Policies/Economic Reform
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Official Party Document
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Economic reform
Citizens Dividend: A Streamlined and Empowering Solution
The excessive complexity of Australia's tax and welfare systems with over 120 distinct taxes and more than 20 separate welfare payments has been a burden on both the government and recipients. The current welfare system incurs annual administrative costs exceeding $5 billion. A Citizens Dividend would simplify these costs by consolidating multiple welfare programs into a single consistent payment. This streamlined approach promotes transparency and eliminates disincentives to work and save.
A Citizens Dividend is intended to provide a financial safety net for all citizens, empowering individuals to break free from abusive relationships (including exploitative employment relationships) and facilitating smoother transitions from welfare to employment. Consolidating various welfare programs into a single regular payment reduces bureaucracy, strengthens individual rights and fosters positive liberty. This freedom enables citizens to pursue entrepreneurship, innovation, education, training, volunteer work and creative endeavours without the burden of complex payment rules and regulations.
Furthermore, a Citizens Dividend bolsters workers' bargaining power, empowering them to negotiate improved working conditions, fair wages, and a healthier work-life balance. A Citizens Dividend lays the groundwork for 21st-century entrepreneurship and innovation, fostering a thriving and dynamic Australian society.
Choosing 'Citizens Dividend' Over 'Universal Basic Income'
We have chosen the term 'Citizens Dividend' to emphasise that the payment is for citizens as a rightful share of the nation's wealth. This will foster a sense of belonging and responsibility, and reduce the social stigma of traditional welfare programs. Using the term 'Citizens Dividend' highlights our aspiration for the payment to exceed 'basic' needs and have the potential to scale up, empowering individuals to pursue their passions and dreams, invest in their personal growth, and contribute to a vibrant, innovative, and resilient Australia.
Funding the Citizens Dividend
The Citizens Dividend will be financed by two streams: immediate changes to spending and revenue plus the returns generated by a Sovereign Wealth Fund. This approach ensures a sustainable, long-term financing mechanism for the Citizens Dividend, while simultaneously allowing for a gradual ramp-up of the dividend as the fund grows. Introducing a $580 per week Citizens Dividend is estimated to cost $572.9 billion per year. The total number of eligible citizens is estimated to be 21.3 million adults and 4.6 million children based on 2021 census data [1]. To reduce economic shock, the following changes (and thus the basic income) will be phased in over a period of eight years.
| Tax Reform | Budget Impact ($bn) |
|---|---|
| Citizens Dividend | -572.9 |
| Displaced Welfare | 166.8 |
| 25% Flat Income Tax | 28.4 |
| Replace Stamp Duty and Payroll Taxes with National Land Value Tax | 137.0 |
| Capital Gains Tax Reform | 108.5 |
| Tax Gifts and Inheritances | 24.0 |
| Remove GST Exemptions | 20.7 |
| Remove Super Concessions | 43.1 |
| Visa Rent | 18.0 |
| Remove Religious Tax Concessions | 31.0 |
| Total | 4.3 |
Inflationary Effects
While some may express concerns that implementing a Citizens Dividend could lead to inflation, it is crucial to recognise that this is a complex issue with multiple considerations that influence the potential impact on inflation. Firstly, it is worth noting that net inflation of this proposal would likely be close to zero. This is due to the revenue-neutral approach of the Citizens Dividend, which ensures the overall money supply in the economy remains stable.
However, it is acknowledged that areas from which the funds are drawn, such as from land value and capital gains, might experience slight deflation, while areas of the economy receiving the funds, such as low-income spending, could see a net inflation. This effect is desirable in two ways; it means that the economy is prioritising the needs of lower-income individuals, and it moderates land values, reducing the barrier to entry into housing. In the first instance, there may be increased pricing for some goods and services that are now in higher demand, such as children's extracurricular activities for example, but this price signal will lead to a market response, increasing supply and ultimately bringing prices down from their peak. This price response is healthy, as it leads to an increase in the supply of services that society needs more of.
Displaced Existing Welfare
The following welfare services will be streamlined and replaced by the Citizens Dividend. This displacement will replace a total of $166.8 billion of current spending as listed below. The values below are from the 2020 budget [2]. In determining whether a welfare program should be displaced by the Citizens Dividend, the guiding principle used was a consideration of the specificity and complexity of the needs that the program addresses. Programs that provide to those who have no or low income, were identified as candidates for displacement, as their roles could be efficiently served by a universally applicable Citizens Dividend. On the other hand, programs dealing with unique circumstances and needs, such as disability support or veterans' benefits, were earmarked for retention. These programs address needs that are not universal and may be significantly higher or more specialized than what could be covered by a general Citizens Dividend. The Citizens Dividend is seen as a floor upon which other necessary supports can be built, not a replacement for all forms of assistance.
