How COVID-19 will change Australia's policy landscape

As we see the reshaping of the economy in the next few years, the policy landscape may need drastic reform to support business and people’s livelihoods, says UNSW Business School's Scientia Professor of Economics John Piggott

For example, take the housing sector. There has been discussion around replacing stamp duties with land tax. 

I think there will be a lot more, as we come out of this, like in all downturns or recessions, there is going to be a shakeout, and that should be seen as an opportunity. 

This is the opportunity when struggling businesses, when unproductive enterprises, actually manage to close their doors and I think that's appropriate, but that means people are going to move. 

That means there will be a necessity for more mobility and that mobility is incredibly restrictive when you tax housing through a transactions tax. 

If you taxed housing just on ongoing services, as you would with the land tax, then there is not that inhibition to trade, and I think that's extremely important. 

So that's something that has existed in many reports and, interestingly, it's come up a number of times in the context of this particular crisis.

It's a secondary thing in a way, but it's an opportunity to do something about it.

I think it would be a good time to do it because I think increasingly over the next two or three years, as we see the reshaping of the economy – which I'm not suggesting will be dramatic but will be significant – I think people will want to move more. 

They should be not inhibited from doing so through a distortion tax.

For more information, contact Scientia Professor of Economics John Piggott, Director of The ARC Centre of Excellence in Population Ageing Research (CEPAR). You can also read Roadmap to Recovery A Report for the Nation.


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