In the realm of economic reform, the pursuit of an ever-elusive finishing line is a metaphor that resonates deeply. John Howard's words, 'If you don't keep running, you don't try to reach it, then others are going to go past you,' echo through time, reminding us of the relentless pace of change. Yet, as the Albanese government navigates the complexities of economic reform, it finds itself in a paradoxical situation, where the very tools meant to drive progress may be hindering it. The numbers, like the hips in Shakira's song, don't lie. Productivity growth remains stagnant, and living standards have declined sharply since the pandemic. The International Monetary Fund's recent downgrade of Australia's economic outlook, placing it 18th out of 30 advanced countries, is a stark reminder of the challenges ahead. Deloitte's assessment of a limp economic growth over the next two years further underscores the urgency of the situation. But what makes this particularly fascinating is the interplay between economic numbers and political decisions. The budget, a map of sorts, can be manipulated to flatter the fiscal bottom line, as Sam Reinhardt, head of the Parliamentary Budget Office, astutely points out. The use of 'off-budget' investments, 'contingency reserves', and an excessive focus on marginal changes can narrow the debate, shifting attention away from the merits of policy. This raises a deeper question: How can we ensure that economic reform is not just a pursuit of an ever-receding finishing line, but a journey towards a more equitable and sustainable future? One idea that has fallen out of fashion is means testing welfare and entitlements. Since the global financial crisis and, more notably, the pandemic, governments have shied away from income or wealth-based limits on handouts. However, a new report by the Policy Institute Australia suggests that rebalancing towards better means testing could free up billions of dollars a year. Curbing access to just four big programs - childcare subsidy, parental leave pay, aged care, and pensions - for some of the most well-off taxpayers would redirect funds to those who need it the most. This is not just about ageist targeting; it's about income and wealth. The report suggests reducing thresholds for childcare subsidy and parental leave pay, redirecting funds to low-income earners. But what makes this idea particularly intriguing is the potential for a political shift. Re-introducing means testing would be politically challenging, as it goes against the current trend of handouts for all. However, as Peter Harris, a former Productivity Commissioner, points out, the natural incentives for high-income earners to return to work are already in place. The challenge lies in redistributing funds from those who don't need it to those who do. This raises a deeper question: How can we create a political environment that embraces means testing as a tool for economic reform, rather than shying away from it? In conclusion, the pursuit of economic reform is a complex journey, where the tools we use can either drive us forward or hold us back. Means testing, once a novel idea, may now be the key to unlocking a more equitable and sustainable future. But it will take a shift in political mindset and a commitment to challenging the status quo to make it a reality.
