Australia’s Productivity Push: Can An AI Round Table Deliver?

Can Australia successfully navigate the artificial intelligence revolution? An upcoming economic reform round table faces the daunting task of forging a path forward. This assembly of 25 citizens must tackle complex issues surrounding artificial intelligence (AI) and its impact on the nation’s workforce and economy.

The August Assembly: Aiming Beyond Tax Squabbles

Instead of becoming mired in endless debates about tax reform-a topic on which consensus often proves elusive-the round table should focus on creating effective policies relating to AI and automation.

A crucial starting point would be understanding global strategies, such as plans from the United States and China, setting the stage for informed discussions and innovative solutions. In July,2024,the round table should address critical productivity hurdles and workforce adaptation issues.

Productivity Pillars: A Foundation For Progress

To inject urgency into the proceedings, Danielle Wood, chair of the Productivity Commission, could highlight critical insights from commissioned reports and public submissions. These reports address five pillars of productivity and represent a wealth of ideas for boosting Australia’s economic performance in the age of intelligent machines.

Two Critical Tasks: Prompt engineering And Safety Net Modernization

To be truly effective, the round table needs to address two key areas:

1. Developing a national system to help businesses and employees master the art of writing effective AI prompts.
2. Modernizing the welfare safety net to alleviate fears associated with job displacement due to AI.

The current system, JobSeeker, assumes unemployment is temporary. The payment amounts are insufficient, and the requirement to apply for multiple jobs monthly is unfeasible if automation reduces available positions.

While a Universal Basic Income might be seen as too radical, the government must prepare for perhaps permanent unemployment, even if widespread job losses don’t materialize.Business leaders and employees need to embrace AI, and a robust safety net is essential for that to happen.

Tax Reform: Funding The Future

Addressing the above needs will require increased tax revenue. This could be achieved through a new wealth or inheritance tax, or by increasing the Goods and Services Tax (GST). Australia has previously implemented major tax reforms during periods of revenue shortfall,introducing capital gains and fringe benefits taxes in 1985 and the GST in 2000.

A plan to reduce tax breaks on high superannuation balances faced strong opposition, suggesting that new wealth or inheritance taxes could be difficult to implement. Increasing the GST rate, moving closer to the global average of 15-20%, may be the most viable option.

A Smarter GST: The Holden-Dixon Proposal

One innovative solution to the regressive nature of GST comes from UNSW Professors Richard Holden and Rosalind Dixon. They propose increasing the GST rate to 15% on all goods and services but only levying it on annual spending above $12,000.

this would be implemented by refunding each taxpayer 15% of $12,000, or $1,800 annually, in two installments of $900 directly into their bank accounts.

According to Holden and Dixon’s models,this higher GST on a broader base would double GST revenue from $90 billion to $180 billion. After refunds, the net extra revenue of $45 billion could fund income tax cuts and eliminate the budget deficit.

The specific threshold of $12,000 for GST-free spending is open for debate,but the concept deserves serious consideration at the round table.

Time For Action

With these foundational issues addressed, the round table can then focus on the core challenges and opportunities presented by AI and robotics.

What steps do you think Australia should take to prepare its workforce for AI? Share your thoughts in the comments below!