Tax:the Treasurer explains

The Federal Treasurer, Wayne Swan, says the government’s tax cuts are part of its plan to encourage people to take bigger roles in the nation’s workforce.

Mr Swan has said that before.

But he made the point strongly, once again, last night while addressing the Business Council of Australia in Melbourne.

Business leaders have been complaining that they are finding it hard to get the workers they need, to fill critical jobs in their operations.

“There has been much comment on our tax plan,” Mr Swan said.

“I understand that.

“But what this commentary often misses is the debate we have championed for many years now to re-inject participation incentives into the tax system.”

Those words would have been music to the assembled business leaders’ ears.

They, too, have been arguing for years that there is little incentive for them, in Australia’s ramshackle tax system.

However, it was not the big end of town, primarily, that Mr Swan was talking about.

Only last week, the Statistician confirmed that Australia has a big pool of “underemployed” workers.

That is people who want to work longer, each week.

Mr Swan is convinced that an unsympathetic tax system is one of the reasons they are not participating fully in Australia’s work force.

He argues that educational barriers are playing their part, as well.

Mr Swan told his business audience that was why the Labor government is making education its top priority.

None of this will stop either the Treasury or the Reserve Bank worrying about the government’s plan to offer $31 billion worth of staged tax cuts, while inflationary pressures are as high as they are now.

But Mr Swan is adamant. Tax reform is necessary. But it is still only part of what is needed.

“Putting incentive in the personal tax system is part of the equation,” he says.