catallaxy files

catallaxy in technical exile

Timing out big government

with 37 comments

Thoughtful lefty Robert Merkel blogs on some reforms proposed by the Victorian Liberals of which the most impressive is the idea of incorporating a 10 year sunset clause on all legislation. In the words of the Liberal press release – ‘if after 10 years the legislation is no longer supported by both House of Parliament it will no longer be Victorian law.’

Robert has copped some flak from LP readers for suggesting this idea may have some merit. From a libertarian and economic rationalist perspective I’d say it’s a no-brainer. The Productivity Commission, if I recollect correctly, has also argued the case for sunset clauses. I say they should be extended to all legislation, Federal, State and Territory. The case for sunset clauses rests on the sound principles that
1) The burden of proof should always be on the proponents of government intervention when one takes into account the relative paucity of true and substantial market failures, the costs of implementing a legislation including the distortionary effects it may have on otherwise working markets and deadweight losses imposed by taxes to fund the working of the goverment intervention and the fact that even imperfect markets may be preferable to imperfect government legislation which crowds out market solutions that may otherwise have evolved over time;
2) Even when this burden of proof has been met in the past, the need for government intervention to correct ‘market failures’ can very quickly become outdated because of technological progress, in particular technological process that leads to the reduction in transaction costs thereby facilitating efficient Coasian bargaining.

Frankly I don’t even regard sunset clauses as a terribly radical measure. Why should proponents of government intervention be afraid to resubmit their ideas to the test periodically? If the regulation is as good and necessary as they claim it is, it will survive unscathed given that legislators and the regulatory bureaucracy which will inevitably lobby them usually have a vested interest in expanding rather than cutting the scope of regulation anyway. There is also going to be an inherent bias towards more regulation than is efficient given the presence of concentrated benefits enjoyed by the beneficiaries of inefficient regulation and diffused costs suffered by the general public. Sunset clauses just go some way towards correcting this asymmetry.

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Written by Admin

November 21, 2006 at 8:50 pm

Posted in Uncategorized

37 Responses

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  1. What about criminal law (murder, rape and all these things)? Also sunset clauses?

    Boris

    November 21, 2006 at 11:05 pm

  2. the only reason we have big Government is because most of the electorate want it.

    This means this proposed legislation has little support and is therefore redundant

    Bring Back CL's Blog

    November 21, 2006 at 10:14 pm

  3. Right, so say the business friendly government of the day implements legislation ensuring that mining companies have good, secure title to land that would otherwise be subject to native title claims. The legislation overturns specific High Court common law interpretations that would otherwise give title to big chunks of land to local Aboriginal groups. It’s controversial legislation and heavily opposed by the opposition and particularly the Greens.

    A Canadian mining company is thinking of building a huge copper mine on some of this statutorily protected land. The mine is projected to be one of the biggest copper finds ever, but it is very close to some sacred Aboriginal carvings and the habitat of an extremely rare frilled lizard. On the other hand, over the life of the mine it’s expected that thousands of people will be employed and billions of dollars injected into Australia’s economy.

    So the company’s lawyers go to the board committee that has responsibility for signing off on major investments. And the lawyers tell the board that the entire investment depends on the company having secure leasehold title to the land and its mineral resources.

    But the legislation that ensures the security of that title automatically expires in five years’ time, and the entire investment will be worthless unless new legislation is enacted that has a similar effect to the current legislation. It’s projected that the Greens have a 10% chance of holding the balance of power in the Senate after the next election, and they have sworn to do everything they can to bring down any government that does not cooperate with them on land rights and environmental protection issues.

    Now in this scenario do you think that having a rule that all legislation sunsets after 10 years makes the board relatively more or less likely to sign off on the proposed investment?

    The answer is that the sunset rule would make the investment less likely. Same goes for any investment that depends on the statutory protection of property rights: some examples off the top of my head being a joint venture that requiries licensing of IP under copyright laws, a takeover of a retailer the profitability of which depends on existing workplace relations laws continuing in force, an investment in a startup that requires existing tax incentives to remain in place.

