Posted by: Spenceee | December 26, 2009

When Less Is Not More

Tony Abbot PhotoSo many people in our great country, our democracy, think that we have only two choices at the ballot box, left or right, less or more, Labor or Coalition. No one is truly willing to discuss the issues that we face today and are more than happy to complain when solutions to a problem are put forward, but never can offer a solution of their own. We currently have a federal opposition leader who believes that an opposition cannot win an election but only that a government can lose it. They believe that it is not their job to put forward real alternatives to policy and legislation but to challenge the government on anything at all no matter how trivial if it gets them into the news.

We currently have several state governments in my opinion are all but dysfunctional, with NSW ready to implode. However as the opposition is incapable of putting forward any kind of legitimate alternative to the current government the status quo remains.

Harry Truman once said “To be able to lead others, a man must be willing to go forward alone”. I have seen many elected representatives in the last decade but very few leaders in the sense of the word. We hope that in the democratic system the people or parties who are offering the best way forward for our country are those who are elected. However our states are hamstrung by our current system of government and their own incompetence, leaving the Australian people to carry the burden, go further into debt and suffer at the mercy of government departments which are bankrupt, inept and quite often corrupt.

I believe the primary problem that we have is that the vast majority of taxes paid both by corporations and citizens are levied nationally either via income tax or company tax. Thus the techniques, policies and ultimately rates of taxation are determined and applied at a national level, with the states then funded by an unequal percentage of the overall take. Essentially each state and territory must fight at a COAG meeting for funding essential to the operation of state/territory infrastructure and indeed public policy as decided by the state’s citizens.

The entire concept behind our federal system is that the states are masters of their own destiny and only cede the powers that make sense for Australia’s wellbeing, such as national defence, customs, immigration etc. This however does not mesh with a national taxation policy. For instance if the people of New South Wales decide that they want private industry to fund their major infrastructure, such as tollways and hospitals then by proxy they should be paying less tax to make it simpler for them to do so. If Queensland’s people decide that they want government investment to lead their development then they must pay for this investment. How can this work if the taxation policy is set at a national level?

I have a simple proposal that I think would greatly improve the operation of our governments today, that would not cause unneccesary burden to the current taxation system and infrastructure. The crux of my proposal involves accountability, both for the federal and the state governments which will not only improve the delivery of services both at state level and nationally, but also directly aid democracy by exposing incompetence or indeed leadership at each level.

The overall tax take by the federal government needs to be split into two sections, the tax take required by the federal government and the take required by each respective state or territory. Secondly the state component must be variable by each state respective to their needs. This is what I believe is missing from our current system of government, as there is no ability to truly differentiate between the states in terms of their spending on their infrastructure and services.

Take for example the New South Wales public hospital system which is all but defunct. Entire regions within it are all but legally bankrupt and logic demands there must be more money directed to these areas. As we are a government, the money must come from taxation (or indeed government investments) to deal with this problem. It wouldn’t be fair that Victoria, Tasmania, Queensland etc. etc. are required to pay for previous mistakes made by incomptent spending of the previous government. If the tax rate were fairly split based on the NSW population but also able to be varied in order to repair or invest in areas needed by the population then each state and thus Australia as a whole will benefit from this.

The largest benefit that would result from this though is accountability to the governments of the day. State election campaigns will no longer be able to simply promise this will be fixed and that will be built and then be able to blame the federal government or a deficit for this not being possible. To make a more positive example, take the Gorgon liquified natural gas (LNG) project in Western Australia. This is an exploitation of our natural resources, a bona fide export providing significant benefit not just to the Western Australian economy but Australia’s overall economy. Preparing infrastructure to sell these resources should not be to the detriment of goverment services and other infrastructure in this state due to the benefit of increased state revenues from the LNG sales. Indeed the ultimate benefit would be Western Australia being in a position to lower it’s rate in the national taxation, benefiting every citizen and business in the state allowing them to spend and invest more due to lower taxes.

Robert Kiyosaki once explained a simple concept in his book Rich Dad Poor Dad called the golden rule: “He has the gold makes the rules”. The federal government has and will always use this to their advantage, as they can control the revenue of a state government and use this to influence state policy in areas which they were not given the privilege to. Take education or health as an example, both are significantly influenced by the federal government via underfunding states and then “coming to the rescue” with federal funding. This prevents the states from operating in the way they were originally meant to and I believe that having a system that allows this behaviour is a flaw in our government.

Is it possible that Australia will have leaders of our states and our Federal government who are able to put aside their ideologies for a moment and remove the taxation stranglehold placed around our country moving forward? I’ll leave you all with a question: until the states are made responsible for their taxation burden how can we hold them accountable for their spending?


  1. I love your political ideas, and I share your love for programming and micro controllers.

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