Economics & Taxation

How wealth is created, kept, and distributed within the nation-through secure property, sound money, and predictable rules that respect the same inherent dignity and limited-government logic as Foundational Values.

Key Takeaways

Australia’s tax and transfer system is highly progressive and complex, with bracket creep, heavy corporate rules, and distortionary state taxes that punish work and investment.
A flat low income and corporate tax, broad consumption tax, and constitutional bans on new wealth or inheritance taxes would simplify compliance and sharpen incentives.
Fiscal rules-balanced budgets except in emergencies, a debt ceiling, and transparent scoring-counter the political urge to spend and borrow against future generations.
Minerals and hydrocarbons should be framed as sovereign citizen assets: predictable royalties, a ring-fenced sovereign fund, and dividends beat ad hoc state regimes and offshore rent capture.
Regulatory sunsets, radical deregulation, and a Reserve Bank limited to price stability (no QE, no debt monetisation) reduce hidden taxes on business and protect the value of money.

Current Australia

New Australia

📉 Progressive Taxation & Bracket Creep

Personal income tax is highly progressive (up to 45% plus Medicare levy), embedded in a dense Income Tax Assessment Act 1997 regime of deductions, offsets, and thresholds, while bracket creep raises effective rates as nominal wages rise; corporate tax sits at 30% (25% for base rate entities) with heavy integrity rules.

Top marginal rate: Up to 45% personal income tax plus Medicare levy.
ITAA 1997: The Income Tax Assessment Act 1997 and amendments create a complex web of deductions, offsets, and thresholds.
Bracket creep (fiscal drag): Effective tax rates rise automatically as wages increase with inflation even when real living standards are flat.
Corporate tax: 30% standard rate (25% for base rate entities) with complex integrity measures.

📈 Simplified Flat Tax

Replace the system with a single low flat rate on personal and corporate income (about 15-20%), almost no deductions, abolish stamp duties, payroll tax, and most state taxes in favour of a broad consumption tax, and constitutionally bar progressive taxation plus new wealth or inheritance taxes.

Flat rate: One low flat rate on personal and corporate income (ideally 15-20%) with very few deductions.
State taxes: Abolish stamp duties, payroll tax, and most state taxes, replaced by a broad-based consumption tax.
Constitutional lock: Prohibit progressive taxation and new wealth or inheritance taxes at the constitutional level.

Why this is better

Progressive code: Punishes success, drives massive compliance costs (billions annually), and distorts behaviour through loopholes.
Flat tax: Maximises incentives to work, save, and invest.
Removing distortive taxes: Cuts deadweight loss so the economy allocates resources by efficiency, not political favouritism.

In context

Peer

Top marginal rate: AU / US / NZ / Estonia 47% / 37% / 39% / 20% flat

AU's 45% (plus 2% Medicare) is among the higher personal income tax rates in the OECD. Estonia's long-running flat tax is the clearest live example of a successful broad-based flat system.

reviewed 2026-04-19
Over time

Bracket creep — 40% threshold 45% earners in 1990 → ~25% now

Without indexation, wage growth drags a rising share of taxpayers into higher brackets. The top personal rate applies to a far larger slice of full-time earners today than when it was first set.

reviewed 2026-04-19
Reframe

Cost of the ITAA complexity ~A$40B / yr compliance

Treasury and PC work put total tax-system compliance cost at ~2% of GDP — a recurring drag larger than most line-item programs the system funds.

reviewed 2026-04-19

Implementation

🗳️ Referendum

Levels 🏛️ Federal 🏢 State 🤝 Intergovernmental

Affects

Income Tax Assessment Act 1997 (Cth) (personal and corporate rate schedules)
A New Tax System (Goods and Services Tax) Act 1999 (Cth)
State stamp duty and payroll tax legislation (all states and territories)

Constitutional prohibition on progressive taxation and new wealth or inheritance taxes requires a referendum under s 128, enacted within the new constitutional framework (see Government Structure › The Constitution); abolition of state stamp duties and payroll taxes requires intergovernmental agreement backed by replacement revenue from an expanded consumption tax base.

Requires Government Structure › 📜 The Constitution

🏦 Large Welfare State & Debt

Transfer spending (Age Pension, DSP, JobSeeker, Family Tax Benefit, NDIS, etc.) sits alongside government outlays often above 25-30% of GDP, chronic deficits, and rising debt-IMF general government gross debt sits around 50-55% of GDP, while Commonwealth net debt is projected to peak around 35-38% of GDP (MYEFO 2025-26)-with revenue leaning on mining royalties and personal income tax rather than broad consumption taxes. Headline fiscal aggregates move with each Treasury Budget / MYEFO; treat percentages as indicative and check the latest chart pack.