    It’s a no-brainer. The sunset rule will necessarily lead to greater regulatory uncertainty. Regulatory uncertainty tends to reduce the amount of economic growth that would otherwise occur. Therefore the sunset rule will tend to impede investment and economic growth. QED.

    The sunset rule is intended to, and does, make legislation less stable and more uncertain. It therefore makes property rights guaranteed under such legislation less stable and more uncertain.

    Why do you libertarians want to undermine property rights?

    The sunset rule will also, as the above hypothetical demonstrates, significantly shift power within the legislature. It will give a balance of power wielding minor party a veto not only over proposed legislation but over all existing legislation as well. Power will shift significantly from the House of Reps to the Senate, further increasing instability and legislative uncertainty and further impeding economic growth and further undermining property rights.

    But I am sure all of you libertarians have thought that through haven’t you? I mean, you guys are the ones who are always talking about unintended consequences, right? Oh but that’s right – I am a lying fuckwit leftist aren’t I. So carry on as you were.

    And btw those of you who think that there is a correlation between the brevity of a nation’s tax act and its economic and other freedoms should move to Indonesia or Papua New Guinea. They have tax codes that are about ten pages long. Go enjoy your economic freedom there, brainiacs. The reason the Australian tax code is so long is because of all the complicated things that the statutory regime of an advanced industrial economy provides for. Want a ten page tax code? Well say goodbye to your investment incentives and tax deductions. You will have biotech companies taxed in exactly the same way as biscuit companies. Does that necessarily make good economic sense? Probably not, but it obviously doesn’t matter to you guys whether it does or not because you would mandate that the tax code must be short and allow no exceptions.

    NiMH AA 1.2V 1400mAh

    November 21, 2006 at 11:28 pm

  4. How about a rule that all pollies have to read all legislation.

    A good idea, but:
    * how is it to be enforced?
    * doesn’t this further entrench the advantages enjoyed by ex-lawyers?

    Jacques Chester

    November 21, 2006 at 11:39 pm

  5. what a load of rubbish…

    once you have a certain size government…it spends huge amounts of resources to create an even bigger government, by introducing new taxes, spending on special interest groups in marginal seats, government fear campaigns and advertising to promote government services etcetera etcetera…

    hindering the ability of government to promote its own interests at every turn would be a good evolution.

    you make out like the electorate exists in a vacuum unaffected by the actions of the government…

    c8to

    November 21, 2006 at 10:54 pm

  6. Sure regulation has its costs Jason, but stable regulatory regimes also have benefits that are undermined by endless reorgs. While sunset clauses aren’t to blame for this, they don’t help.

    There have been numerous examinations of redundant regulation, little actual cleaning out of same. This would require more examination of wider purpose than is fashionable, or indeed possible.

    This is a recipe for more timewasting, not less – oops, can’t deal with that now, must rush off to debate the renewal of the Pearls Before Swine (Amendment) Bill 1997.

    Andrew Elder

    November 21, 2006 at 10:57 pm

  7. I was going to lodge a protest vote in favour of Family First this Saturday at the ballot box, until Jason pointed out this Liberal policy. This makes up for all the pork-barrelling of the past few months. Andrew you might want to read terje’s take on sunset clauses here.

    Sukrit

    November 21, 2006 at 11:37 pm

  8. C8to ,

    Show me some evidence that Australians want small Government.
    I haven’t seen it.
    I wish it were so but Australians have always loke governments to do things they could do themselves.

    Bring Back CL's Blog

    November 22, 2006 at 12:18 am

  9. Sukrit, you can bounce a bad idea off several surfaces and it’s still a bad idea.

    I think that sunset clauses should be used more than they are – the assumption that a law should just hang around until it’s repealed is the legalistic equivalent of fustiness and clutter. A far-reaching rethink of what particular legislation is meant to e for, what actually hapens, and what might be needed to achieve better outcomes, leads to legislation being repealed and a reduction in red tape – but it happens so rarely it’s no wonder people look for quick fixes like this. It’s one of the great ironies that nothing adds to red tape like a red-tape reduction initiative, but it’s true.

