Tim Colebatch (The Age, 23/8) has realised that Singaporeans actually earn more than Australians. Unfortunately, he remains mired in an unwarranted respect for government skill in selecting commercial opportunities. He attributes the success of Singapore to its so-called industry policy.
Singapore, is a low (in fact zero) tariff state. It pursues free trade policies that Mr Colebatch has previously castigated as beyond the realms of the real world. Contrary to his view Singapore's success has been founded on low government spending, wage rates tied to productivity, and above all, very favourable tax rates on investment and low taxes on income generally. These low tax rates are not confined to the selected bunch of favoured activities that Mr Colebatch champions but are widely available to industries across-the-board. There are no foreign investment restraints.
Singapore is, in fact, the example par excellence of Mr Colebatch's reviled economic rationalist regime. It has flourished because of its openness and lack of government direction to industry and government budget surpluses higher than the deficits of Australia. These are supported by equally sound policies of low levels of tax, made possible by small government -- transfer payments are less than 2 per cent of GDP (Australia's are 14 per cent). The outcome has been income levels towering above Australia's with the gap widening and unemployment that is virtually non-existent.
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