Friday, October 19, 2012

Regulations that worked in 1901 do not work now

On this day in 1781 the British army in North America surrendered to George Washington at Yorktown.

Six years later an independent United States adopted the world's first modern constitution, on which Australia's 1901 Constitution was modelled.

Government regulation and taxation were the reasons behind the American colonial revolt.

Even though the taxes levied by Britain were low, the slogan ''no taxation without representation'' was persuasive.

Constitutional restraints on government — even democratic governments — are there to impede regulatory measures or tax grabs that favour some constituents at the expense of others.

But the restraints on government are not working.

In 1901 the Commonwealth spent 3 per cent of national income.

Today it taxes and spends a whopping quarter of the income that firms and individuals earn.

The Gillard Government's roll call of new and expanded taxes includes:

CARBON taxes, renewable energy requirements and spending on unbankable green schemes costing over $15 billion a year, plus a $10 billion Clean Energy Fund.

NEW taxes on mining, our most vibrant sector, now the highest in the world.

THE National Broadband Network, in which Australia is, uniquely throughout the world, reintroducing a monopoly government owned telecommunications system.

WATER buybacks in the Murray Darling that will needlessly reduce agricultural productivity.

Other big new taxpayer-slugging programs will lift schools spending, bring in a new dental care system, and raise wages for those presently on low pay in the social services sector.

On top of this spending are intensified regulatory measures.  The Commonwealth Government in 1901 had 258 pages of regulatory Acts.

Today it has more than 100,000 pages.  The Rudd/Gillard Government has introduced 20,000 regulations and regulatory changes to expand its controls over businesses and individuals.

Among the most significant are expanded environmental regulatory measures that impose high costs and project-killing delays, especially on mining and agriculture.  Recently we have seen bans on high productivity fishing trawlers.

Regulations also prevent firms from replacing unproductive employees.

That impediment on businesses apparently does not apply to the trade union movement, which is sacking supernumerary staff to focus its spending on re-electing the Gillard Government.

Regulation constraining union activity is the one area where we have seen a reduction.

The ''tough cop on the beat'' that Julia Gillard promised would replace the Australian Building and Construction Commission has proved inadequate to combat appalling conduct by picketers.

Unions are using aggressive picketing in the campaign to force firms like Grollo to hire shop steward agitators — a double whammy that makes firms pay for their own destruction.

It is an astonishing tribute to business that, in spite of government, most firms survive and some even prosper.

However, the Government's overbearing growth and support of illegitimate union activity is adding costs and suppressing opportunities for business enterprises — the only creators of sustainable jobs.

The various constitutional restraints on government that were put in place at the time of Federation have clearly failed.

Government as a regulator and spender just keeps on getting bigger.

Stagnation will be the result unless measures are taken to arrest this growth.

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