    That said, Terje underestimates the use of the gag, and Parliament’s true role as a production line for legislation put by the executive rather than some Olympian forum for leading community debate. Parliament either follows community debate (e.g. Laura Norder) or it operates as though community debate is irrelevant (e.g. Telstra). Where it does engage in cutting-edge, real community leadership (e.g. stem cell research) it surprises itself with occasional outbursts of both civility and incivility, then bustles along as though nothing has happened.

    Andrew Elder

    November 22, 2006 at 12:19 am

  10. if one supports smaller government then one wants to reduce the legislative ‘program’.

    sunset clauses do not do this

    Bring Back CL's Blog

    November 22, 2006 at 1:23 am

  11. Homer, you are saying that automatic expiration of law does not cut the amount of laws made.

    You are only partly right in that the Government needs to repeatedly justify the law they make and pass them through Parliament again. Why is this bad? The amount of laws inflicted on us would decrease unless there was masive support for every law on the books.

    The list of Bills may get longer, but the long standing effects of stupid laws go away. The second benefit is that the issues must be debated, so more information is supplied.

    Can you imagine how poorly any other institution would be run if they did not review policies, except when the CEO thought it was a good idea?

    The idea that if the amount of Acts in force decreases but the Parliamentary bills list increases reduces liberty by having more law is asanine.

    Mark Hill

    November 22, 2006 at 1:56 am

  12. The list of Bills may get longer, but the long standing effects of stupid laws go away.

    More legislation jammed into less sitting time equals greater likelihood of rubber-stamping. “All those in favour of extending the Compulsory Blah Act (Against Rapists And In Favour Of Cute Puppies) Act 1997? You’ve got four minutes”. Who’s going to vote against that? No time. Yeah, yeah. Next. See how easy inertia is?

    The second benefit is that the issues must be debated, so more information is supplied.

    Like Terje, you assume that Parliament is a place which generates more light than heat.

    Can you imagine how poorly any other institution would be run if they did not review policies, except when the CEO thought it was a good idea?

    Don’t have to imagine that, pretty much everywhere I’ve ever worked has been like that – not necessarily the CEO, but basically it’s difficult for junior woodchucks to up-end things without buy-in from someone up the ladder.

    Andrew Elder

    November 22, 2006 at 2:05 am

  13. In an ideal world, I’d support each law having to be reauthorised after some period, if only so that each law was periodically reviewed.

    In practise there might be unintended undesireable consequences – such as bits of legislation not being reauthorised, for whatever reason, and thus whole systems (such as national corporation laws) disappear. As I wrote at LP, having to reauthorise all bits of legislation allows govts to be more radical.

    I wrote the following at LP:

    If legislation had to be reauthorised every ten years, this might effectively give governments more chances to implement their policies. At the moment, a government can repeal and enact whatever laws it wants if it controls both houses of the parliament (and in Qld, it can do this if it’s a majority govt) and, if it wants to, it could just repeal all laws and start again. The fact that current laws already exist leads to inertia in them not being repealed, especially if people benefit from them. Having a default of laws needing to be reauthorised means that the inertia is lessened. The experience in the US would be instructive – as many laws have to be reauthorised after so many years (eg the No Child Left Behind act)

    It makes sense to re-examine laws every so often to see if they’re needed or if they can be improved. Having to reauthorise laws allows for a more radical government.

    A compromise could be to set up a standing committee of both houses of parliament to examine each law after a fixed number of years. This would probably lead to unneeded laws being repealed and laws being improved without a huge change to the current scheme.

    I support laws being periodically reviewed to see if they’re necessary, convenient or could be improved.

    Sacha Blumen

    November 22, 2006 at 2:09 am

  14. Again, Terje has been right in saying that you and Homer think that Parliament exists in a vacuum.

    But of course there should be other mechanisms like CIR and Hare Clark PR to make sure it cannot be in such a vacuum.

    You have clear bias in your answer. It is even easier for Parliament to allow a bill not to be tabled again and expire into history.

    Mark Hill

    November 22, 2006 at 2:10 am

  15. It is more likely that little bits of the legislative framework would fall off, and that once the consequences of some missing bit were felt there’d be no time to fix it, too busy reinventing the wheel.

