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Not a clever country yet: Greg Smith calls for investment in knowledge economy

Publication date: 09 Nov 20 | Source: THE TAX INSTITUTE

SYDNEY, 9 November 2020: Speaking at The Tax Summit: Project Reform, Former Head of the Treasury Budget and Revenue Group, Greg Smith, said that as part of the lead up to meaningful tax reform, Australia needs to examine its investment priorities, with a focus on bolstering the knowledge-driven economy.

“Australia cannot rely on the mining industry as its sole economic advantage in the long run,” Smith said.

He explained that Australia needs to look at its other points of advantage as a society and consider the need for the public sector to contribute jointly with the private sector in the development of creative and highly skilled sectors, which he said would be necessary for the Australian economy.

“I don’t see us being a big manufacturer, I don’t see us being able to get back to being an exporter of services, which we’ve lost a fair bit of with this pandemic,” Smith said.

Instead, he said, there was potential in the knowledge-based part of the economy such as information technology, media or research and development and knowledge-based services such as education, consultancy or financial planning.

“At the moment, only 10% of our total investment is going into intellectual property. Whereas in most of the rest of the advanced world, its 20-30% of investment going into that sector,” Smith said.

“A country that invests mostly in the primary sector and in property, I don’t think is going to be able to cut it in the 2030s and 2040s without shifting investment as well.”

This focus on the knowledge economy harks back to 1990, when in a speech promising new initiatives to build on education and scientific research, Bob Hawke famously said, “No longer content to be just the lucky country, Australia must become the clever country.”

In his keynote, Smith was a realist when it came to our achievement of that goal.

“What we need to recognise is we’re not remotely clever at the moment. That is very much an aspirational stretch and somehow Australians have to wake up to the fact that it requires a combination of public and private investment to actually deliver it. Every other country in the world which is delivering on these fronts is delivering through that combination,” he said.

“Everywhere in the world which is making any sort of inroad on that do it jointly, and that’s the big mistake that Australia has made, not realizing that.”

“I actually think there will be a need for another tax reform, it’s just that it’s not going to look like the one that, unfortunately, is being called for by 99% of the people calling for tax reform at the moment. It’s going to be a very different type of tax reform. And I think it will be a public policy reform rather than just a tax reform.”

Greg Smith delivered his keynote session as part of The Tax Summit: Project Reform, an ambitious series of events, leading to a Virtual Summit this month, through which The Tax Institute is building a case for change in our tax system.

The next Focus session of The Tax Summit: Project Reform, is Innovation: creating jobs and investment on 11 November, followed by the final keynote speaker, Bernard Salt AM on 13 November 2020.


ENDS
For more information, please contact:


Kelly Emmerton – Media Contact, The Tax Institute
kellyemmerton@taxinstitute.com.au
02 8223 0029


About Greg Smith
Greg Smith began his policy advising career in housing, industry, tax, fiscal and financial system policy in 1978.
His past roles included tax policy adviser to the Treasurer (1983-86), head of Treasury Taxation Policy and
Financial Institutions divisions, Secretary to the Australian Financial System (“Wallis”) Inquiry (1996-97), head of
the Treasury Budget and Revenue Groups (1998-2004) and a member of the Future Tax System (“Henry”)
Review (2008-09). He was a member and then Chairman of the Commonwealth Grants Commission (2006-2020)
and is a member of the CEDA Council on Economic Policy.


About The Tax Institute
The Tax Institute is the leading forum for the tax community in Australia. Our reach includes membership of 12,000
tax professionals from commerce and industry, academia, government and public practice and 40,000 Australian
business leaders, government employees and students. We are committed to representing our members, shaping
the future of the tax profession and continuous improvement of the tax system for the benefit of all, through the
advancement of knowledge, member support and advocacy. Read more at taxinstitute.com.au