| Benefit | Expenditure ($bn) |
|---|---|
| Income Support for Seniors | 50.10 |
| Aged Care Services | 19.76 |
| Access and information | 0.23 |
| Mature Age Income Support | 0.15 |
| Aged Care Quality | 0.24 |
| Allowances, Concessions and Services for Seniors | 0.38 |
| Income Support for People with Disability | 17.78 |
| Income Support for Carers | 9.38 |
| Disability and Carers | 1.45 |
| Family Tax Benefit | 18.33 |
| Child Care Subsidy | 7.92 |
| Parents Income Support | 6.44 |
| Child Support | 2.33 |
| Support for the Child Care System | 0.32 |
| Families and Children | 0.55 |
| Child Payments | 0.11 |
| Other Families with Children Benefits | 0.01 |
| Paid Parental Leave | 2.40 |
| Assistance to the Unemployed and the Sick | 20.13 |
| Other Welfare Programs | 1.87 |
| Assistance for Indigenous Australians | 2.39 |
| General Administration | 4.53 |
The following welfare programs will be retained:
| Benefit | Expenditure ($bn) |
|---|---|
| Veterans' Community Care and Support | 0.99 |
| National Partnership Payments - Assistance to the Aged | 0.01 |
| National Disability Insurance Scheme | 18.68 |
| Assistance to the States for Disability Services | 0.17 |
| National Partnership Payments - Assistance to People with Disabilities | 1.58 |
| Family Relationship Services | 0.18 |
| Assistance to Veterans and Dependents | 7.71 |
Pirate Party Australia proposes the following reforms:
- Implement a Citizens Dividend to all adult citizens (excluding incarcerated persons) of $580 per week.
- The Citizens Dividend for minors shall be equal to half that of the adult Citizens Dividend, paid to the guardian(s) of that minor.
Transition to a Flat Income Tax System
Our proposed tax reform, incorporating a 25% flat income tax, a Citizens Dividend, a national land tax, and adjustments to the capital gains tax system, encapsulates a comprehensive, progressive, and future-focused approach to Australia's tax structure.
The cornerstone of this reform is a 25% flat income tax. Simplifying our current tax system, this shift eradicates the complexities tied to multiple tax thresholds, the myriad of tax offsets, and reduces reporting requirements. By doing so, it eliminates loopholes, thwarts tax evasion, and negates income diversion through convoluted financial structures such as trusts and companies.
Moreover, the flat tax model is inherently more equitable for those with fluctuating income, like gig workers, small business owners, sportspeople, and individuals in industries with irregular pay cycles. It prevents them from being penalised in years of higher earnings and provides a stable, predictable tax landscape. Similarly, it addresses imbalances experienced by couples with uneven income distributions, ensuring fairness across the board.
In complement to the flat income tax, our Citizens Dividend provides a progressive counterbalance. Functioning as a redistributive mechanism, the Citizens Dividend ensures those on lower incomes are proportionally advantaged, making the overall system progressive. The combination of these two components results in net gains for all income ranges, as demonstrated by our net income graph above.
The introduction of a national land tax and adjustments to the capital gains tax system play a pivotal role in funding this comprehensive tax reform. These changes primarily impact the asset-rich, adding to the overall progressiveness of our approach. The land tax, based on the unimproved value of land, targets wealth accumulation in a resource predominantly owned by affluent Australians. Similarly, our capital gains tax adjustments ensure that individuals who generate substantial income from investments contribute their fair share to the national economy.
By blending these distinct components, we ensure that our proposed tax system is robust and resilient in a world where increasing automation is shifting the income distribution away from labour. This future-ready approach leads to an even playing field for all taxpayers and minimises economic inefficiencies, incentivising productivity and workforce participation.
The replacement of our current income tax system with a flat tax is estimated to generate an additional $28.4 billion per year. This figure is estimated from a Total Personal Income of $951.4 billion [3] and Total Personal Income Tax of $209.49 billion [4]. Most tax offsets are set to be replaced by the Citizens Dividend. This includes offsets for senior Australians, mature age workers, overseas civilians, entrepreneurs, low and middle income earners, and termination payments, as well as zone offsets. However, it does not include tax offsets for private health insurance and foreign employment income.
Pirate Party Australia proposes the following reforms:
- Transition to a 25% flat income tax system.
- Include a tax-free threshold for non-citizens at the level of the Citizens Dividend.
The Case for a Federal Land Value Tax
Australia's stamp duties and payroll tax system, imposes burdens that hinder economic growth and housing affordability. Stamp duties, levied on transactions, create market distortions, discourage mutually beneficial property exchanges, and result in deadweight loss. Payroll tax stifles job creation and business expansion, escalating hiring costs, and imposing a growth disincentive due to differing thresholds and rates across regions.
A fundamental shift to a Land Value Tax (LVT) presents an efficient and equitable solution. LVT, a charge on the unimproved value of land, encourages optimal land use and channels capital towards more productive sectors. Unlike stamp duties and payroll tax, it maintains economic efficiency as it does not influence decisions about work, savings, or the use of land.
