I hope that the August economic reform roundtable will not change to a three-day discussion on tax reform. No one can agree whether a sustainable budget is best achieved by reducing spending, achieving more taxes, what taxes should be imposed, or the new taxes that are imposed.
The 25 citizens of Congress would be better off trying to come up with a proper set of policies regarding artificial intelligence and robots. And they were able to follow up with an overview of China's eight-year-old strategy to become a global leader in AI by 2030, starting with a briefing on what US President Donald Trump will reveal in his AI plan to be announced on July 23rd.
You can read this article from last week's Financial Times on five pillars of productivity commissioned by Jim Chalmers in December, as well as how PC Chair Daniel Wood introduces a sense of urgency to the roundtable.
Meta CEO Mark Zuckerberg is trying to build a team that will help you create smarter AI than humans. And it seems that Openai staff is clearly knocking him!
The total market value of the five leading AI companies (Meta, Alphabet, Microsoft, Amazon, Nvidia) is $20 trillion, almost twice as much as every home and unit in Australia.
The only way this makes sense is that Meta, Openai, and other Peddlers in AI are making more money from other technological revolutions in history. And the only reason the rest of the business world pays a lot for AI software and robots is to make more money by trading people and increasing productivity for those still employed.
How Business Uses AI
There are two ways to apply AI to your business: top-down and bottom-up.
The top-down risk that oversimplifies (but not so much) is that the business executive leadership team decides to use AI to exchange many human workers, for example, by writing software code, entering data, answering calls, writing articles like this.
Bottom-up is where individual employees use AI to improve at work. The key to doing bottom-up use of AI work is to create a good prompt.
The AI consulting business, called Fourday, has built a “prompt library” for its clients and has developed a prompt writing assistant called Prompt Cowboy. You write some kind of lazy, plain language prompt on it, and spit out much longer ones designed to get the best answers from AI. CHATGPT improves performance with more detailed and better written prompts.
Four Day Founder Henry Bullerry says you can get a 30-40% productivity boost with AI, but “Because you're not using it correctly. You're not asking the right questions, you're asking the right questions, you're asking the right questions.
Meta CEO Mark Zuckerberg wants to create AI that is smarter than humans. (Reuters: Dado Ruvic/Illustration))
Two tasks of the round table
If a roundtable works to lift productivity, you need to do two things: First, we need to develop a national system to help small businesses and employees write better AI prompts, and second, we need to modernize welfare safety nets so that businesses can exchange AI workers without worrying about contributing to social disruption, as people don't need to scare them.
Specifically, the government needs to reconsider unemployment benefits. The current JobSeeker system is not suitable for purposes as it is assumed to be a temporary payment to job seekers.
The money isn't enough. Additionally, the points system, which includes the need to apply for four employments per month, will not work unless there are any jobs to apply for.
As some have pushed, universal basic income for everyone has gone too far, but the government needs to prepare for a more permanent period of unemployment, even if AI is ultimately not needed to prevent mass unemployment.
Executives and staff need to embrace AI and need a good safety net for that to happen. This is another reason for more tax revenue, along with the need for more public housing. And more tax revenues fall on new taxes, either wealth or inheritance tax.
Australia's past two major tax reforms when tax revenues do not reach government spending included capital gains and fringe benefits in 1985 and capital gains and fringe benefits in 2000.
Revenues in 25 years will be short again due to decisions to increase population aging, NDIS, and defense spending.
However, the near-hysterical response to plans to reduce tax cuts on pension balances above $3 million suggests that new wealth or inheritance taxes are too difficult. Lifting the GST rate towards the global average of 15-20% is probably something you need.
The problem with GST is that it is regressive. It strikes the poorer than the wealthier. However, there is a solution to this, and it was invented by UNSW professors Richard Holden and Rosalind Dixon.
With their books From free markets to fair markets Holden and Dixon propose to raise the GST rate to 15% and apply to all products and services, but they simply spend and charge if they exceed the $12,000 annual threshold.
how? By repaying each taxpayer 15% ($1,800) of $12,000, you can simply post it in your bank account, with a six-month payment of $900, if possible.
Holden and Dixon model the results, saying that a wider foundation GST rise will double GST revenue from $90 billion to $180 billion, leaving $45 billion in net revenue that can be repaid with a refund, spent on income tax cuts, and that it will remove the budget deficit.
It can be debated whether $12,000 ($1,000 per month) is the right threshold for GST-free spending, but the idea is worth spending 1-2 hours on a roundtable.
After that, 25 round tablers were able to tackle the real business of AI and robots.
Alan Kohler is a financial presenter and columnist at ABC News and also writes for intelligent investors.
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