Australian Perspective: 2016 and beyond – keynote presentation to CPA Congress, Brisbane

I was delighted to give the opening keynote presentation at the Brisbane CPA Congress at the Brisbane Convention & Exhibition Centre this morning. My presentation slides (which I’ve slightly modified with additional headings and source information) are available to download:

Australian Perspective: 2016 and beyond

In the presentation, I emphasised the Australian economy is facing some strong headwinds. The outlook for business investment is discouraging, and there are real concerns about the Chinese economy and a risk it could experience a major downturn, which would obviously have ramifications for our economy. I discussed how I am also concerned about the housing market, given it is pretty clear the Sydney market at least has over-heated. So the recent Macquarie Bank report predicting a 7.5 per cent slump in house prices should not be quickly dismissed. Certainly, The Economist  magazine has argued Australian house prices are over-valued for what must be more than a decade now, and I was glad a recent issue contained its latest estimates of the extent of over-valuation, estimates which I used in the presentation this morning (see chart below).

Economist_housing_market

I also discussed the urgency of the budget repair and economic reform tasks for Australia, given the risk we will enter our next downturn still with a large fiscal deficit, reducing our fiscal room to manoeuvre, and also due to the challenges posed by population ageing and our ever-growing social security and welfare expenditures. I suggested the Government might consider changes to current superannuation tax concessions, so they are less generous to high income earners, and that changes to these concessions would be much less politically toxic than, say, changes to the aged pension (e.g. including the family home in the assets test) or negative gearing rules. The Government would be mindful of how many negatively-gearing landlords there are in Australia who would be adversely affected by any changes in the short-term. I also discussed how Australia would get major efficiency gains from raising more revenue via GST and cutting less efficient taxes, particularly stamp duties and payroll taxes.

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2 Responses to Australian Perspective: 2016 and beyond – keynote presentation to CPA Congress, Brisbane

  1. Glen says:

    Gene your presentation highlights the problem we have in this country, our constant removal of property from the tax debate, mainly for political reasons, this is the reason our house prices are so high. Anyone looking to retire in years to come will simply upgrade to an expensive property with a lump some portion of their super to ensure they stay below the thresholds of govt requirements for some sort of concession or health card or tax implications. If changes go ahead that are been talked about currently, someone could have a $2m house and $800k in super tax free, reverse the equation and they get taxed, it’s just ridiculous. Downsizing will simply never happen in years to come, which will add to the problems further.

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