One of the key advantages of LVT is its impact on land and housing prices. As the LVT rate rises, it decreases the net return from owning land, effectively moderating its market price. The aim would be to set the tax rate such that land value growth is moderated to zero (in inflation adjusted terms) rather than appropriation of the current value. This mechanism discourages land speculation, induces idle or unused property into the market, and notably improves housing affordability over time. Valued at $5.8 trillion [5], with an average annual increase of 5.8% between 2011 and 2016 [6], Australia's land offers a significant tax base. A proposed federal LVT at 3%, half the average annual growth rate, could yield approximately $137 billion per year, even after compensating states for lost revenue from abolishing stamp duties [7] and payroll taxes [8].
Importantly, a federal LVT is superior to state-based LVTs, which often include tax-free thresholds that individuals and companies can exploit by spreading portfolios across states and using companies and trusts. A uniform federal LVT eliminates these loopholes, establishing a fair and efficient system.
Pirate Party Australia proposes the following reforms:
- Abolishing inefficient taxes like payroll tax and stamp duties on cars and houses.
- Implementing a 3% federal LVT on the unimproved land value, extending to owner-occupied housing.
- Credit the cost of the most recent stamp duty paid against land value tax obligations, as a transitional mechanism.
- Exempt conservation land.
- Protecting income-poor taxpayers by allowing tax payments to be deducted from the equity of the land via a Line of Credit or lien.
Capital Gains Tax Reform
Inheritance
Under the current tax system, when an individual inherits an asset, Capital Gains Tax (CGT) implications are usually deferred until the asset is sold or otherwise disposed of. In some instances, the cost base of the inherited asset is effectively reset, effectively exempting the asset from CGT on gains accumulated prior to inheritance. This arrangement can be perceived as inequitable, as it allows the inheritance of substantial wealth without immediate tax obligations. In essence, it favours wealth accumulation for a few at the expense of broader societal welfare.
In pursuit of a more equitable taxation system, Pirate Party Australia proposes a reform to the handling of inherited assets. Specifically, we advocate for the levy of CGT at the point of inheritance rather than at the point of disposal. This measure ensures that tax obligations are addressed immediately and prevents the deferment of tax liability. This reform would see the taxation of inherited wealth in line with income generated through labour and entrepreneurship. In cases where cash is not readily available to pay the tax, alternative means could be arranged. For example, the tax could be paid by ceding a proportionate amount of equity in the asset, through mechanisms such as a lien or shares. This provision prevents the need for forced sales to meet tax obligations. Low value goods below a threshhold (such as furniture) will be exempt.
Since ‘one-half of capital gains are held until death or donated to charity, thus escaping tax’ [9] we shall estimate the additional revenue available to be approximately the same as the Capital Gains Tax that was collected - $18.4 billion [10]. By capturing tax on inherited gains at the point of transition, we aim to ensure that the compounding returns of that wealth benefit all Australians, not just the few.
Pirate Party Australia proposes the following reforms:
- Reform Capital Gains Tax by levying CGT at the point of inheritance.
CGT when Loans are Secured Against Assets
The current taxation system allows investors to take out loans against their assets and defer Capital Gains Tax (CGT) indefinitely. This practice often distorts market behavior and creates the "lock-in effect," where investors are incentivised to hold onto their assets longer than they otherwise would to avoid CGT. These practices can significantly distort investment decisions and inhibit the efficient allocation of capital.
In response to this issue, Pirate Party Australia advocates a reform that would levy CGT at the point when loans are secured against an asset. This measure disrupts the loophole that allows investors to defer CGT, ensuring that tax obligations are also met at the time of securing a loan in additional to at the time of asset disposal. To alleviate any potential burden, no forced asset sales would be necessary under this reform. As is currently the case, the valuation of the asset would be agreed upon mutually by the lender and the asset owner, reflecting a fair market value at the time of loan issuance.
The additional revenue that this would generate is difficult to estimate. However research [9] shows that decreasing the tax deferral period from 35 years to 10 years changes the Effective Tax Rate from 10% to 20%, or a doubling of the CGT collected. Since Capital Gains Tax collected was $18.4 billion [10], the additional revenue is estimated to be also approximately $18.4 billion.
Pirate Party Australia proposes the following reforms:
- Reform Capital Gains Tax by levying CGT when loans are secured against assets.
Removal of the 50% CGT discount
Australia's tax code currently includes a provision that allows for a 50% discount on Capital Gains Tax (CGT) for assets held for more than one year. While this provision may have been implemented with the aim of promoting long-term investment, it has been widely criticised for disrupting the equity and neutrality of the tax system. Indeed, this discount incentivises individuals to structure their finances in a way that allows them to derive a significant portion of their income in the form of capital gains, thereby reducing their tax liability.
This not only introduces an element of bias in the tax system, favouring capital gains income over other forms of income, but also risks eroding the tax base and contributing to wealth inequality. Other forms of capital income, such as dividends and interest, do not receive comparable inflation adjustments, leading to uneven treatment within the taxation system.
To address this, Pirate Party Australia advocates for the abolition of the 50% CGT discount. However, to maintain fairness and address the impact of inflation, we propose adjusting the cost base of the asset for inflation over the period it was held.
This reform could generate an additional $11.7 billion per year [11] in tax revenue. This additional income could be utilised to fund public services, support social initiatives, and promote economic stability and growth. The Pirate Party Australia is committed to tax reforms that promote fairness, equality, and economic prosperity for all Australians.
