Federal President Josh Manuatu made the following formal submission to the Treasury as a part of the Budget process. You can read the submission on the Treasury's website here.

Introduction

The Young Liberal Movement is a federation of State and Territory Young Liberal divisions that come together as Australia’s largest youth political movement, bringing together thousands of young Australians who share our values. Our Federal President and Federal Vice President are elected annually by delegates from State and Territory divisions.

Last year, for the first time, our Movement made a Federal Budget Submission under the leadership of then President Aiden Depiazzi. We were particularly pleased to see in the last Budget, a focus on improving housing affordability for aspirational young Australians, a trial of drug testing for welfare recipients and the level of spending continue to be relatively tame. Since the Budget, we have also been pleased to see the Government move to scrap the Renewable Energy Target, enhance access to private health insurance for young Australians and to build stronger relations with fellow nations in the Anglosphere as well as a further reduction in net government debt in the latest MYEFO.

While the Movement is strongly supportive of the Federal Liberal National Government and its policy agenda, we believe that there are a number of key areas where the Government could take further action to better promote aspiration and reward for effort for young Australians and, as a result, build a better future for our nation. We strongly submit that the next Budget should:

  • take strong and effective action to further reduce the intergenerational debt burden;
  • promote economic growth by reducing the size of government and providing tax relief to, in particular, small businesses and individuals;
  • support those cultural institutions that have stood the test of time, including the free-market; and
  • abolish the Student Services and Amenities Fee.

Supporting Young Australians

As a Movement, we strongly share the Government’s belief that the best form of welfare is a job because those in work have better mental, physical and social health and are better able to contribute to their family, community and society as a whole. While we have seen a dramatic improvement in the job growth data since the Government’s election in 2013, unfortunately there are still many young Australians who are finding it difficult to find or retain work.

While clearly there are many reasons for this, many of which are not within the Government’s control, we respectfully submit that we need additional policies to promote aspiration, reduce red tape and ensure young Australians can have the best possible start in life. For instance:

  • Actively supporting young Australians who want to start a business with more information and support to navigate the labyrinth of legal requirements including promoting contracting and acting as a sole-trader as a positive path for employment;
  • Further expanding the PaTH programme to support and encourage unemployed young Australians back into the workforce by providing real skills in addition to the soft skills that so many lack;
  • Promote and encourage the take-up of apprenticeships and non-tertiary careers in recognition; and
  • Amend the school curriculum to ensure that our schools are focused on providing living and employability skills.

Intergenerational Debt

Last year, the Movement launched the Stop the Debt Bomb campaign which saw hundreds of young Australians sign on to the campaign and many people join our Movement.

While we accept that the level of debt is lower than it otherwise would be under Labor, and the Government continues to make inroads as was highlighted at MYEFO, we remain highly concerned at the peak level of debt at around $700 billion and the fact that the anticipated surplus will not meaningfully reduce that debt burden. As illustrated in the last Intergenerational Report, the debt burden from government will equate to around $150,000 for every man, woman and child in 2050, while we and most Young Australians of today are still in the workforce. In circumstances where almost 40% - the largest single line item of the Budget - is being expended on welfare, we contend that it is highly unfair and unjust for our generation to be saddled with higher taxes, a weaker economy and fewer job opportunities due to the burgeoning welfare bill of today. In short, we contend that our generation shouldn’t have to fund the excesses of today.

In addition to taking more strident action to reduce expenditure and in turn more aggressively reduce the debt burden, we suggest that the Government publish more regular data about our debt trajectory into the future. At present while detailed figures are included in the Intergenerational Report about debt projections for the next 35-40 years, we contend that it would be of benefit for information about the debt trajectory to not only be included annually in the Budget but also on the Tax Receipt provided to taxpayers each year. We believe that this important accountability measure would ensure Australians could better hold governments to account for the continued debt burden and that young Australians could be more alert to the debt that will need to be paid back by our generation.

Further, in order to take serious action on reducing the debt burden, we respectfully make a number of suggestions that build upon our previous submissions:

  • We believe that a reduction in the size of the Australian Public Service to 2005 levels is both achievable and manageable without redundancies nor legislation. This would achieve savings of at least $2.2 billion per year or $8.9 billion over the forward estimates from full implementation;
  • As mentioned, welfare payments are the largest part of the Federal Budget and, we contend, the most unfair for future generations to pay back with interest. While we recognise that most of this expenditure requires legislation, we ask that the Government consider ways to significantly reduce welfare expenditure by non-legislative means. Our Movement strongly believes that we should provide a safety-net but for many Australians our generous welfare system has become a hammock with some spending their entire lives on welfare;
  • The continued extravagance of the Australian Broadcasting Corporation and the Special Broadcasting Service has been on full display with both organisations venturing into advocacy on changing Australia Day and identity politics and even now seeking to compete on a global stage with for-profit companies such as Netflix. Given the ABC continually returns money to the Budget, clearly there is scope for a wide-scale reduction of the funding provided to these broadcasters; and
  • The Movement has repeatedly identified Australia’s foreign affairs and aid Budgets to be bloated and poorly directed. We believe there is scope to reduce this funding to ensure that all funds are directly linked to advancing Australian values or to make a proportion of the UN budget directly linked to outcomes. Other G20 countries have taken a similar approach and found savings in doing so.