Transfers: Age Pension, Disability Support Pension, JobSeeker, Family Tax Benefit, NDIS, and related programs.
Spending scale: Government spending consistently exceeds 25-30% of GDP.
Deficits and debt: Persistent budget deficits and rising debt-IMF gross general government debt around 50-55% of GDP; Commonwealth net debt projected to peak at ~35-38% of GDP (MYEFO 2025-26).
Revenue mix: Heavy reliance on mining royalties and personal income tax rather than broad-based consumption taxes.

📜 Constitutional Balanced Budget & Debt Limit

Enshrine a balanced-budget rule (revenues ≥ outlays except in declared emergencies requiring a supermajority), cap debt-to-GDP (for example at 30%), and require that spending above baseline be offset with transparent cuts or revenue scored by an independent fiscal office.

Balanced budget amendment: Revenues must match or exceed expenditures except in declared emergencies (requiring supermajority approval).
Debt ceiling: Strict debt-to-GDP ceiling (e.g. 30%).
Offsets and scoring: Spending above a baseline must be offset by cuts or new revenue, with transparent scoring by an independent fiscal office.

Why this is better

Political incentives: Without structural restraint, politicians face pressure to expand spending and borrow to buy votes, burdening future generations.
Evidence: Jurisdictions with similar fiscal rules tend to show better discipline.
Outcomes: Forces prioritisation and blocks the slow creep toward an unsustainable welfare state.

Implementation

🗳️ Referendum

Levels 🏛️ Federal

Affects

Commonwealth of Australia Constitution Act 1900, s 81 (Consolidated Revenue Fund)
Charter of Budget Honesty Act 1998 (Cth)
Social Security Act 1991 (Cth)

A constitutional balanced-budget amendment and debt ceiling require a referendum under s 128, enacted within the new constitutional framework (see Government Structure › The Constitution); the independent fiscal office and offset rules can be established by primary legislation amending the Charter of Budget Honesty Act 1998. This fiscal guardrail is itself a prerequisite for the welfare spending cap proposed in Welfare & Social Security.

Requires Government Structure › 📜 The Constitution

⛏️ Mining Royalties & Resource Rents

Australia is among the world's largest miners of iron ore, coal, LNG, gold, and critical minerals. Royalties are mostly state-based (ad valorem or specific, e.g. WA iron ore ~7.5% escalating with price); the federal PRRT covers offshore oil and gas; the RSPT 2010 super-profits push was repealed after massive uncertainty; much rent from foreign-owned operations flows overseas; sovereign wealth and intergenerational ring-fencing remain minimal.

Scale: Among the world’s largest miners of iron ore, coal, LNG, gold, and critical minerals.
State royalties: Primarily state-based-ad valorem or specific rates varying by commodity and jurisdiction (e.g. Western Australia’s iron ore royalty ~7.5%, escalating with price).
Federal layer: Petroleum Resource Rent Tax (PRRT) on offshore oil and gas.
Policy history: Federal resource super-profits taxes (RSPT 2010, later repealed) created massive policy uncertainty.
Who benefits: Much revenue from foreign-owned operations flows overseas with limited direct compensation to Australian citizens.
Sovereign wealth: Little ring-fencing for sovereign wealth or intergenerational equity.

⛏️ Sovereign Resource Ownership & Citizen Compensation

Constitutional recognition that Australians own subsurface minerals; simple competitive royalty and rent settings; mandatory flows into a transparent Sovereign Australian Resources Fund; annual dividends or super/pension top-ups; preferences for Australian-owned operators and domestic processing; foreign owners pay full economic rent without loopholes.

Constitutional ownership: The people of Australia own mineral resources in the ground-explicitly recognised in the Constitution.
Rates: Royalties and resource rent taxes at simple, predictable, competitive levels (e.g. 10-15% ad valorem baseline plus a resource rent on profits above a normal return threshold).
Sovereign Australian Resources Fund: A significant share of revenue mandatorily directed to a fund modelled on Norway / Alaska principles, with transparent governance.
Citizen return: Annual citizen dividends or contributions to superannuation / pensions for all adult Australians.
Domestic industry: Preferential treatment and tax incentives for Australian-owned operators and domestic value-adding / processing.
Foreign investors: Full economic rent with no loopholes.

