Australia’s real inflation cause? Complete lack of competition

Talk about burial. Hidden in an attachment Efficiency Commission’s Draft Proposal In order to overhaul the company tax published yesterday, the focus of the productivity round table meeting later in this month (but not) (but lack of competition in Australia.

Others impose cash flow tax and immediate investment, while exposing the curved field to reduce taxes for companies that earn less than $ 1 billion. In order to protect the threshold of 30% of the tax rate of 30% of the company, it lies in the justification of the PC as well as the need for impartiality. Because much more of the profits of these big companies are “economic rents”, that is, the profits issued by companies using their strong competitive position to remove prices.

“Permanent economic rents for a long period of time can reduce living standards and reduce economic efficiency, lower than required to provide this goods or services to the extent that they are associated with lower amounts and/or higher prices for goods or services.”

PC reference to the work carried out by economist Chris Murphy for commission and others:

Economic rent has attracted the interest of the increasing policy in recent years, various estimates have grown in both global and Australia, become more permanent and emerged in certain sectors or asset classes… Modeling (54% of the company income base for this investigation consists of an increase of economic (2018).

This seems to be solving a significant part of the debate on the causes of pandemic inflation. Those who claim that companies benefiting from high concentrated markets do not play an important role in inflation to remove Australia’s prices – such as reserve bank Financial reviewright-wing economists and business world-like. Compared to 2018, we know that there is a significant increase in profits issued by large companies as economic rents.

This “economic rents” was at higher prices that we all paid. Higher prices in supermarkets. Goug is higher flight ticket to Qantas. Higher prices for building materials. Higher power prices. Higher child care prices. And higher banking fees – high banking fees supported and supported by a substitute bank that rejects all evidence of institutional emphasis and insists that inflation is due to excessive consumer demand that requires higher interest rates.

As PC points out, the differential tax regime is not the only possible answer to this problem – the competition policy may be better. However, competition law reforms undertaken by Jim Chalmers during the last parliamentary period aim to make it difficult for more market concentration, while reversing the level of concentration that increases economic rents. And the more citizens can encourage the idea, the liquidation seems to have died with Peter Dutton’s career.

Although the government is unlikely that the PC will adopt tax changes – in part, as they will oppose large business lobby groups, such as the Business Council, Unless they see a way to play a $ 1 billion -dollar threshold – Chalmers must absolutely embrace the idea that the PC is a good way to cope with economic rents. No matter which tax changes arise from the round table meeting, productivity should slap them tax if the government does not embrace the destruction of economic rents. At least taxpayers will take back what consumers have given up.