    Not all legislation is oppressive. Some legislation should be reviewed in less than ten years (the Corporations Law is a prime example of this – anyone who thinks Parliament would “forget” about it understands nothing about politics in this country).

    Legislation should be reviewed when people have thought about the issue at hand, and the role legislation plays as part of a wider issue.

    A compromise could be to set up a standing committee of both houses of parliament to examine each law after a fixed number of years. This would probably lead to unneeded laws being repealed and laws being improved without a huge change to the current scheme.

    This happens every time government changes. Every time, they produce a report featuring a laundry list of quaint regulations, e.g. Tipping One’s Hat To Ladies Act 1909 or somesuch. Sometimes these are addressed with a sweeping piece of legislation called an Acts Amendment Act, sometimes it just stays there. Until the next such report. It’s easy to bat away such a committee with: “look, we need that legislation as part of the bigger picture”.

    Only in addressing that bigger picture, and the role particular legislation plays, do you end up with legislative change.

    Andrew Elder

    November 22, 2006 at 2:20 am

  16. It is even easier for Parliament to allow a bill not to be tabled again and expire into history.

    The executive will ensure that a piece of legislation that it wants to remain on the books will do so, and will guillotine Parliamentary debate if necessary to achiee that end. The end you desire, review and reconsideration of legislation in isolation from the wider issues that use legislation as one asspect of its operations, will not happen as a result of sunset clauses.

    you … think that Parliament exists in a vacuum.

    No, I don’t. But it can be self-referential on occasion.

    But of course there should be other mechanisms like CIR and Hare Clark PR

    Non-answers to non-problems at best, entrenching government-by-interest-group at worst.

    Andrew Elder

    November 22, 2006 at 2:27 am

  17. Of course the Parliament wouldn’t forget about Corporations Acts. The thing is, that there are a myriad of reasons that a bill might not get passed, eg, early dissolution of the lower house, the use of a parliamentary tactic (eg one like Senator Joyce used in relation to a bill relating to small business, if I recall correctly), there might not be enough days in the sitting calendar. It is unlikely that the Parliament wouldn’t consider reauthorising major pieces of legislation, but not impossible.

    Sacha Blumen

    November 22, 2006 at 2:28 am

  18. The whole idea that you can stampede the parliament into effecting smaller, less intrusive government is garbage.

    there might not be enough days in the sitting calendar

    If the executive wants a piece of legislation on the books, for populist reasons or other reasons, it will have it.

    Stampeding parliament as you describe Sacha makes careful, considered review of government policy generally and legislation in particular – surely the most desirable end – less likely, not more so.

    Andrew Elder

    November 22, 2006 at 2:36 am

  19. The problem with the propoasal is that it is made by people who seem to think that all enactments are a few lines long.

    Can you imagine if the Parliament had to review the Income Tax Assessment Acts every 10 years?
    it would take up most of the sitting time for the next ten years. In fact it would mean that Parliament had no time to pass any new legislation. Not a bad thing really:)

    Rococo Liberal

    November 22, 2006 at 3:14 am

  20. smaller Government means less laws which means Parliament would be getting rid of laws not sunsetting the damn things.

    You can still have Big government with this proposal

    Bring Back CL's Blog

    November 22, 2006 at 4:50 am

  21. its a defeatist comment bringback,

    propose some thing that would get rid of bad government legislation, stuff that didn’t work…and say oh australians dont want smaller government so lets not do anything or try to get them to want smaller govrenment…

    if they see the benefits of smaller government they will like it…

    c8to

    November 22, 2006 at 6:13 am

  22. “17. Bring Back CL’s Blog | November 22nd, 2006 at 4:50 am

    “….smaller Government means less laws which means Parliament would be getting rid of laws not sunsetting the damn things.
    You can still have Big government with this proposal…”

    LEFTIES ARGUING FROM A POSITION OF BAD FAITH.
    >>>>>>>>>>

    Damn you statists are really DESPERATE aren’t you?

    Like the worst junkies to the tenth power.

    Like you HEAR this and you think the compulsion, the slavery-lite….

    Like there is just this PANIC that a lot of that might come to an end…
    >>>>>>>>>>>

    Forget this guild-of-theives-FOOL!!!!!!