If these suggestions were to be taken in full, we believe the Government could find at least an additional $6.5 billion in annual savings which would help in reducing the level of debt.

Economy and Taxation

On the whole, the Movement strongly believes that the pathway to prosperity is through a strong and robust economy and that only through fundamental economic reform will we be able to remain truly competitive in the world market.

It is regrettable that despite the lessons from the past being clear, many in the Federal Opposition and left-leaning political parties in Australia are now advocating for a return to many socialist policies and a culture of reckless spending. We strongly contend that there is no crisis of capitalism but a resurgence of socialism which must be combatted.

To ensure strong economic growth into the future, we suggest that the Government embark on wide structural economic reform including:

  • Prioritising an Anglosphere-Free Trade Deal between the nations of Australia, New Zealand, Canada and the United Kingdom which capitalises on our existing strong security ties to create a transformative economic partnership that benefits all while maintaining our sovereignty and strong borders;
  • Seeking to build stronger ties with the only free and democratic nation in the Middle East, Israel, which could be achieved with a Free Trade Deal;
  • Prioritising workplace reform to make it easier for employers to employ and easier for workers to navigate the system without needing a union representative. The urgent implementation of the Productivity Commission’s Report on Workplace Relations is vital;
  • Regulatory reform to reduce the red-tape burden in Australia, in particular for small and medium sized businesses. While the Government’s continuation of the Instant Asset Write-Off is welcome, small businesses continue to spend too much time working to comply with Local, State and Federal laws and regulations. Be it the burdensome Business Activity Statement, navigating complex and often unworkable Modern Awards or simply trying to navigate the myriad of legislative requirements;
  • Expediting the implementation of the Harper Review recommendations relating to parallel import restrictions on textbooks. It is estimated that these restrictions increase the cost of textbooks for tertiary students by up to $200 per year;
  • Reforming the charities regime to ensure that tax deductibility isn’t being used, either by stealth or openly, for political campaigning, activism or law breaking; and
  • Consistent with the Productivity Commission’s Draft Report on Horizontal Fiscal Equalisation, consider ways to ensure the federation works better with a clearer delineation of responsibilities to reduce duplication.

The Government’s strong commitment to tax cuts for businesses is welcome and we believe that there will be wider economic benefits not only for those businesses but also for workers and the economy as a whole of that reduction.

It is noted that in recent times, following the passage of tax cuts in the United States, business confidence has soared so much so that millions of additional jobs have been created, workers are receiving record pay rises and multinational tax avoidance has substantially dropped.

The nonpartisan US Congressional Joint Committee on Taxation, in studying the economic effects of the business and personal income tax cuts, has concluded that they will add an average of 0.7 per cent to the level of US gross domestic product, 0.9 per cent to the stock of capital available for investment, 0.6 per cent to the level of employment, and 0.7 per cent to the level of household consumption, relative to a baseline scenario, over the next 10 years. Failure to implement meaningful tax cuts in Australia would not only deprive this country of such an economic boon, but also put us at serious risk of capital flight as investors flock to the new low-tax business environment in the world’s largest economy.

We contend that contrary to claims from the Federal Opposition, supply-side economic reform is vital to unleashing further economic prosperity in our country. To this end, we respectfully request the Government consider further taxation reform in addition to its Enterprise Tax Plan to both reduce and simplify our tax system while ensuring a reduction in the tax burden on Australian businesses and taxpayers.

Further, we draw your attention to the Student Services and Amenities Fee which was introduced by Labor in 2012 as an attempt to reintroduce compulsory student unionism by stealth. This tax collects more than $100 million each year which has minimal oversight and is funnelled directly into student unions. While we strongly believe that the Student Tax should be abolished, we have suggested to the Government that an Independent Review be undertaken, potentially by the Auditor General or Productivity Commission to consider the governance arrangements of this tax which is being misused and abused by many.

Conclusion

We trust that this submission will be of assistance to the Government as it prepares its Budget for 2018-19 and eagerly look forward to the Treasurer delivering it in May.