Asked at an Australian Industry Group forum which taxes were the biggest drag on productivity, he nominated state taxes on housing which he said inhibit economic adjustments, "whether they be individual workers moving from the Illawarra to Queensland or Western Australia to work in the mining sector, or whether a firm is trying to restructure its business".
"We need to encourage change, not to stand it in its way. That's why I make specific reference to state governments," he told the conference.
NSW made $3.9 billion from real estate stamp duties in the year to June, about one third of the national total. Abolishing it could be paid for by increasing the goods and services tax by a quarter, from its current rate of 10 per cent to 12.5 per cent. The Henry tax review reported that "ideally there is no place for stamp duty in a modern tax system". It found they discourage property turnover and penalise property improvements.
The only positive feature of stamp duty - its relative simplicity - has long since ceased to justify its continued use in the face of the costs it imposes on Australian society," the review said, recommending they be replaced by a broad land tax.
Professor Neil Warren, who reviewed state taxes for the Independent Pricing and Regulatory Tribunal in 2008, told the Herald it was acknowledged by the states that stamp duties should go, but the transition was difficult.
"What about someone who has just bought a house. Does she have to also pay the replacement tax? If so she is taxed twice. If the replacement tax is on land it should be the unimproved value so as not to reinstate one of the faults of stamp duties."
Dr Parkinson had little sympathy for business figures who said the industrial relations system was holding back the economy, telling the forum productivity had been slipping for 10 years, regardless of the industrial relations system.
There was "no magic pudding" that could help manufacturing businesses through difficult times. There could not be a return to protection and there could not be intervention to "adjust" the exchange rate. Manufacturers had to adjust to the higher dollar and reinvent themselves as they had throughout history.
"Our emphasis moved away from dyeing cloth and tanning leather towards automobiles, whitegoods, machinery, and chemicals. Then as tariff walls became unsustainable many Australian producers successfully moved up the value chain."
The rise of China presented opportunities as well as threats for Australian businesses.
"By 2020 China could have a middle class market that surpasses the United States in dollar terms. Australian industry has always faced continuous change. While not all have been winners, many have adapted successfully and prospered.
"There is a certain distinction attached to premium goods that are 'designed in Germany' or 'made in Japan'. Rather than being the cheapest goods, they are labels that signal quality. It is my view the same cachet can and should be attached to those premium goods made or designed in Australia."
Source: The Age Domain