Economists welcome budget and reply, even if they don't like every policy

Australian economists have largely welcomed the federal government's recent budget, viewing it as a necessary attempt to tackle long-standing national problems, even as they express reservations about specific policy details. The budget, released nearly two weeks ago, has been met with a concerted media campaign against some of its proposed changes.

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We've failed to tackle a series of chronic problems on a whole series of fronts. Maybe the rise of China allowed us to gain income as a nation that we then parcelled out, one way or another, and it made our political class a bit lazy. But for whatever reason, we haven't changed enough in 20 years, and that's not the sign of a healthy society.

Independent economist Chris Richardson stated that Australia's tax debate has been stagnant for too long, expressing satisfaction that both the governing Labor party and the opposition Coalition are now discussing "bold tax ideas." He warned that the nation is becoming "brittle" and needs significant change, citing the rise of One Nation votes as an indicator. Richardson specifically favored reforming the 50 percent capital gains tax discount, suggesting income averaging as a preferable alternative to a 30 percent minimum tax.

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Look at the rise of the One Nation vote. We're getting brittle. Something has to change.

Ken Henry, a former Treasury secretary, also commended the budget for addressing issues ignored for years, particularly focusing on restoring "intergenerational equity." He approved of the efforts to assist first-home buyers and address income distribution through discretionary trusts, which he believes impacts the tax system's integrity. However, Henry cautioned that the current budget represents only a step, and "a much bigger tax reform package" will still be required.

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I like the fact that the tax reform agenda is focused on restoring some measure of intergenerational equity.

Both economists acknowledged that some budget proposals might not be popular with the public. Richardson admitted that Australians "haven't 'voted in' some of the budget's policy proposals." The ongoing debate highlights a tension between the need for structural economic reform and public acceptance of potentially unpopular policy changes. The budget's success, according to Richardson, hinges on Australia's capacity for such change.

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In particular, dealing with opportunities for aspiring first home owners, and also dealing with income going through discretionary trusts, which has been an issue for the integrity of the tax system.