Australia at crossroads as China boom ends

Updated 12 July 2013
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Australia at crossroads as China boom ends

SYDNEY: Australian Prime Minister Kevin Rudd said the China resources boom was over, leaving the economy at a crossroads, as he called for a new productivity pact to boost competitiveness.
In his first major policy speech since ousting Julia Gillard as leader, Rudd also urged a sharper engagement with Asia, particularly Indonesia, to help smooth the nation’s economic transition from its reliance on commodities.
“If we make the wrong decisions now, we will be living with those decisions for the decade ahead,” he said.
“The truth is, in 2013, the China resources boom is over. While the export of resource and commodity volumes are up, the prices we receive for them have now fallen almost 25 percent since their peak and may well fall further. Right now, we find ourselves at a crossover point for our national economy.”
Rudd’s comments came as Australia’s jobless rate jumped to 5.7 percent in June, its highest level in almost four years, as the mining-driven economy begins a tough diversification drive to other sources of growth.
The economy grew at a slower-than-expected rate in the first three months of the year, expanding 0.6 percent on quarter and 2.5 percent on year suggesting the decade-long mining investment boom was unwinding
“Managing this economic transition is now a core task of Australian economic policy,” said Rudd.
“Critical for jobs. Critical for infrastructure.”
He said lifting national productivity was a key priority, calling for better cooperation between business, unions and government so everyone was “pushing in the same strategic policy direction.”
“The core of this new national competitiveness agenda must be a common agreement to lift the rate of annual productivity growth from its existing level of 1.6 percent to two percent or better,” he said.
Since becoming prime minister a fortnight ago, Rudd has met four times with the Australian Council of Trade Unions and the Business Council of Australia to enlist their support for closer cooperation.
Agenda items included rising energy prices, rigidities in the labor market, business productivity, red tape, education, skills and training, infrastructure and small business.
Rudd said greater business engagement with Asia outside of the resources and energy sector was also necessary to help the economy cope.
“The truth is Australia is much under-done in Asia beyond the resource and energy sector,” he said.
“Indonesia is a classic example — an economy which by 2050 is on track to become the fourth largest economy in the world after China, India and the US. But at present, Indonesia does not fall within our top 10 trading partners or our top 20 investment destinations.”
Rudd had invited Tony Abbott to join him at the National Press Club, where he made his speech, to debate the economic future of Australia, but the conservative opposition leader declined.
The prime minister said Abbott was scared of “the public scrutiny of an economic policy debate” and branded him “Captain Negative,” suggesting he routinely talked down the economy.
Abbott, who remains the narrow favorite to win national elections later this year, responded by accusing Rudd of being all talk and no concrete policy.
“Unfortunately, Mr. Rudd has no specific announcements to make. All he can talk about is process, not change,” he said of his opponent’s speech.
’He had a plan to destroy a prime minister but doesn’t have a plan for the country,” he added, referring to Rudd’s unseating of Gillard in a Labour Party coup recently.


Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018
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Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”