PC gone mad?
The Productivity Commission’s bold tax reform pitch tests both Danielle Wood’s promise to make policy more adoptable and the government’s appetite for change.
When Danielle Wood joined the Productivity Commission in 2023, she pledged to ensure the influential economic agency’s recommendations would be palatable to the government — or, in her words, “implementable”.
“I can never give any guarantee that the government will accept more of our recommendations in the future. But what I can say is that we will be doing everything that we can to make the sort of recommendations that governments can adopt,” she told Capital Brief months after taking the top job.
That ambition is now set to be tested. The Commission has released its most substantial reform proposal since Wood joined the organisation — a proposal to cut the company tax rate to 20% for businesses with revenue under $1 billion, alongside the introduction of a new 5% net cashflow tax for all companies. The cashflow tax had previously been suggested by the Grattan Institute, Wood’s former employer.
According to the Commission’s modelling, the changes would deliver a $7.4 billion boost in investment, a $14.6 billion increase in GDP and a 0.4% rise in labour productivity — all without much of a budget hit. Reforming the inefficient corporate tax system, it argues, is “one of our biggest levers to encourage investment and productivity growth”.
