Free Childcare & Gas Royalties: Two Solutions Australia Refuses to Try

Free Childcare & Gas Royalties: Two Solutions Australia Refuses to Try

In this podcast episode we interview two Puntermon!

ALAN KOHLER: NATIONALISE CHILDCARE

THE SCAM: 70% of Australian childcare centres are for-profit businesses, unlike schools which must be not-for-profit to receive government subsidies. The government pours billions into subsidising private childcare while parents still pay exorbitant out-of-pocket costs, and the profits flow to shareholders. Private equity funds own the two biggest after-school care operators.

THE DAMAGE: Quality is measurably higher in government-run centres and lower in privately owned ones. The ideological refusal to nationalise anything means Australia keeps subsidising a system where corporate profits are prioritised over children's development. The last serious nationalisation debate was in the 1940s when Labor proposed to nationalise the banks — neither major party believes in it now.

THE OUTCOME: Nationalising childcare would cost $60 billion to buy all centres plus $20-40 billion annually to run — but the government already shells out huge subsidies anyway. It's cheaper for everyone to take this public good out of the private sector. We've been trained to think government debt equals bad, rather than asking what we're spending on and how much it's costing us out of pocket.

ABC - There's a case for nationalising child care, but of course it won't happen

CAMERON MURRAY: VARIABLE GAS ROYALTIES

THE SCAM: Australia gives away its gas for minimal return through the broken Petroleum Resources Rent Tax (PRRT). International companies are expert at making profits magically appear in low-tax jurisdictions through accounting tricks. 30 countries have a national gas company — Saudi Arabia, China, Brazil, Russia, Malaysia — everyone who's got gas except Australia.

THE DAMAGE: Murray says a 25% tax on the top line of revenue sounds reasonable, but if it costs $50 to get $100 worth of gas, that's effectively a 50% profit tax — and companies dodge it through transfer pricing. The PRRT is fundamentally broken and the gas industry has captured the regulators.

THE OUTCOME: Murray suggests the smarter approach is a variable royalty that scales with market price — like Queensland's coal model. In boom times you take more than 25%, in busts it drops to 10%. Queensland raised $8 billion extra in one year from coal during the boom. The variable royalty sticks politically because in a boom companies can't argue when they're reporting record profits, and in a bust they can't argue because the rate is low.

Fresh Economic Thinking - How to get a decent public return from Australia's gas resources