Economy

1. Background

The Science Party believes strongly in using markets as a means to achieve competition for success and to gauge demand for products, technologies and lifestyles that individuals want. Market economies allows pluralism and diversity. Each person, through earning money, is given the opportunity to 'vote' with their money for the products and systems that they want to have. There are many decisions that cannot be voted on by an entire nation, and hence money gives individuals the chance to help decide what is produced. If the majority of people were to decide what all people received, then only goods that the majority liked would be available. The only cars available would be Toyotas, and no other brand would be available. The only phones available would be iPhones. Chicken would not be the default option; it would be the only option! Systems where the government is too heavily involved in the production and regulation of goods results in monotony, and hence market economies allow for plurality of lifestyles to coexist by allowing people the opportunity to decide as individuals what they want.

Many people believe that the economy is a zero sum game, where if one person gets richer that wealth must have come at the expense of someone else. The Science Party believes that this is far from the truth. Technological developments, management developments and economic developments result in efficiency and productivity gains beyond the cost in attaining that gain.

That said, The Science Party believes that the government, as the representatives of the majority of the population, has a role to play in directing what sort of society the population generally wants to live in and the rules by which people interact in that society. The government also has a role to play in guiding the economy with macroeconomic policy, where the population desires a change, but existing structures make the transition non-responsive to the demand. In situations where competition encourages short sightedness or destruction (the tragedy of the commons), the government, as representatives of the people, should act to provide incentives to reduce waste and destruction. The natural environment is particularly prone to destruction as there are no real monetary incentives to corporations and individuals to avoid environmental destruction. The benefits of a healthy environment are shared by all people. Hence the time, money and effort that an individual puts into reducing their impact on the environment will be much greater than the personal benefit that the individual derives. The government therefore has a mandate from the people to act to protect the environment through multiple methods (with options for achieving this mandate ranging from incentives to penalties).

Capitalism may also be incapable of directing investment to benefit all of society in an efficient manner. Education is one such field in which capitalism cannot be incentivised to invest to an optimal level. Education provides returns over a person's lifetime that are far above the initial cost, in terms of improved economic output of the individual in the workplace and the economy, good life choices that increase health and life expectancy of that person, understanding of the law and how to interact intelligently with other human beings, and engagement with the democratic process to ensure their say in self-determination. Unfortunately for Libertarian-style capitalism (that is, a system where government is minimised to all but a very limited number of services), there is no easy way to monetise the benefits that education brings to those individuals who do not have a great deal of money at birth. In the case of education, capitalism needs a helping hand from the government. Significant public funding of education is, therefore, absolutely necessary to maximise the outcomes for individuals of all backgrounds. We need the government to invest heavily in young people because we wish for a world where people, no matter their race or economic standing, are given the chance to achieve for themselves and by implication, the rest of society. While there may be an initial cost, the impact of educating these individuals is an increase in wealth for all people in the long term. Even those who have a high tax ratio, such as business owners, will benefit. While they may pay more tax now to educate our youth, in 10 years' time those young people will be transformed into better workers as well as higher earners (and hence greater spenders), earning the business owner more money in the long term.

The Federal Budget decides how the taxes the government raises are spent. Taxes are, fundamentally, a plan for the future. We give up some money today in tax, with the aim that in the future our country will be safer (defense and police), our future health care will be met, our children will have a future worth looking forward to (education) and the Earth itself is left in a condition that is pleasing to the future generations (environment).

People born today have a life expectancy of around 81 years, based on current rates of mortality. The current rates of mortality will likely decline greatly as medical care improves, safety increases and the use of mortality inducing drugs (such as smoking and alcohol) continue their steady decline. This means that people today will likely live longer than what their life expectancy calculations say today (that is, well beyond 81 years, on average).

The long life expectancy of people in Australia positions us well to plan far into the future. As most of us are likely going to be around for a great deal more years, we should think about planning for the kind of world we want to see not just years from now, but also decades from now. We shouldn't only be worrying about how we are going to deal with the health care of older people; we should also be thinking about how our society will be more pleasurable, interesting and efficient for our older selves than it is right now.

Budgets should consider the expected benefit spending over long time periods. Projects should be initiated which have payoffs over a range of time periods, such as 1, 5, 20, and 50 years. The government should create systems that have long-term worth, but an extreme barrier to entry that makes it hard for private enterprise to enter into. The early to mid 1900s saw a great investment in infrastructure that has had long-term benefits, such as national railways, the Sydney Harbour Bridge and the Snowy River Scheme. All of these projects have had great long-term benefits to society and could not be achieved by private enterprise at the time. It is time to return to those bold plans of the past. Most modern developments have focused on extremely short term objectives, which later require additional work to bring the system up to standard. The Sydney Harbour Bridge was designed to be 49 metres wide, much wider than would have ever been needed when it was constructed. Today, we reap the benefits of such forethought, more than 80 years after it was built.

Transportation and communication make the world a better place by increasing connectivity. It makes us better friends with foreign nations. It allows us to trade produce and ideas, which adds value to both parties. The Science party supports the plan of a National Broadband Network wholesaler, created by the government to sell wholesale network access to private telecommunication companies. The Science Party also supports the creation of a high-speed rail-link running from Brisbane to Sydney to Canberra to Melbourne. Both of these initiatives will allow for a rapid expansion of the economic capabilities generated by transportation and communication.