Pirate Party Australia proposes the following reforms:
- Reform Capital Gains Tax by removing the 50% CGT discount.
Owner-Occupied Homes
The Pirate Party recognises the need to create a more equitable and efficient tax system. As part of this effort, we propose a significant reform: the reevaluation of the capital gains tax (CGT) exemption currently given to owner-occupied homes. This exemption, which is estimated to be worth about $60 billion a year by the Treasury [12], disproportionately benefits wealthier households and contributes to the distortion of the housing market. International bodies such as the International Monetary Fund (IMF) have urged Australia to review this substantial tax concession.
The current exemption is more generous than what is typically seen in many other advanced economies. It promotes investment in owner-occupied housing over other types of assets and can contribute to inflated housing prices. By restricting the CGT exemption for the family home, we can reduce these distortions and generate additional tax revenue. This approach aligns with our vision of a tax system that treats all forms of capital income equitably.
In implementing this change, we will consider the potential impacts on homeowners, particularly those who may be asset-rich but income-poor. Specific measures, such as a threshold for tax exemption or limiting the policy to future gains, can be implemented to mitigate any negative effects.
Pirate Party Australia proposes the following reforms:
- Reform Capital Gains Tax by broadening it to include owner-occupied homes.
Taxing Gifts and Inheritances as Income
Under the current tax system, a discrepancy exists between earned and unearned income. In an effort to rectify this imbalance, we propose a revision of tax laws to classify gifts and inheritances as taxable income, subject to the income tax rate. Our objective is to cultivate a more equitable tax system and curtail tax avoidance strategies.
While some may consider this a 'death tax', we clarify that the tax is imposed on the recipient, not the deceased, and complements the recipient's existing tax situation. This policy aims to address intergenerational wealth disparities and bridge the wealth gap between those with the fortune of intergenerational wealth and those without such benefits. Importantly, this tax will apply to transfers of assets that are readily convertible to cash and have a clear market value - such as cash, precious metals, stocks, property, and other securities. By focusing on these types of assets, we avoid the challenges of valuing and taxing in-kind benefits, such as the provision of rent-free housing to a family member. We propose to exclude small gifts and ordinary family expenditures from this tax. The law will be crafted in such a way to exempt transfers below a certain threshold, mitigating the burden on average families and focusing on substantial wealth transfers instead. This exemption would encompass normal household expenses and personal living costs, allowing families to provide for their members without undue taxation.
In terms of potential revenue, the total value of wealth transfers, inclusive of inheritances and gifts, exceeded $120 billion[13]. By introducing a 25% flat tax rate on such transfers above the established threshold, we estimate that this could potentially yield an additional $30 billion in tax revenue per annum. This policy will be administered in a manner similar to the existing Fringe Benefits Tax system, ensuring efficient implementation and the fair and consistent application of the law. By embracing these changes, we seek to foster a fairer tax system, mitigate wealth inequality, and generate additional revenue for public investment.
Pirate Party Australia proposes the following reforms:
- Broaden the income tax base by including gifts and inheritances as taxable income.
Removing GST Exemptions
The proposal to broaden Australia's GST base involves eliminating current exemptions on essential items such as healthcare, education, and fresh food, among others. These exemptions were initially implemented with the aim of promoting equity and stimulating the consumption of 'merit goods', which generate positive societal externalities. However, according to the Organisation for Economic Co-operation and Development (OECD), this approach does not efficiently serve its intended purpose of promoting equity or encouraging consumption of such goods [14]. The inefficiencies stem from the fact that these exemptions inadvertently benefit higher-income households more, as they are the ones who generally spend more on these exempted goods and services.
By eliminating these exemptions, we could simplify the tax system, decrease compliance costs, and reduce distortive effects between different types of goods and services. Modelling suggests that the broadening of the GST base could increase GST collections by approximately $20.7 billion [14].
This additional revenue will be directed towards the Citizens Dividend and this would mitigate any regressive impacts of the expanded GST on lower-income households, effectively transforming the policy into a progressive one. It is worth noting that a significant proportion of this additional GST revenue would come from higher-income households, and while lower-income households might pay a larger proportion of their income in GST, they would receive a net gain as a result of this change.
Regarding goods that produce positive externalities such as education, a targeted approach like direct subsidies would likely be more effective at stimulating their consumption (refer to the Education policy section). The GST system's role should not be to promote socio-economic goals but to collect revenue efficiently. The funds collected could then be utilised in a more targeted and effective manner, like providing subsidies to promote the consumption of goods with positive externalities.
The proposal to eliminate GST exemptions and introduce a Citizens Dividend would lead to a more equitable, efficient, and simpler taxation system. This approach not only improves the overall efficiency of the GST system but also mitigates its regressive impacts, thereby establishing a fairer and more effective taxation system for all Australians.
Pirate Party Australia proposes the following reforms:
- Broaden the GST base by removing most GST exemptions.
- Retain exemptions for certain medical and personal-care items by schedule, similar to the PBS.