    THIS IS A GREAT IDEA.

    GMB

    November 22, 2006 at 6:41 am

  23. Exactly Roccoco… exactly. And a great incentive to cut down the size of that tax act too.

    How about a rule that all pollies have to read all legislation.

    David Friedman is fond of telling how Iceland managed their laws during the middle ages. Once a year a community leader would announce all the laws on one day. Anything not announced that year wouldn’t be law. Stupid laws disappeared and there wasn’t enough time to create laws banning everything and regulating everyhing.

    John Humphreys

    November 22, 2006 at 6:42 am

  24. “Can you imagine if the Parliament had to review the Income Tax Assessment Acts every 10 years?”

    Not only CAN I.

    Its making me drool.

    GMB

    November 22, 2006 at 6:43 am

  25. there should be a constitutional mandated finite word length of all legislation…

    then to get some new legislation passed they’d have to make a real choice and junk some old legislation…

    bring opportunity cost to the behemoth!

    c8to

    November 22, 2006 at 6:47 am

  26. “The whole idea that you can stampede the parliament into effecting smaller, less intrusive government is garbage.
    there might not be enough days in the sitting calendar”

    Look at how DESPERATE these people are?

    I’m going from bottom to top and all I see is hysterical panic.

    As if THATS the big problem.

    Charge them by the word and by the second for even TALKING to cut down the amount of bollocks-talk.

    Show a bit of creativity.

    GMB

    November 22, 2006 at 6:47 am

  27. “the only reason we have big Government is because most of the electorate want it.”

    You guys really are SICK bastards aren’t you.

    I mean I say this from time to time and forget that it must in fact be true.

    Does the word PHSYCHIATRIST mean anything to you?

    If there is like FOUR of you… Like you and Don Arthur and a couple of others.

    You know you might be able to afford it.

    GMB

    November 22, 2006 at 6:50 am

  28. “C8to ,
    Show me some evidence that Australians want small Government.
    I haven’t seen it.”

    If they are sick bastards like you and they want big government really bad they can still have it under this scenario.

    When we talk policy its a given that we are not talking about a TO-DAY-VOTE.

    Thats not an argument. You just changed the subject.

    Typical dumb-left thing. People are trying to be serious and then all of a sudden some dumb-leftist says IT WOULDN’T GET VOTED IN TODAY….

    As if thats got anything to do with any damn thing.

    GMB

    November 22, 2006 at 6:55 am

  29. Wow, funny how the media didn’t make a mention of this Liberal policy.

    There are a few dodgy policies by Liberal, like anti-gaming and anti-smoking regulation. But a loosening of road laws, and introducing sunset clauses are great things. I’ll feel even better voting for them this weekend.

    Jono

    November 22, 2006 at 4:29 pm

  30. GMB

    I love your work. But you are a bit of a twat sometimes, my friend. As someone said above, the main thing that is needed is certainty.

    I don’t want some sodding swampy with half a mind and a hatred of civilisation to have the power to insert lots of nasty amendments into Acts of Parliament so as to increase unceratinty of land tenure or commercial dealings.

    If you really want to limit the size of Government, you should support a Constitutional Amendment that limits Government taxing, borrowing and spending and also requires Parliament to repeal an Act every time they pass an Act.

    Rococo Liberal

    November 23, 2006 at 9:12 am

  31. I’ve taken the liberty of reposting the following cos it got posted out of order (time difference) and then the server crashed, and i would actually be interested to hear the libertarian response to the points i make
    ————————

    Right, so say the business friendly government of the day implements legislation ensuring that mining companies have good, secure title to land that would otherwise be subject to native title claims. The legislation overturns specific High Court common law interpretations that would otherwise give title to big chunks of land to local Aboriginal groups. It’s controversial legislation and heavily opposed by the opposition and particularly the Greens.

    A Canadian mining company is thinking of building a huge copper mine on some of this statutorily protected land. The mine is projected to be one of the biggest copper finds ever, but it is very close to some sacred Aboriginal carvings and the habitat of an extremely rare frilled lizard. On the other hand, over the life of the mine it’s expected that thousands of people will be employed and billions of dollars injected into Australia’s economy.