 

2. Investing in our future

2.1. Policy: Plan for the future through targeted government investment in areas which encourage economic and technological development in areas such as:

  • Transportation
  • Communication
  • Education
  • Agriculture
  • Health
  • Energy
  • Computer science

Implement measures that aim to bring the annual expenditure on science and technology research from 2.35% of GDP (2008 figure) to 5% of GDP. This level of research will be achieved through both increasing government funded research and by attracting private enterprise research firms.

2.2 Discussion: See policy section 2.1.2.

 

3. Anti-monopoly

3.1. Policy: The Science Party stands opposed to corporate monopolies, particularly government created or endorsed monopolies acting as private entities. Where government monopolies are privatised, sufficient provisions should be enacted to allow competition in that sector.

3.2. Discussion: Some systems are natural monopolies, such as power distribution systems, rail infrastructure, roads and other systems where the barriers to entry (that is, the money needed to create an alternative) are so massive as to be prohibitive to the creation of new companies to compete with those existing systems. While it should be an aim of governments to reduce its footprint in the marketplace as much as possible, this aim does not extend to privatising systems where there can never be any reasonable assumption of a competitive market place. It is not the duty of the government to maintain such institutions, especially if they run contrary to the aims of the government (e.g. governments owning coal-fired power plants while having a stated aim to reduce global warming), however there is no economic imperative to reduce the government's involvement for "competition's sake" when competition can never reasonably be expected to exist in such a field.

Government endorsed monopolies are a threat to the competitive nature of the marketplace. Such monopolies are formed where a corporation is given exclusive rights to operate in a market and other companies are excluded due to the agreement between the corporation and the government. The Science Party stands opposed to such agreements.

Corporate monopolies will increasingly become an issue in the modern economy. Simply having a very large company across many disciplines allows such a company to perform predatory pricing over long periods of time, reducing competition by reducing the number of market participants to very small numbers. While large companies allow competitive pricing due to economies of scale, it is important that the Australian Competition and Consumer Commission is able to determine if lower pricing in subsidiaries of large corporations is due to economies of scale and other competitive advantages of these corporations, and not due to predatory pricing (i.e. running at a persistent loss to induce the failure of competitors).

 

4. Startups

The Science Party has a startup policy written by today’s startup founders, for tomorrow’s startups.

4.1. Policy: Creating new startup incubator spaces to promote informal education in new businesses.

  • $14 million commitment in the first year of operation in the form of fourteen $1 million grants to create startup spaces around the country.
  • Two such startup space grants to be awarded per capital city in the first year, with the program to be extend if sufficient demand for new startup coworking spaces exist.

4.2. Policy: Support for very early stage startup founders.

  • “SmartStart Allowance” — unconditional basic income grants equivalent to 1 year of Centrelink Newstart for a year. All individuals will be eligible to receive this grant for 1 year in every 5.
  • Office and plant funding: $8000 per startup founder for their first year. Based on an additional 200 startup founders per space, this comes to $22.4 million on new startups alone. Existing startups (less than 3 years old) will be eligible to receive these grants, which are expected to increase the size of the program to $150 million.

4.3 Policy: STEM education.

  • Formal education is an important stepping stone for many people who are involved in startups. The Science Party is committed to providing Science Technology Engineering and Mathematics (STEM) classes in primary school.

4.4. Policy: Legislative reform.

  • Scalable legislative requirements for businesses depending on size.
  • Setting up a startup legislation commission that routinely investigates if startups are hindered by antiquated legislation.
  • Remove unnecessary legislation after a review of legislative bottlenecks.

4.5. Policy: ABS Reporting for small businesses.

  • ABS to create a new categories of business for startups in statistical reporting of businesses to capture the “unicorn”-type businesses that have low fixed upfront costs and a scalable business model that can be applied to international markets in the technology sphere.
  • ABS reporting to include businesses not necessarily registered. ABS to attend startup spaces and startup events to conduct surveys to determine the true size of entrepreneurial individuals in Australia
  • Integrate data from cross-department communication: ATO and ASIC reporting to be relayed to ABS to help in sector size estimation.

4.6. Policy: Government supported startup centred consumer protection.

  • The government to provide information (such as how-to-guides) about setting up businesses, and the types of services that are necessary and what are reasonable prices for such services.

4.7. Policy: Maintain employee share schemes.

  • Under the Gillard government, Labor made employee share schemes extremely restrictive in an attempt to limit bank executive tax minimisation. The Science Party believes that the impact on startups far outweighs the expected revenue of tax from bank executives and hence employee share schemes should remain flexible to allow startups to thrive.

4.8. Policy: Flexible migration arrangements for people in STEM.

  • Like scientists, startup founders have specialised knowledge and grow as professionals by working in international settings. The workplaces that take international workers on gain from their skills and expertise. The Science Party is pro-migration and will ensure that individuals who wish to work in the science and technology can come to Australia to help build the Australia of tomorrow with a clear path for permanent residency for those involved in the migration program.