John Humphreys

LDP President’s welcome message

Welcome to the Liberal Democrats – Australia’s only classical liberal (or libertarian) political party, and the only party that truly believes in shrinking the size of government.

The liberal tradition does not fit easily into the usual left-right spectrum. In Australia the Liberal Party (sic) has borrowed the word, and yet they pursue an uninspired big-government-conservative agenda. At the same time, in the USA the word “liberal” has been co-opted by the political left, and in the UK the term has evolved to mean something close to centrist. So what do we mean?

For the Liberal Democrats, the word “liberal” is more than just a convenient label. It is our philosophy and our reason for existing. We use the term in the classical sense of meaning “live and let live”, where people have the freedom to live their own lives as long as they respect the rights of other people to do the same. This covers traditionally “left-wing” causes such as drug law reform, same-sex marriage, and protection of privacy; and it also includes notionally “right-wing” issues such as the freedom to work, trade & invest without excessive taxes and burdensome regulation. This mix of policies may look awkward at first glance, but the consistent theme is individual liberty and scepticism of government.

2021 Liberal Democrats AGM

A bit over 20 years ago a small group of young Canberra libertarians got together at the Kingston Hotel and outlined our plans to launch a new political party. Flash forward to this year and that small group had become a national network of thousands of members, with several important electoral victories under our belt, and playing an important role in the Australian liberty movement. It was a moment worth celebrating, and thank you to everybody who came along to our 20th birthday celebration in Canberra earlier this month.

Not all tax cuts are equal

_{Published in The Canberra Times on 27 October 2019 under the title “Truth is, not all tax cuts are created equal”. Written in my capacity as Research Associate at the Centre for Independent Studies.}

TREASURY’S flawed tax model has caused the government to underestimate the benefits and overestimate the budget cost of their long-term tax reforms. This has influenced the government to pursue the wrong tax policy and delay a lever that could give productivity a much-needed boost.Their static tax model – which assumes people don’t change their behaviour at all in response to cuts – has led to the government’s structural reforms being estimated to cost $90 billion more than they actually will, and to be scheduled much later than they should be.

In reality, people respond to different tax rates in a number of ways. They may decrease their amount of saving and/or investment, shy away from new ventures, change how much they work, pursue tax minimisation schemes – or even be tempted into tax evasion.

Tax cuts are about productivity, not stimulus

_{Published in The Australian on 25 October 2019 under the title “Canberra needs to discover ‘secret’ tax cuts bonus”. Written in my capacity as Research Associate at the Centre for Independent Studies.}

Australia’s tax debate needs a reset. The government’s recent tax reform is to be commended but it was based on flawed Treasury modelling that ignored productivity and over-estimated the budget cost of tax cuts by $90bn.

The debate about tax in Australia is often framed as a contest between tax cutters and big spenders. The tax cutters argue that workers should be able to keep more of their own income and that tax cuts provide important stimulus. Their opponents insist that we need more government spending instead of tax cuts and that spending also provides important stimulus. Both sides frame their argument through the prism of stimulus. This is a mistake.

Tax cuts & economic growth

_{Published in The Australian Financial Review on 17 October 2019 under the title “Tax is the first lever the government can pull for growth”. Written in my capacity as Research Associate at the Centre for Independent Studies.}

The Australian economy has stalled. According to the most recent national accounts, Australia’s GDP per person has not increased over the past year, and the IMF predicts the stagnation will continue in the short term.

This gloomy news has led to the inevitable calls for more monetary and fiscal stimulus. But these are the wrong ideas at the wrong time.

There may be a time and place for stimulus policy. Specifically, if there is a sudden shock that decreases aggregate demand, then stimulus policies can potentially improve the situation by boosting consumption spending. But these macroeconomic tools are blunt instruments designed to create a short-term boost during an emergency — and they do nothing to improve long-term productivity.