    So the company’s lawyers go to the board committee that has responsibility for signing off on major investments. And the lawyers tell the board that the entire investment depends on the company having secure leasehold title to the land and its mineral resources.

    But the legislation that ensures the security of that title automatically expires in five years’ time, and the entire investment will be worthless unless new legislation is enacted that has a similar effect to the current legislation. It’s projected that the Greens have a 10% chance of holding the balance of power in the Senate after the next election, and they have sworn to do everything they can to bring down any government that does not cooperate with them on land rights and environmental protection issues.

    Now in this scenario do you think that having a rule that all legislation sunsets after 10 years makes the board relatively more or less likely to sign off on the proposed investment?

    The answer is that the sunset rule would make the investment less likely. Same goes for any investment that depends on the statutory protection of property rights: some examples off the top of my head being a joint venture that requiries licensing of IP under copyright laws, a takeover of a retailer the profitability of which depends on existing workplace relations laws continuing in force, an investment in a startup that requires existing tax incentives to remain in place.

    It’s a no-brainer. The sunset rule will necessarily lead to greater regulatory uncertainty. Regulatory uncertainty tends to reduce the amount of economic growth that would otherwise occur. Therefore the sunset rule will tend to impede investment and economic growth. QED.

    The sunset rule is intended to, and does, make legislation less stable and more uncertain. It therefore makes property rights guaranteed under such legislation less stable and more uncertain.

    Why do you libertarians want to undermine property rights?

    The sunset rule will also, as the above hypothetical demonstrates, significantly shift power within the legislature. It will give a balance of power wielding minor party a veto not only over proposed legislation but over all existing legislation as well. Power will shift significantly from the House of Reps to the Senate, further increasing instability and legislative uncertainty and further impeding economic growth and further undermining property rights.

    But I am sure all of you libertarians have thought that through haven’t you? I mean, you guys are the ones who are always talking about unintended consequences, right? Oh but that’s right – I am a lying fuckwit leftist aren’t I. So carry on as you were.

    And btw those of you who think that there is a correlation between the brevity of a nation’s tax act and its economic and other freedoms should move to Indonesia or Papua New Guinea. They have tax codes that are about ten pages long. Go enjoy your economic freedom there, brainiacs. The reason the Australian tax code is so long is because of all the complicated things that the statutory regime of an advanced industrial economy provides for. Want a ten page tax code? Well say goodbye to your investment incentives and tax deductions. You will have biotech companies taxed in exactly the same way as biscuit companies. Does that necessarily make good economic sense? Probably not, but it obviously doesn’t matter to you guys whether it does or not because you would mandate that the tax code must be short and allow no exceptions.

    NiMH AA 1.2V 1400mAh

    November 23, 2006 at 11:09 pm

  32. I didn’t say anything about minimising the number of words in the tax code so I can’t speak to that.

    As to your worse case scenario re native title, well I’ll say I’ll take the risk. or better still that this sort of framework might actually encourage the government to do something more efficient to resolve the situation.

    How much property rights is actually threatened by native title? How much compensation is needed to buyout the owners? From an economic perspective it doesn’t matter who owns the land as long as it’s tradeable. You’re assuming the most efficient solution is for the government to legislate over it. But if the claim is strong enough then why not just hand it over to the tribe in question as full property rights? In effect privatise it and let them decide what they want to do with it. If the mining company values it enough it’ll buy it off them or come to some sort of arrangement.

    Now as to the rest, as I said. I think it’s a reasonable tradeoff. Ultimately people in parliament will be held accountable. If the law is important enough and has enough support in the community and someone plays silly buggers. they’ll be hauled into line by their party or suffer the consequences. But by the same token unnecessary regulations will be weeded out too. Real property laws will survive the weeding out process, laws against rape and the like will as well,. IP laws? They’re temporary property rights anyway and the economic lives of most IP is actually shorter than their legal lives. You’re making the huge assumption here that
    1) all libertarians are for IP laws
    2) IP law as it currently is is well-optimised.

    Tax incentives? We want to minimise the proliferation of special tax incentives for all sorts of pissy little things, and just have a flat across the board cut in rates. That’s the best tax incentive.