Why this is better

Beneficiaries: Australians, not foreign multinationals or state bureaucracies, should be the primary beneficiaries of non-renewable resources left by nature.
Current system: Ad hoc, state-varying royalties with minimal direct citizen return let excess profits flow offshore while future generations inherit depleted assets and little compensation.
Corporate capture sustains the giveaway: Resource companies that pay almost no tax donate millions to both major parties, employ former ministers and regulators, and spend millions more on propaganda campaigns telling Australians the status quo is normal. The policy failure is not accidental; it is sustained by the influence mechanisms addressed in Public Integrity-and resource taxation reform will not hold unless the revolving door, donation pipeline, and lobbying regime are reformed in parallel.
Reform package: Clear sovereign ownership, simple rules, and a dedicated fund paying direct dividends deliver fair compensation, cut political rent-seeking, support efficient extraction and downstream industry, and build national wealth.
Framing: Resource nationalism that favours Australian citizens without destroying investment incentives.

In context

Precedent

Norway Government Pension Fund Global ~US$1.7T

The world's largest sovereign wealth fund, built from oil revenues of a country with a smaller resource base than AU. Transparent governance, strict fiscal rule (only the real return — ~3% — may be spent), and explicit intergenerational purpose.

Source reviewed 2026-04-19
Peer

Alaska Permanent Fund ~US$80B, pays annual citizen dividend

A US state model where a share of oil revenue funds an explicit per-resident dividend. Shows citizen-level resource rent return is administratively feasible in a federal system.

Source reviewed 2026-04-19
If nothing changes

If AU had saved at Norway's rate since 2000 ~A$500B+ fund today

Rough order-of-magnitude: taking the Norway savings rate against AU resource royalties and applying a 3% real return compounds to several hundred billion — wealth that was instead largely absorbed into recurrent spending.

reviewed 2026-04-19

Implementation

🗳️ Referendum

Levels 🏛️ Federal 🏢 State 🤝 Intergovernmental

Affects

Petroleum Resource Rent Tax Assessment Act 1987 (Cth)
Minerals Resource Rent Tax Repeal and Other Measures Act 2014 (Cth)
State mining royalty legislation (e.g. Mining Act 1978 (WA))
Foreign Acquisitions and Takeovers Act 1975 (Cth)

Constitutional recognition of citizen ownership of subsurface minerals requires a referendum under the new constitutional framework (see Government Structure › The Constitution); the Sovereign Australian Resources Fund, royalty harmonisation, and citizen dividend would be established by federal legislation and intergovernmental agreements with the states that currently collect royalties. The Fund must be operational and receiving revenue before downstream appropriations (e.g. the regional connectivity fund in Infrastructure & Transport) can draw on it.

Requires Government Structure › 📜 The Constitution

📋 Regulatory Burden & Red Tape

Federal and state rules span environment, labour (Fair Work Act 2009), planning, and licensing in thousands of pages, imposing high compliance costs on small business; stamp duty, payroll tax, and similar levies distort choices; Australia underperforms its potential on OECD-style ease-of-doing-business metrics.

Volume: Thousands of pages of federal and state regulation across environment, labour (Fair Work Act 2009), planning, and licensing.
Small business: Compliance costs fall disproportionately on small businesses.
Distortionary taxes: Stamp duties on property transfers, payroll taxes, and other state taxes skew economic decisions.
International benchmarks: OECD rankings show Australia lagging in ease of doing business relative to potential.

🗑️ Radical Deregulation

Sunset regulations after 5-7 years unless Parliament reauthorises them after rigorous cost-benefit analysis; slash or replace the Fair Work Act, environmental approvals (one-stop shop, strict timelines), and most occupational licensing; shift the burden of proof to regulators to show necessity.

Sunset: All regulations expire after 5-7 years unless reauthorised by Parliament following rigorous cost-benefit analysis.
Regulatory budget (one-in, two-out): No new regulation may be introduced without removing existing rules of equal or greater compliance cost; the long-term target is net reduction, modelled on the UK's "one-in, two-out" and Canada's "one-for-one" rules. An independent scorekeeper (the reformed Productivity Commission) tallies compliance costs so politicians and agencies cannot game the count.
Major simplification: Abolish or drastically simplify the Fair Work Act, environmental approvals (one-stop shop, strict timelines), and occupational licensing for most professions.
Burden of proof: Regulators must demonstrate necessity-not applicants prove harmlessness by default.

