This paper, written by Professor Andrew Scott of Deakin University for the Nordic Policy Centre, explores the lessons Australia could learn from Nordic countries such as Norway in providing leadership for revenue raising options in Australia.

Australia is a low tax country. Tax is a part of the Nordic countries’ economic success and a point of difference with Australia. The Swedish word for tax – skatt – has another meaning: ‘treasure’. This makes the Swedish language unusual in having such positive connotations associated with the word for community members’ payment of contributions for the general good.

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Values such as security, fairness, trust and a sense of belonging underpin – and are in turn reinforced by – the taxation arrangements in all four main Nordic nations. While changing the Australian word for tax is unlikely, improving the fairness and transparency of the tax system could begin to strengthen similar values here.

This paper is the first piece of research released by the newly established Nordic Policy Centre at The Australia Institute in partnership with Deakin University.

“The repeated claims by Government that Australian taxpayers are paying higher overall rates of tax in the global context is false and misleading,” said Deakin University Professor Andrew Scott, author of the report.

“For example, Norway’s Social Security Contribution component of taxation paid by employers is more than 6 per cent of GDP. In Australia 6 per cent of GDP would be just over $100 billion extra per annum. Other Nordic countries have higher Social Security Contributions going to nearly 9 per cent of GDP in the case of Finland.

“The direct contribution made by employers in Nordic nations to more extensive paid parental leave, skills training opportunities, and adequate income support for the unemployed, brings benefits back to employers in the form of retention of a high-skilled, well-motivated workforce with greater work-life balance. This puts Nordic nations well above Australia in terms of the factors which determine prosperity. 

“Tax is the price we pay to live in a civilised society, but in contemporary Australia we rarely ask how much civilisation we would like to buy, and what are the best new ways we could fund it,” said Ben Oquist, Executive Director of The Australia Institute.

“We need to talk about revenue. After decades of spending cuts, efficiency dividends, and budget emergencies it is time to confront the fact that many of Australia’s problems, both real and imagined, flow directly from the fact that we have chosen to be one of the lowest taxing countries in the developed world.

“The Australia Institute is establishing the Nordic Policy Centre to explore the policy lessons that Australia can learn from Nordic nations. Through research, stakeholder engagement, policy development, events, and public education, the Institute hopes to widen the Australian policy debate to include Nordic solutions to the big economic, social and environmental questions facing Australia.”

The Nordic Policy Centre at The Australia Institute is partnering with Deakin University on a series of research papers, of which this paper is the first.
The Nordic Policy Centre is set to be launched on 7 March at the Royal Embassy of Denmark.

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