Removing Superannuation Concessions
The proposal to remove superannuation concessions and redirect the funds to support a Citizens Dividend offers a more equitable approach to public spending. Superannuation concessions, as outlined in the Treasury's "2021 Tax Benchmarks and Variations Statement" total a staggering $43.1 billion [11]. However, instead of aiding those most in need, these concessions have disproportionately benefited the most affluent, creating an unfair advantage that contravenes the ethos of equal opportunity for all citizens [15].
Over time, superannuation concessions, initially intended to reduce reliance on the aged pension, have inflated at an exponential rate. This bloating of concessions has led to a situation where these tax breaks, ostensibly designed to aid retirement saving, have instead morphed into a vehicle for wealth accumulation for high-income earners, who are best positioned to exploit such incentives [16].
The fairness of the current system has been repeatedly called into question, as data shows that 60% of superannuation tax concessions go to the top 20% of households, with a meagre 11% directed towards the bottom half of all Australian households [17]. This, coupled with gender disparities, where women, despite making up about half of the workforce, receive only 30% of superannuation tax concessions, makes the case for reform even more compelling [17].
In light of these insights, the reform of superannuation concessions is not just critical but urgent. It represents a significant stride towards a more equitable Australia, where funds are allocated in a way that is transparent, fair, and genuinely promotes the well-being of all its citizens.
Pirate Party Australia proposes the following reforms:
- Remove superannuation concessions.
Revolutionising Migration: Visa Rent
Our Visa Rent policy represents a fresh approach to Australia's immigration system, combining fairness, efficiency, and market-driven principles. It streamlines the visa process by amalgamating all classes into one, addressing extensive processing times and significant visa backlogs that currently hinder our immigration system. Critically, it targets migrants who can gain the most from relocating to Australia, thus maximising the potential benefits they bring to our economy and society.
Unlike our current skilled visa program, it doesn't preference high-income migrants but rather uses the price signal to select for those with the most to gain by coming here. For instance, a fruit picker that would triple their income by coming to Australia would be more inclined to pay a visa rent than an engineer whose income increase would be marginal. Furthermore, this policy isn't anti-immigration. Pirate Party Australia supports free movement of people and trade across borders and this policy doesn't dictate the number of people we should welcome each year, but rather strategises on how to effectively meet that planned level of migration.
The Visa Rent policy utilises a market-driven mechanism: migrants pay a visa rent, the value of which is determined by market forces that balance visa supply and demand. This system ensures Australia attracts an optimal number of immigrants without overburdening services and infrastructure. It dynamically responds to global migration patterns and economic changes, maintaining balance. This approach has dual benefits: it aids migrants who experience significant improvement in their living standards or career opportunities by moving to Australia, and it encourages employers to offer competitive wages that account for the added visa rent cost. This ensures parity for Australian and overseas workers, preventing local wage undercutting through low-cost foreign labour. Students who come here on visa would no longer be forced to work limited hours a week - allowing them the freedom to contribute more to our economy and earn a livable wage. Workers on visa would no longer be tethered to a sponsor employer and thus can change employers to escape exploitative conditions. With the Visa Rent, migrants can stay as long as they like which negates the need for a Permanent Resident category and there's no longer an arbitrary need for visa holders to leave the country and come back under a separate visa application.
In addition, the Visa Rent policy generates a substantial, continuous revenue stream for the government. This revenue could be returned to Australian citizens as a Citizens Dividend, fostering economic equality by sharing immigration benefits with the entire community. In the steady state, the Visa Rent policy could accumulate up to $9.8 billion per year, based on 4.5 million non-citizens[1].
Transition to this system will be gradual and fair, with a ramp-up mechanism allowing migrants ample time to secure employment, adjust to living costs, and manage their finances effectively. It won't apply retrospectively to current visa and permanent resident (PR) holders, thus preserving their rights and providing certainty.
By fostering fair competition, inclusivity, and leveraging market forces, the Visa Rent policy exemplifies Australia's commitment to a diverse and prosperous society. It introduces an innovative immigration pathway that bolsters economic growth, upholds our tradition of supporting newcomers, and equitably shares migration benefits among Australians.
Pirate Party Australia proposes the following reforms:
- Implement a visa rent system set at a level at which the demand for visas equals the supply of migration places.
- Exempt student, tourist and humanitarian visas.
Remove Religious Tax Concessions
Pirate Party Australia maintains that all organisations, irrespective of religious ties, should adhere to the same tax laws and regulations. We acknowledge that churches and other religious institutions currently enjoy tax concessions, including exemptions from land value taxes and rates. Although religious activities may offer certain societal benefits, these concessions are estimated to result in a significant shortfall in revenue for the Australian government.
We advocate for the abolition of all tax concessions for religious organisations, including exemptions from land value taxes and rates. All entities, religious or otherwise, should be subject to the same taxation criteria. We suggest the removal of the 'advancement of religion' as a charitable activity when determining tax exemption. However, exemptions should be retained for non-commercial income earned by religious organisations, provided they meet other qualifying categories for exemption, such as provision of charity or community service. Previous estimates by others [18] indicate these tax concessions could account for as much as $31 billion per year.
