambitious and stable climate change policy” is essential.
The OECD thinks Australia should have a national carbon price – in fact, we had one, but it was dropped. But this does not matter because it is recommended to penalize large emitters with the equivalent of a tax (what is called the safeguard mechanism). In that case, those big emitters can just go overseas and do their broadcasts in other countries.
What is of most concern about this country review is the fact that the ideas contained therein probably reflect in part the Treasury’s wishlist. (This is how these reports are put together, with information and ideas sought from top bureaucrats across the country.)
It is easy to see this influence in some of the oddly specific recommendations such as the overhaul of the Personal Property Security Register (what the…?) And the legislation on automatic mutual recognition of professional authorizations.
In this sense, the predictable green / left wedge contained in the review is not entirely Mathias’s fault. (I was told the early versions were even worse, but I just can’t believe it.) But hey, he’s the boss.