OECD praises NSW, Victoria for ending zero Covid but says GST will have to rise to fund lockdowns

A stark warning that Australia will have to raise TAXES to pay off its $1 trillion lockdown debt – as Gladys Berejiklian and Daniel Andrews end ‘Covid zero’

  • The OECD has given special mention to the roadmap of NSW Prime Minister Gladys Berejiklian
  • It praised her and Victoria’s Daniel Andrews for abandoning the zero-covid idea
  • But it warned Australia would have to raise the GST to pay for the lockdowns










An influential global organization has praised Australian state leaders for abandoning their zero-Covid strategy – but has warned the country will have to raise the GST to pay for the lockdowns.

NSW Premier Gladys Berejiklian has pledged to allow pub and restaurant visits once 70 percent of the working-age and adult population is fully vaccinated as part of a roadmap to reopen the economy.

With Sydney residents likely to enjoy more freedoms from mid-October, the Paris-based Organization for Economic Co-operation and Development (OCED) has praised Victoria’s Daniel Andrews for following Ms Berejiklian’s lead.

“In Australia, the recent outbreak of the Covid-19 Delta variant has prompted the government to adjust its public health response,” it said.

“Instead of trying to suppress the virus (‘zero tolerance’), efforts are now being made in New South Wales and Victoria to contain the virus, along with a more active campaign to vaccinate the population.”

The Paris-based OECD has praised NSW Prime Minister Gladys Berejiklian for abandoning its zero-Covid strategy, but warned Australia will have to raise the GST to pay for lockdowns

New Zealand was not specifically mentioned, but the OECD Rich Country Club was subtly engaged in Prime Minister Jacinda Ardern’s zero-covid strategy.

Labor Prime Ministers in Western Australia and Queensland, Mark McGowan and Annastacia Palaszczuk, are pursuing the same goal.

Even before Sydney and Melbourne went into harsh lockdowns, the federal treasury estimated in the May budget that Australia’s gross public debt would exceed $1 trillion by June 2023, representing 48.6 percent of the economy.

The $161 billion deficit for fiscal year 2020-21 made up 7.8 percent of the economy, the highest level since World War II.

Huge spending programs for welfare measures such as wage subsidies for JobKeeper mean that Australia will have budget deficits for the foreseeable future.

The OECD said the goods and services tax should be increased from the current 10 percent, a level that has remained unchanged since its introduction in July 2000.

As the federal government collects the GST, the proceeds are returned to the states and the OECD said consumption taxes would have to rise to pay off the debt incurred by multiple lockdowns.

“Another legacy of the pandemic will be higher national debt,” it said.

With Sydney residents likely to enjoy more freedoms from mid-October, the OECD has praised Victoria's Daniel Andrews for following New South Wales' lead

With Sydney residents likely to enjoy more freedoms from mid-October, the OECD has praised Victoria’s Daniel Andrews for following New South Wales’ lead

Tax reform will be needed to reduce Australia’s reliance on taxing personal incomes, leaving public finances vulnerable to an aging population.

‘That could be done by increasing the rate of the goods and services tax or broadening the base.’

The OECD called for more income tax cuts and cuts in pension tax breaks and capital gains tax cuts for those selling real estate or stocks.

It also praised a NSW proposal to replace stamp duty on property purchases with land tax.

With Sydney on lockdown since June 26, the Australian economy is expected to contract in the September quarter.

Lockdowns are costly and drive up the national debt.  The OCED says Australia will have to raise the GST above the existing 10 per cent rate to pay its lockdown debt (pictured is police in Merrylands in Sydney's west)

Lockdowns are costly and drive up the national debt. The OCED says Australia will have to raise the GST above the existing 10 per cent rate to pay its lockdown debt (pictured is police in Merrylands in Sydney’s west)

But the Reserve Bank of Australia expects the economy to grow strongly again in the December quarter, as NSW and Victoria ended or eased lockdowns.

Australians are more optimistic as the two largest states point out ways to return liberties.

Consumer confidence from the Westpac-Melbourne Institute for September showed a reading that was 13.2 percent higher than a year ago, when only Melbourne, not Sydney, was locked.

CommSec senior economist Ryan Felsman said news of new vaccines and roadmaps for reopening had boosted morale, despite continued high cases.

“Aussies remain resilient despite extended lockdowns in our largest cities and rising new numbers of Covid-19 Delta cases,” he said.

“The accelerated vaccine roll-out and rapid supply of Pfizer and Moderna vaccines – especially for younger Australians – appear to have boosted morale as state governments announce preliminary roadmaps out of lockdowns.”

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