Pirate Party Australia proposes the following reforms:
- Remove 'advancement of religion' as a charitable activity for the purpose of determining tax exemption.
- Retain exemptions for non-commercial income earned by religious organisations if the organisation meets any other categories for exemption including provision of charity, education, culture, community service, or health.
- Require qualifying charitable activities to be non-discriminatory against any marginalised group in terms of both recipient eligibility and the delivery mechanism.
Reinstate the Commonwealth Employment Service
Rent-seeking in the employment services sector needs to be addressed. It is clear that the existing Job Active system is a dismal failure which handicaps job seekers more than it helps them, while syphoning off large amounts of public money for private profit.[19] The system has now reached breaking point, while costing $7.3 billion per year - half of which is spent on administration. The Commonwealth Employment Service (CES) was a vastly superior model by comparison and produced far better outcomes at much lower cost. At its peak, the CES handled 41% of job vacancies and had various specialised and experienced staff that served the unemployed well, while providing employers with a low cost "one stop shop" for workers. Small business has joined calls for a reinstatement of the CES, which would be more beneficial for them in finding staff.[20][21] The CES should be reinstated to replace Job Active and resume their previous responsibilities.
Pirate Party Australia advocates the following reforms:
Reinstate the Commonwealth Employment Service (CES)
- End rent seeking in the employment services industry by replacing Job Active with the CES.
Distributed Digital Currencies
Distributed digital currencies such as Bitcoin[22] (also referred to as cryptocurrencies) are an emerging and potentially highly disruptive technology, and are the subject of numerous official inquiries around the world.[23][24][25][26] Existing payment methods carry significant risks - such as the need for consumers to share credit card details - and also impose dead-weight middle-men costs. Digital currencies offer a solution to these issues and a potential diversity of new financial services.
Digital currencies allow the population of a country to avoid potential currency devaluation as a result of fiscal and monetary policy. They offer a mechanism for risk-free online purchases, with transaction fees and middle men removed. Digital currencies also offer much to retail businesses. Existing payment systems are structurally unsuited to online transactions: paying online with a credit/debit card involves divulging card details to a slew of interested parties, with all costs associated with poor practices or fraud falling on the retailers, and ultimately on consumers. Distributed digital currencies correct this issue inherently[27] and eliminate the need to divulge account details, ensuring vendors have access to incoming funds immediately with no risk of fraud.
Pirate Party Australia anticipates a large future for the general distributed currency concept, but to be successful Australia needs to actively engage in its development. Pressure from incumbent financial organisations seeking to restrict competition must be resisted, as self-exclusion will deny Australia potentially enormous benefits.
Pirate Party Australia advocates the following reforms:
Support the development of new technology businesses
- Ensure clear guidelines and a suitable regulatory environment are available for businesses.
- Treat restriction of basic banking services to crypto-currencies businesses as an illegal restriction on trade, excepting where trade poses direct financial risks to the bank.
- Ensure crypto-currency businesses with control over customer funds are subject to equivalent regulation to banks.
- Ensure crypto-currency businesses without control over customer funds are not subject to traditional banking regulations, but are encouraged to self regulate.
Change tax regulation to support distributed currencies in the broader community
- Re-define digital currencies from a commodity to a currency for tax purposes.
- Count digital currency gains through 'mining' or speculation efforts as capital gains.
Sovereign Wealth Fund and Market-Based Resource Extraction Rights
The mining industry, vital to Australia's economy, brings forth significant environmental, land rights, and economic considerations. Addressing these intertwined issues requires a balance between economic viability and long-term sustainability.
Given that minerals are a finite resource, relying solely on the recurring income from taxation and royalties is not a sustainable long-term strategy. We foresee diminishing returns over time due to exhaustion of resources. To preserve the nation's wealth for future generations, we propose the establishment of a Sovereign Wealth Fund, accruing the wealth generated from resource extraction. This fund will distribute only the returns on the principal, safeguarding the future prosperity of Australia.
Taxation, while necessary, often diminishes the taxed activities. Our goal in mining is not to curb employment or exploration, but to secure greater value from extraction. Hence, we propose a shift from fixed licensing to auctioning extraction rights to the highest bidder. This market-based approach fosters competition and reduces the risk of profit shifting. A reserve price set by the government will deter low-value projects, conserving resources for future use. To encourage exploration, a commission on the final auction price could be offered.
Pirate Party Australia advocates the following reforms:
- Establish a Sovereign Wealth Fund from resource royalties
Addressing Negative Externalities through Targeted Taxation
The Pirate Party remains dedicated to the challenge of climate change and related environmental issues, viewing the implementation of a carbon tax as a primary policy tool. Our previous carbon tax implementation raised $15.4 billion, embodying a practical strategy to internalise the negative externalities from carbon emissions. This measure encourages both businesses and individuals to reduce their carbon footprint and to invest in cleaner technologies. Moreover, beyond carbon pollution, several other negative externalities merit the application of targeted taxation. These externalities and their respective fiscal interventions include:
- Congestion Tax: To alleviate traffic congestion in heavily populated urban areas and stimulate the use of public transportation or carpooling, we propose a congestion tax. This levy would attribute a price to the external costs of congestion, such as time delays and heightened pollution, thus incentivising more efficient use of our roads.