Why this is better

Hidden tax: Regulatory accumulation acts like an invisible tax on entrepreneurship and innovation.
Small firms: Spend disproportionate time on compliance instead of value creation.
Sunset and analysis: Sunset clauses and rigorous review curb bureaucratic empire-building and ensure only demonstrably beneficial rules survive-unleashing productivity growth.
Regulatory budget logic: Sunsets deal with the existing stock of rules periodically; a one-in, two-out discipline constrains the flow of new rules in real time, so the system trends leaner year by year without requiring a periodic political crisis to force a clean-out.
Regulations as power structure: Regulatory accumulation is not just a hidden tax-it is a self-reinforcing power structure. Every regulation creates or empowers an institution with an interest in its own perpetuation; deregulation therefore means dismantling not only rules but the institutional incentives to resist reform.

Implementation

📜 Legislation

Levels 🏛️ Federal 🏢 State 🏘️ Local 🤝 Intergovernmental

Affects

Fair Work Act 2009 (Cth)
Environment Protection and Biodiversity Conservation Act 1999 (Cth)
Legislation Act 2003 (Cth) (sunsetting provisions)
State and territory occupational licensing legislation

Sunset clauses and the one-in-two-out regulatory budget can be legislated federally by amending the Legislation Act 2003; major simplification of the Fair Work Act and EPBC Act requires new primary legislation; state licensing reform requires parallel state action or intergovernmental agreement.

💰 Monetary Policy & Central Banking

The RBA (Reserve Bank Act 1959) targets inflation with wide discretion, used large-scale QE during COVID, faces no constitutional limit on money creation or debt monetisation, and Fair Work Commission processes inject union-influenced wage rigidities into labour markets.

Reserve Bank of Australia: Operates under the Reserve Bank Act 1959 with a discretionary inflation-targeting framework.
Quantitative easing: COVID-era QE expanded the balance sheet sharply.
No hard limits: No constitutional restraint on money creation or debt monetisation.
Labour institutions: Union influence on wage setting via the Fair Work Commission distorts labour markets.

🏦 Sound Money & Limited Central Bank

Narrow the RBA constitutionally to long-run price stability only (no employment or housing goals), ban QE and direct government financing, and encourage competing private currencies and sound-money norms.

Mandate: Constitutional constraints limiting the RBA to long-term price stability only-no employment or housing targets.
Prohibitions: Ban quantitative easing and direct financing of government debt.
Competition: Encourage competing private currencies and sound money principles.

Why this is better

Crisis policy: Expansive monetary policy has distorted asset prices, hurt savers, and enabled fiscal profligacy.
Narrow mandate: Stops the bank becoming a tool of government spending.
Sound money: Protects wages and savings, underpinning long-term planning and capital accumulation.

Implementation

📜 Legislation ⚠️ Some provisions may also require a constitutional referendum

Levels 🏛️ Federal

Affects

Reserve Bank Act 1959 (Cth)
Commonwealth of Australia Constitution Act 1900, s 51(xii)-(xiii) (currency and banking powers)

Narrowing the RBA mandate to price stability and banning QE and direct government financing can be achieved by amending the Reserve Bank Act 1959 - the core reform is statutory. An optional further constitutional lock on money creation, enacted through a later referendum under s 128, can entrench the regime against easy reversal but is not required for the reform to take effect.

💸 Vertical Fiscal Imbalance

Australia has one of the most vertically imbalanced federations in the developed world: states collect roughly 15% of total tax revenue through their own instruments (stamp duty, payroll tax, land tax, gambling taxes) while depending on the Commonwealth for approximately half their funding through GST distributions and tied grants-leaving state governments fiscally dependent on Canberra and undermining the subsidiarity the Constitution supposedly protects.

Revenue asymmetry: The Commonwealth collects income tax, company tax, GST, and excise-the major revenue bases-while states rely on narrow, distortionary taxes (stamp duty, payroll tax, insurance levies) and federal transfers.
GST distribution: GST revenue is collected federally and distributed to states through the Commonwealth Grants Commission's horizontal fiscal equalisation (HFE) process; the formula is opaque, politically contested, and redistributes from high-performing states (WA, NSW) to weaker ones.
Tied grants: A large share of federal funding comes with conditions that dictate how states may spend it-health funding agreements, education funding conditions, infrastructure grants-giving Canberra effective policy control over nominally state responsibilities.
Political dependence: States that depend on Canberra for revenue cannot meaningfully resist federal policy preferences; fiscal dependence turns subsidiarity into a fiction.
Reform paralysis: Abolishing stamp duty and payroll tax (as proposed in other sections of this manifesto) removes the states' remaining own-source revenue without a guaranteed replacement, worsening the imbalance unless explicitly addressed.

