Comments to the Free Market Road Show in Budapest, Hungary - May 27th, 2015
You might think that Australia is not relevant to this wonderful country of Hungary but let me assure you that we have exactly the same problems with government that you have and that Greece has…. In fact, it is a universal problem of governments spending your money unwisely, buying your votes for their next election, and then blaming you for not paying enough money in taxes.
They then think that by raising taxes, they will raise more revenue.
They are quite wrong you know because in reality it works the opposite way. Tax rates and tax revenue are quite different.
This graph illustrates that in Australia when taxes were reduced in the 1990s, the tax revenue actually went up, mainly because we were all encouraged to work harder.
Our politicians have forgotten this because many of them don’t understand economics.
Australia has a lot to learn from Hungary with your decision to introduce the simple flat rate tax, as this has given you an opportunity to start reducing your debt.
I’ve just spent an interesting week in Greece, the home of democracy where the original idea was to vote for people who have earned our trust and respect.
Well, all that has changed in most countries where, apart from a few exceptions, people vote for the politicians who promise to steal money from others so they can buy the votes of their own followers and so remain in power.
We are hearing today from various speakers whether this is the case in Hungary but in Australia it can be seen that welfare, unemployment and entitlements have become dynamic growth industries, whilst innovation and productivity are not enthusiastically encouraged.
This will all change in both our countries when the philosophy of liberty and free markets becomes the driving force and the national priority. I have been impressed at the way Barbara Kolm’s Free Market Road Show has taken this message to a combined audience of over 7,000 this year over the past 44 days, visiting 35 European cities.
Well, that’s the big vision and goal on a large scale which will bring us good government, small government, plus governments we can trust and respect.
However, my message for you today is, “what can each of us, as citizens, do to activate our economies right now while we are waiting for the big tide to change.”
There are many things that can be done to draw attention to the insanity of out-of-control government expenditure and I understand that Australia and Hungary are both facing the possibility of having more football stadiums than football teams.
Anything to get votes!
Now, let me quickly tell you the story of the surprise circumstance that gave Australia its best 15 years of remarkable growth.
A major event happened in 1983. A Labor politician who was a former union boss got elected as Prime Minister; he called his first Cabinet meeting and asked, “Have we got any policies?” Nobody knew what policies were and somebody said, “A small group of politicians known as ‘The Dries’ have been talking about policies for years.” However, their own Prime Minister (Fraser), refused to listen but Hawke, the newly elected Prime Minister, requested information on these deregulation policies (note this is a gross over-simplification of the events), he listened to every detail and then asked his own Party members if they had any better policies. When they advise no, he instructed his own Party to ‘do the lot’. As a result, Australia experienced 15 years of remarkable prosperity.
I benefited from this in several ways, including having one of the ‘Dries’, John Hyde, on our Mannkal Foundation’s Board. John and Mannkal’s Andrew Pickford have produced an instruction book - Project Western Australia - which outlines policies for new Governments to adopt which will get the economy moving. It’s available via a link on Mannkal’s website - http://www.mannkal.org/downloads/projectwa/ProjectWA-FINAL.pdf. This is a model of simplicity which reminds any new government why they have been elected. We sent a signed copy of this to every politician.
So the moral of my story is simply, ‘be prepared’.
Have your own ‘instruction book’ ready in case you can fire it off like an intellectual bullet every time you have the opportunity. That way, and only that way, will we encourage growth and win the intellectual and economic battle of ideas that we must win, if our future generations are to have a future full of opportunity.