Time for change

The current economic and social difficulties caused by rampant inflation are in fact an opportunity to grasp the nettle of reform.

Increased productivity is essential if wage rises are to escalate to try and approach or match inflation, as additional wage costs should never be thrust upon employers. Merely increasing their costs would stoke further price rises while reducing their profits and it’s profitable businesses that provide employment and support our nation’s GDP.

An increase in inflation is therefore doubly dangerous if wages escalate without increased productivity to pay for it.  Indeed, the process becomes like a dog chasing its own tail, running in futile circles till it exhausts itself with no real progress being made in terms of better living standards or economic competitiveness.

Encourage work, don’t penalise it

I urge the new Federal government to turn the current crisis into an opportunity by instigating a simple but permanent reform to set Australia on the path to ever increasing productivity.

This step would enhance businesses opportunities to increase profits and growth, and therefore generate additional employment as well as increase the wages earned by employees to match and surpass the current inflation rate.  Futhermore, this shared win would extend to the government itself, as there would be no actual real reduction in tax revenues.

What’s the big idea?  To make overtime hours worked by employees tax free but allow employers to pay them at the standard hourly rate.

A business that has the capacity to grow would have greater opportunity to do so, while employees could take on the additional work made available to suit their financial requirements to meet demands on the family budget such as higher grocery bills and mortgage payments.

Taxation revenues should actually increase in the long-term, as the additional economic activity generated would increase the size of the economy, thereby generating additional indirect taxation gains by all levels of Government.

Small business owners and family businesses already work additional hours to keep their heads above water, and often can’t afford the stiff additional rates demanded in overtime or the overheads of employing additional workers.

Allowing current employees to work longer and keep their additional wages in full would be a boon for both employers and employees, while boosting the economy and GDP without increasing business costs and consumer inflation.

The solution of working additional tax free hours for an employer is a lot simpler and less stressful than obtaining and balancing a second job to keep the mortgage paid. A fall in people working two jobs should then free up more job vacancies for people who are currently unemployed or under-employed to fill them.

While unemployment is currently low, and many sectors have job vacancies, the job market may tighten as immigration rises, holiday workers return and the economy slows, and so creating more job opportunities will be vital

The risk of “bracket creep” would have to be addressed through further tinkering, but a bold step to make overtime tax free would also allow the whole vexed subject of penalty rates to be placed under review and reduced over perhaps 10 years until eliminated.

Providing a real tax free incentive to work additional hours would be embraced by the working population and employers alike and go a long way to generating the significant productivity boost which many have called for but none have delivered in recent years.

Time for Change

A second bold reform should see the country abandon the varied timezones which serve only to confuse and divide the nation and adopt a single time zone, just as China has done.

Daylight savings is a productivity blight on the Australian economy. Whether you’re based on the east coast, the west or anywhere in between, 9.00am should be 9.00am. The three current time zones and seasonal daylight saving time adaptations are a hangover from a previous age and serve no purpose in the modern era.