🏛️ Fiscal Federalism & State Revenue Independence

A constitutionally guaranteed, formula-driven share of consumption-tax revenue flows automatically to states; states may levy a capped flat-rate land-value tax as own-source revenue; tied grants are abolished in favour of unconditional block grants; and horizontal fiscal equalisation is simplified to a transparent, rules-based formula.

Guaranteed consumption-tax share: The Constitution guarantees that a fixed percentage of all consumption-tax revenue (e.g. 50%) flows automatically to the states, distributed by a transparent population-and-need formula-not at the discretion of the Treasurer or subject to annual political negotiation.
State land-value tax: States may levy a capped flat-rate land-value tax (LVT) as their primary own-source revenue, replacing abolished stamp duties and payroll taxes; the rate is capped constitutionally (e.g. no more than 1% of unimproved land value) to prevent confiscatory taxation while providing a stable, non-distortionary revenue base.
No tied grants: All federal transfers to states are unconditional block grants; the Commonwealth sets outcome standards (e.g. minimum health and education metrics) but does not dictate how states spend the money-genuine subsidiarity means trusting states to allocate resources according to local priorities.
Simplified equalisation: Horizontal fiscal equalisation is replaced by a simple, transparent formula based on population, remoteness, and a narrow measure of fiscal disability-no longer a black box that punishes productive states or rewards rent-seeking.
Fiscal transparency: Both the Commonwealth and states publish real-time fiscal dashboards showing revenue collected, transfers made, and outcomes achieved-citizens can see exactly where the money goes.

Why this is better

Subsidiarity requires fiscal independence: A state that depends on Canberra for half its revenue is not an independent level of government; it is a branch office. The rest of this manifesto proposes devolving real power to states-but devolution without fiscal capacity is meaningless.
Resolving the tension: This manifesto proposes abolishing stamp duties and payroll taxes (Economics, Section 1) while simultaneously strengthening state autonomy (Government Structure); without a guaranteed replacement revenue mechanism, those proposals are contradictory. This section resolves the tension explicitly.
Land-value tax efficiency: A flat-rate LVT is among the least distortionary taxes available; it does not penalise labour (like payroll tax), transactions (like stamp duty), or investment (like capital gains tax)-it taxes the unimproved value of land, which cannot be moved, hidden, or reduced by productive effort.
Ending the bargaining game: Automatic, formula-driven transfers replace the annual political theatre of intergovernmental funding negotiations, where states lobby, threaten, and trade favours for revenue that should be structurally guaranteed.

In context

Peer

State/provincial own-source revenue: AU vs Canada vs US ~15% / ~50% / ~50%

AU has among the largest vertical fiscal imbalances in the federated world. Canadian provinces and US states both collect roughly half of total tax revenue directly, retaining meaningful policy independence.

reviewed 2026-04-19
Precedent

Germany's Finanzausgleich

Germany's fiscal equalisation is constitutionally bounded and formula-based, combining a per-capita baseline with a transparent adjustment for fiscal capacity. It shows how horizontal equalisation can exist without the discretionary ad-hocery of AU's current arrangement.

reviewed 2026-04-19

Implementation

🗳️ Referendum

Levels 🏛️ Federal 🏢 State 🤝 Intergovernmental

Affects

A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST distribution)
Federal Financial Relations Act 2009 (Cth)
Commonwealth Grants Commission Act 1973 (Cth)
State stamp duty and payroll tax legislation (all states and territories)

Constitutional guarantee of the consumption-tax share and cap on state LVT rates requires a referendum under s 128, enacted within the new constitutional framework (see Government Structure › The Constitution) which also embeds subsidiarity and state fiscal independence; abolition of tied grants and simplified equalisation formula can be legislated by amending the Federal Financial Relations Act 2009 and Commonwealth Grants Commission Act 1973; state LVT enabling legislation enacted by each state.

Requires Government Structure › 📜 The Constitution

Sources

Income Tax Assessment Act 1997 (Cth) - Federal Register of Legislation · accessed 2026-04-12
Reserve Bank Act 1959 (Cth) - Federal Register search · accessed 2026-04-12
Fair Work Act 2009 (Cth) - Federal Register of Legislation · accessed 2026-04-12
Treasury - Australian Government Budget · accessed 2026-04-12
Reserve Bank of Australia - About monetary policy · accessed 2026-04-12