Most read
Pros and cons: Working in the gig economy...
Pros and cons: Working in the gig economy...
Latest Podcast
Is the market overheating; should ETFs take your fancy, and what’s happening t...
Is the market overheating; should ETFs take your fancy, and what’s happening t...
Resources
There is $17.5 billion in lost and unclaimed super across ...
There is $17.5 billion in lost and unclaimed super across ...
Invest
Indebted until 2056: Why we need tax reform
An 18-year-old entering the workforce in 2020 can’t expect to see another federal budget surplus until they are at least 37 years old, new modelling has revealed.
Indebted until 2056: Why we need tax reform
An 18-year-old entering the workforce in 2020 can’t expect to see another federal budget surplus until they are at least 37 years old, new modelling has revealed.
PwC has analysed government budget figures to reveal that it could take the Australian government another 19 years to return to a budget surplus due to COVID-19.
It also said that Scott Morrison and the Treasury’s aim to reach zero net debt could be 27 years away.
The big four firm’s forecasting pre-pandemic showed that the budget was projected to reach zero net debt in 2029-30, but due to ballooning deficits and the current economic climate, this will be delayed until at last 2056-57.
By the end of March 2020 – the month when the pandemic was declared in Australia – the Commonwealth’s net debt was around $430 billion, approximately $37 billion higher than the most recent end of financial year forecasts had predicted.
PwC said it expects this burden to grow even further.
As a result, that same 18-year-old cannot expect net debt in Australia to hit zero until they near the age of 55.
The grim outlook has caused the professional services giant to call for significant tax reforms and an overhaul to the Australian tax system.
Tax partner Paul Abbey said tax reform will be needed “more than ever in post-COVID-19 Australia”.
“Now is the time to be planning for comprehensive changes to the tax system.”
Despite the stance, PwC is also cautioning against acting too soon – warning that the country’s health and economic situation must be stabilised before any changes can be implemented.
According to Mr Abbey, tax reform in the midst of COVID-19’s economic shock would pose “further disruption to householders and businesses that are already being asked to change on many fronts, and may give rise to reforms that will need to be recalibrated once some stability returns”.
“But that does not mean that we should be doing nothing,” he continued.
“Now is the time to plan for reforms as we emerge from the immediate crisis.”
While yet to reveal how exactly this reform could take place, PwC has argued that reform “should be undertaken through a transparent process”.
This should further build on the public trust that the consultancy firm said “has been established in the way governments, business, unions and community groups have come together to respond to the COVID-19 crisis”.
The firm’s chief economist, Jeremy Thorpe, has also weighed in, noting the reform process needs to be seen “as fair and equitable”.
“This also means that excluding certain taxes or concessions from any review will undermine trust and affect the acceptability of any final package of reforms.”
Did you enjoy this article? You may also be interested in:
About the author
About the author
Economy
Next step of COVID recovery begins with the budget, PM says
Prime Minister Scott Morrison has his sights set on a business-led economic recovery from the COVID-19 pandemic, relying on deregulation to help grow Australian businesses. ...Read more
Economy
Frydenberg promises jobs and services budget
The federal Treasurer has announced the budget will put jobs at the forefront, with fiscal repair likely to be put on the backburner, as the country looks to recover from the first economic downturn i...Read more
Economy
6 reasons not to worry about inflation
Despite consumer expectation of strong inflation, a leading expert has noted six reasons why the world economy will not experience strong inflation growth, even with large government spending and reco...Read more
Economy
Labour market bounceback sees consumer confidence reach decade high
The end of JobKeeper and a botched vaccine rollout have not dented consumer sentiment, with strong labour market data leading to consumer confidence rising to levels not seen since the GFC recovery, a...Read more
Economy
Vaccine rollout delay could set back herd immunity by 12 months, costing billions
Australia’s delay in the vaccine rollout is tipped to cost the nation over $1.4 billion and see residents locked down for an additional 11.1 days, an industry expert has said. ...Read more
Economy
Economy may have just hit pre-COVID levels
The Australian economy is tipped to bounce back to its pre-pandemic level within weeks, according to the IMF. ...Read more
Economy
New Zealand reveals travel bubble arrangement with Australia
New Zealand Prime Minister Jacinda Ardern has announced that the country will begin a quarantine-free travel bubble with Australia within a fortnight. ...Read more
Economy
RBA reveals April cash rate call
The Reserve Bank of Australia has made its April call on the official cash rate, following its decision to cut the rate to a record low in November. ...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Economy
Next step of COVID recovery begins with the budget, PM says
Prime Minister Scott Morrison has his sights set on a business-led economic recovery from the COVID-19 pandemic, relying on deregulation to help grow Australian businesses. ...Read more
Economy
Frydenberg promises jobs and services budget
The federal Treasurer has announced the budget will put jobs at the forefront, with fiscal repair likely to be put on the backburner, as the country looks to recover from the first economic downturn i...Read more
Economy
6 reasons not to worry about inflation
Despite consumer expectation of strong inflation, a leading expert has noted six reasons why the world economy will not experience strong inflation growth, even with large government spending and reco...Read more
Economy
Labour market bounceback sees consumer confidence reach decade high
The end of JobKeeper and a botched vaccine rollout have not dented consumer sentiment, with strong labour market data leading to consumer confidence rising to levels not seen since the GFC recovery, a...Read more
Economy
Vaccine rollout delay could set back herd immunity by 12 months, costing billions
Australia’s delay in the vaccine rollout is tipped to cost the nation over $1.4 billion and see residents locked down for an additional 11.1 days, an industry expert has said. ...Read more
Economy
Economy may have just hit pre-COVID levels
The Australian economy is tipped to bounce back to its pre-pandemic level within weeks, according to the IMF. ...Read more
Economy
New Zealand reveals travel bubble arrangement with Australia
New Zealand Prime Minister Jacinda Ardern has announced that the country will begin a quarantine-free travel bubble with Australia within a fortnight. ...Read more
Economy
RBA reveals April cash rate call
The Reserve Bank of Australia has made its April call on the official cash rate, following its decision to cut the rate to a record low in November. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
