It is time for Baby Boomers to pay a bit more in tax and properly share the burden of providing for the future.
It is time for Baby Boomers to pay a bit more in tax and properly share the burden of providing for the future.

Mr Turnbull, you need to tax me more, not less

IN SOME respects you could argue Australia - in which an entire generation of workers has grown up without ever experiencing a recession - has had it too good for too long.

That we haven't cast even more hundreds of thousands of people onto the Newstart queues as part of a cyclical catharsis is certainly no bad thing, but it has tended to instil a sense of complacency and entitlement.

Since Australia moved on from, as Paul Keating famously put it, the "recession we had to have" in the early nineties, economic reform has become associated with handouts rather than the sometimes hard yards needed to achieve meaningful structural changes.

In the Howard-Costello years of the first mining boom and since, reform has usually been sold on the basis that "every player wins a prize". This has given rise to an unwritten political maxim that there must be no losers when government policy shifts in areas such as taxation.

This paradigm may have worked when revenues consistently overshot Treasury forecasts during what was optimistically termed the period of the "great moderation". It is not going to work now.

The truth is real reform carries with it some pain. There are winners and losers.

Otherwise you are looking, at best, at a zero sum game where the pieces are just shuffled around a bit for appearance sake.

At worst you are planting land mines for future budgets as the cost of trade-offs or election year budget handouts come home to roost for subsequent governments.

In the past two decades the winners, by a big margin, have been the baby boomers - basically the cohort of Australian's who have held the reins of power in this country over that period.

This is the demographic that benefited in their younger years from free university education, Medicare and strong (union fought) wages growth.

As they aged they reaped the windfalls of superannuation, negative gearing on investments, then capital gains tax discounts, dividend imputation, tax-free super drawdown and even cash payments for unused imputation credits.

All the while the haven of a tax free and non means-tested family home (regardless of value) and the ability to hand on, again tax-free, a multimillion dollar estate retained sacred cow status; unable to be touched or even discussed.

It is in this context that reports of the Turnbull government framing a "baby boomer" budget for May 8 should be of very real concern to anyone seriously interested in placing Australia's long term fiscal position on a more sustainable footing.

There are solid arguments in favour of the first round of corporate tax cuts for small to medium businesses, and the government should be rightly credited with relieving some of the burden on the sector that is the largest Australian employer.

It is, however, much harder to justify corporate tax cuts to our larger companies (which as it is pay on average a rate of 17 per cent), or extending more largesse in the form of personal tax cuts or breaks/handouts to the plus 50 demographic, of which I am a member.

This is the area where people like me who benefit from hugely generous (and expensive) breaks on the likes of negative gearing, CGT and super that is ripe for reform.

The tax breaks - which amount to revenue foregone - is money that can't be spent elsewhere; on transport networks for the future, skilling our next generation for a rapidly changing world, or indeed providing the medical and aged care for our older Australians.

It is time those of us who have done very well for quite some time properly shared the burden of providing for the future.

Mr Turnbull, you need to tax me more, not less.

This column appeared in the May issue of Queensland Business Monthly.