- Pay-as-you-throw Fee: A generalised pay-as-you-throw charge for waste disposal could effectively reduce waste generation and stimulate recycling and reuse. By holding households and businesses accountable for their waste output, we can incentivise waste reduction and foster more responsible consumption and production patterns.
- Sugar Tax: To combat the negative externalities associated with high sugar consumption, we propose a tax on added sugar in beverages, to be levied on the manufacturer or importer. By increasing the price of such drinks, that tax would encourage ingredient lists to be reformulated to healthier levels and generate revenue to fund public health initiatives.
- Tobacco and Alcohol Taxes: By levying higher taxes on tobacco and alcohol products, we can mitigate the negative externalities associated with their consumption, such as health issues and societal costs. These increased taxes could discourage consumption and help fund public health and addiction treatment programmes.
As Pirates, we endorse personal choice. It is not the intention of this section that we limit people's freedom to make choices, however, we would like to ensure people pay for the consequences of their choices towards others.
The revenue generated from these taxes will first be allocated towards initiatives that counter the respective negative externality. For instance, funds from the carbon tax could be directed towards carbon sequestration efforts. Should the collected tax exceed what is needed for these initiatives, the surplus will be invested into the Sovereign Wealth Fund. As these taxes are correcting behaviors whose costs often burden future generations, it is only just that the resulting revenue should benefit those future generations as well. This approach ensures that these taxes directly fund the rectification of the issues they aim to resolve, thereby eliminating the perverse incentive for the government to promote harmful behaviours for revenue collection. Furthermore, this strategy ensures that any remaining funds are invested prudently, providing a sustainable financial foundation for the future of Australia.
Additionally, the Pirate Party advocates for major industrial projects to be financially accountable for potential environmental impacts. We propose a requirement for these projects to secure an insurance policy covering potential environmental damage, or a bond that would finance environmental restoration if damage occurs. This policy ensures that the cost of environmental harm doesn't fall on taxpayers or future generations, while promoting responsible business operations. Such measures, along with our targeted taxation strategy, create a comprehensive approach to managing environmental externalities and preserving natural resources for future generations.
References
- ↑ 1.0 1.1 Australian Bureau of Statistics (ABS): 2021 Census Community Profiles (Tab G01), https://www.abs.gov.au/census/find-census-data/community-profiles/2021/AUS/download/GCP_AUS.xlsx, (Accessed 17 July 2023)
- ↑ Australian Parliament House 2020 Budget Statement 6: Expenses and Net Capital Investment, https://parlinfo.aph.gov.au/parlInfo/download/library/budget/2020_07/upload_binary/107bp1_bs6.pdf, (Accessed 17 July 2023)
- ↑ Australian Bureau of Statistics (ABS): Personal Income Australia (2019-20), https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/personal-income-australia/latest-release, (Accessed 17 July 2023)
- ↑ Australian Bureau of Statistics (ABS) Document: 55060DO001_201920 Taxation Revenue, Australia (2019-20), https://www.abs.gov.au/statistics/economy/government/taxation-revenue-australia/2019-20/55060DO001_201920.xls, (Accessed 17 July 2023)
- ↑ Property Update: Guess how much all the land in Australia is worth? Quoting Australian Bureau of Statistics (ABS) (2017), https://propertyupdate.com.au/guess-how-much-all-the-land-in-australia-is-worth/, (Accessed 17 July 2023)
- ↑ Australian Bureau of Statistics (ABS): National Land Account, Experimental Estimates (2016), https://www.abs.gov.au/statistics/environment/environmental-management/national-land-account-experimental-estimates/latest-release, (Accessed 17 July 2023)
- ↑ Deloitte: Analysis Report, The Economic Impact of Stamp Duty (2015), Table ii, https://www2.deloitte.com/au/en/pages/economics/articles/economic-impact-stamp-duty-reform-options.html, (Accessed 17 July 2023)
- ↑ The Conversation: FactCheck: how much of Australia’s tax is collected by states and territories? (2015), https://theconversation.com/factcheck-how-much-of-australias-tax-is-collected-by-states-and-territories-50457, (Accessed 17 July 2023)
- ↑ 9.0 9.1 The Australia Institute: Tax Equity, Reforming Capital Gains Taxation in Australia (2009), https://australiainstitute.org.au/wp-content/uploads/2020/12/cap_gains_7.pdf, (Accessed 17 July 2023)
