Taxing Capital More in a Productivity Slump? Perverse Policy in Australia

Australia has endured nearly a decade of weak productivity growth, and living standards are under pressure. In this episode, Gene Tunny and John Humphreys explore the common thread connecting several major economic debates: investment and incentives. They discuss Australia's productivity slump, the Federal Government’s proposed capital gains tax changes, Brisbane’s Olympics infrastructure plans, and the challenges facing the National Disability Insurance Scheme (NDIS). Along the way, they explain why economists place so much emphasis on incentives and what current policy settings could mean for Australia's future prosperity.

Gene would love to hear your thoughts on this episode. You can email him via contact@economicsexplored.com. 

What You’ll Learn from This Episode

• Why productivity growth is the ultimate driver of long-run living standards.
• How savings, investment and innovation contribute to economic prosperity.
• The economic arguments for taxing capital gains differently from labour income.
• Whether Brisbane’s Olympic infrastructure spending is likely to address existing bottlenecks.
• Why economists place so much importance on incentives when designing public policy.

Timestamps

• Introduction to episode on Capital Gains Tax policy change and Productivity Slump (0:00)
• Economic Performance and Productivity (4:55)
• Capital Gains Tax Proposals (14:24)
• Economic Theory and Capital Taxation (24:28)
• Olympics Infrastructure and Public Investment (29:37)
• National Disability Insurance Scheme (NDIS) (38:22)
• Investment and Incentives in Government Programs (44:12)

Links relevant to the conversation

Australian Taxpayers’ Alliance livestream, Thursday 11 June, “Tax blunders & shrinking economy || #45”:

https://www.youtube.com/live/K1Fsnjeg3mM?si=jKrxraJJlT0DzLfd

Richard Holden’s opinion piece “There is no economic case for taxing work and investment the same” (paywalled):

https://www.afr.com/policy/economy/there-is-no-economic-case-for-taxing-work-and-investment-the-same-20260528-p601ke

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