    All these things you nominate as requiring certainty are not necessarily efficient overall. But the sorts of laws most likely to be weeded out will be special corporate welfare provisions, short cuts to problems that could be better tackled by more comprehensive reforms (like buying out or giving away native title land) and so on. All these laws that favour the proliferation of lobbyists asking governments for special exemptions and tax dodges. Out the window.

    Workplace laws? The absence of a workplace law is complete freedom of contract.

    The basic tort, contract and real property laws will tend to be the laws that will survive the weeding process mostly without modification.

    BTW don’t complain if people take your snarky tone the wrong way. You’re the first to preemptively use the word ‘fuckwit’ on yourself though Rococo Liberal up there actually agreed wth you.

    Jason Soon

    November 23, 2006 at 11:38 pm

  33. The battery pack has gone flat.

    Let’s take the worst possible, least likely scenario, premise it as the most likely.
    Good one, battery pack.

    JC.

    November 24, 2006 at 12:26 am

  34. “I didn’t say anything about minimising the number of words in the tax code so I can’t speak to that.”

    I will. The battery pack is talking about the way depreciation allowances and such are treated for tax purposes. Battery think we need 10,000 pages of tax codes because errr, it helps us. “hello, i am from the ATO and here to help you”.

    That’s easy. Allow 100% depreciation expense in the first year of purchase. Set the tax rate that allows for this.

    Better still, Corporations for all intents and purposes are used as ways for people to organise themselves in the production of goods and services . Eliminate corporate tax

    JC.

    November 24, 2006 at 12:37 am

  35. “And btw those of you who think that there is a correlation between the brevity of a nation’s tax act and its economic and other freedoms should move to Indonesia or Papua New Guinea. They have tax codes that are about ten pages long. Go enjoy your economic freedom there, brainiacs. The reason the Australian tax code is so long is because of all the complicated things that the statutory regime of an advanced industrial economy provides for. Want a ten page tax code? Well say goodbye to your investment incentives and tax deductions. You will have biotech companies taxed in exactly the same way as biscuit companies. Does that necessarily make good economic sense? Probably not, but it obviously doesn’t matter to you guys whether it does or not because you would mandate that the tax code must be short and allow no exceptions.”

    I can do better. A Georgist land tax may even require less pages. The most efficienct tax (other than a head tax) which allows for the accumulation of the msot capital and technology. Most pulbic goods aren’t even public goods in the true sense, they are Governemnt owned business enterprises. What can justify any other spending that fails a cost-benefit analysis?

    We’d go to rack and ruin by instituting the most efficienct tax of all and slashing Government spending? Swallowing the underconsumptionist myth is one thing, but believing in state imposed inefficiencies to create wealth is another…it is off the planet.

    Mark Hill

    November 24, 2006 at 9:51 am

  36. NiMH, your suggestions for the optimality of complicated tax codes and incentives for certain parts of industry intrigue me. Could you please write up an article on how a central planning and pricing committee could create incentives for the “right” types of economic activity.

    c8to

    November 24, 2006 at 11:46 am

  37. I’m glad to see this issue got a good run. I’m sorry I missed it before now.

    My model for sunset clauses allows perpetual laws in two cases:-

    1. Those laws that predate the amendment.
    2. Those laws that attract more than 75% of parliamentary support.

    Item 2 is so we don’t need to argue the definition of rape and murder periodically. Item 1 simply acknowledges that laws are interdependent and you can’t expiring historical laws that were not written with a used by date in mind.

    I think 10 years is too short a period to road test a law. I think laws should stand for a generation so they are tested and can bear fruit (both good and bad). Thats why I suggested 30 years in my article.

    I know that parliament applies the gag. However we have laws that stand simply because the government of the day is too scared to suggest abolishing them. Imagine Howard repealling Medicare? With sunset clauses you force the government to declare it’s position publicly and that will have a flow on at the ballot box.

    I really want the “Bank Notes act of 1910” repealled. However I imagine that there is almost no chance of getting it on the agenda. If it was due to lapse automatically I am reasonably sure that apathy would do the trick.

    terjepetersen

    December 1, 2006 at 12:04 am


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