- ↑ 10.0 10.1 Australian Government: Budget 2020-21, Budget Strategy and Outlook, Budget Paper No. 1, Page 10-25, https://archive.budget.gov.au/2020-21/bp1/download/bp1_w.pdf, (Accessed 17 July 2023)
- ↑ 11.0 11.1 The Conversation: How to Camouflage $150 Billion in Spending: Call it ‘Tax Expenditure’ (data from 2021-22), https://theconversation.com/how-to-camouflage-150-billion-in-spending-call-it-tax-expenditure-176236, (Accessed 17 July 2023)
- ↑ Australian Financial Review: IMF Urges Australia to Restrict Tax Breaks for the Family Home (2023), https://www.afr.com/policy/economy/imf-urges-australia-to-restrict-tax-breaks-for-the-family-home-20230201-p5cgz6, (Accessed 17 July 2023)
- ↑ Australian Government, Productivity Commission: Wealth Transfers and their Economic Effects (2021), https://www.pc.gov.au/research/completed/wealth-transfers, (Accessed 17 July 2023)
- ↑ 14.0 14.1 pwc: How GST Reform can Help Reboot Prosperity for Australia, Figure 3.1 (Data from 2018-19), https://www.pwc.com.au/tax/assets/tax-reform/2020/how-gst-reform-can-help-reboot-prosperity-for-australia-july2020.pdf, (Accessed 17 July 2023)
- ↑ The Australia Institute: New Analysis: Superannuation Tax Concessions Big, Getting Bigger and Unfair (Data from 2019-20), https://australiainstitute.org.au/post/new-analysis-superannuation-tax-concessions-big-getting-bigger-and-unfair/, (Accessed 17 July 2023)
- ↑ Grattan Institute: It's Crystal Clear: Super Tax Concessions Have Got To Go (2015), https://grattan.edu.au/news/super-system-allows-some-big-earners-a-tax-edge/, (Accessed 17 July 2023)
- ↑ 17.0 17.1 The Australia Institute: A Super Waste of Money: Redesigning Super Tax Concessions (2015), https://australiainstitute.org.au/report/a-super-waste-of-money-redesigning-super-tax-concessions/, (Accessed 17 July 2023)
- ↑ Secular Party of Australia, Tax Review Submission: Review of Australia Future Tax System (2008), https://web.archive.org/web/20110601223621/http://taxreview.treasury.gov.au/content/submissions/pre_14_november_2008/Secular_Party_of_Australia.pdf, (Accessed 17 July 2023)
- ↑ Rexter, Darren "Commonwealth Employment Service the pitfalls of privatisation" https://independentaustralia.net/business/business-display/commonwealth-employment-service-the-pitfalls-of-privatisation,11304 (accessed 15 June, 2018)
- ↑ Farr, Malcolm "Small business calls for revival of the CES as employers and the unemployed criticise private operators" http://www.news.com.au/finance/economy/australian-economy/small-business-calls-for-revival-of-the-ces-as-employers-and-the-unemployed-criticise-private-operators/news-story/a8c9247da2359ab5816ab1b3aa7cd979 (accessed 15 June, 2018)
- ↑ Strong, Peter. "Change management, employment, the economy and local communities – bring back the CES" https://www.cosboa.org.au/single-post/2017/10/31/Change-management-employment-the-economy-and-local-communities-%E2%80%93-bring-back-the-CES (accessed 15 June, 2018)
- ↑ Crypto-Currency Market Capitalizations. As at 18/05/2015, Bitcoin has a MarketCap: $USD 3,350,127,706, Price: $USD 236.35 per BTC, Circulation: 14,174,375 BTC. The next highest was Ripple at MarketCap: $USD 197,776,223, Price: $USD 0.006198 per XRP, Circulation: 31,908,551,587 XRP. The next highest was LiteCoin at MarketCap: $USD 57,019,327, Price: $USD 1.46 per LTC, Circulation: 39,126,154 XRP. Note: Ripple isn't really a Distributed Digital currency as it relies on a central authority. http://coinmarketcap.com/, (Accessed 30 March 2013).
- ↑ Senate Standing Committees on Economics: Digital currency Inquiry., http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Digital_currency, Video of live hearings (LONG ~ 4 hours.) https://www.youtube.com/watch?v=oE5cW5K5ziE, (Accessed 30 March 2013).
- ↑ ATO submission to the "Inquiry into how to develop an effective regulatory system for digital currency, the potential impact of digital currency technology on the Australian economy, and how Australia can take advantage of digital currency technology.", http://www.aph.gov.au/DocumentStore.ashx?id=4e646878-bca5-4c7e-9c77-dd20bd243e03&subId=301948, (Accessed 30 March 2013).
- ↑ Andreas Antonopolous addresses and answer questions in front of Canadian Senate Inquiry. https://www.youtube.com/watch?v=xUNGFZDO8mM, (Accessed 30 March 2013).
- ↑ UK Government: Digital currencies: call for information, https://www.gov.uk/government/consultations/digital-currencies-call-for-information/digital-currencies-call-for-information, (Accessed 30 March 2013).
- ↑ Extensive description of Bitcoin's future potential, by Mr Chris Mountford, as submission to the Senate Standing Committees on Economics: Digital currency Inquiry, http://www.aph.gov.au/DocumentStore.ashx?id=772948e4-4ab5-4484-9a6d-f881eb4d68de&subId=302131, (Accessed 30 March 2013).