Tax & Technology - Opinion piece

The only thing worse than taxes is not paying taxes (means you aren’t getting paid or you have run into life’s other certainty). With underemployment in South Australia sitting at 17% and a guy at Oxford saying that 40% of all jobs will be replaced by automation within ten years it might be time to fundamentally rethink our tax system.

 

Firstly, let’s look at the types of jobs which will be at risk: Basically, all of them. And … yes, that most definitely includes lawyers. I am currently working on an Artificial Intelligence which will replace entry level law jobs with automation; sorry in advance, but things are going to get worse for lawyers.

According to some professor at an Australian government think tank; everything from dentists, to editors, to grave diggers “are in grave danger of perhaps outliving their usefulness”. The most imminent and most dramatic shift will be the introduction of driverless cars. With 25% of Australian jobs involving driving, this is going to rock our economy. I see truck drivers being replaced within five years and legislation banning all human driven cars being banned by legislation within ten years. Even the pizza delivery guy or couriers can be replaced in the next couple of years with drones. If you struggle to believe driverless cars will be a reality anytime soon go and check out what RACIntellibus and Tesla are doing. The fact is driverless cars are already on our roads.

The question for you as someone interested in politics is: what will be the jobs of the future and how can we start preparing for this huge shift in our economy? This is not the first time we have faced a huge structural shift in our labour force, but perhaps none as sudden or fundamental as this one. The industrial revolution saw a huge number of jobs being replaced by machines and a great many people went into manufacturing jobs. Technology dramatically lowered the cost of goods and allowed people to then go into more cerebral tasks such as design or development. In the industrial revolution, it was relatively easy for people to step into the new jobs created by technology.

If history repeats itself we should be all fine and dandy… however, the technology of drones, driverless cars and automated checkout systems at supermarkets create very few new jobs as a result. The express aim of these new technologies is to require no human involvement, unlike the textile industry during the industrial revolution which required humans to operate the machines.

We have 5 – 10 years to prepare our labour force for a dramatic
structural shift in the jobs market. A failure to prepare will see unemployment skyrocket with a market unable to adapt in time to a rapid fundamental structural change. We can sit around and wait for it to happen or we can set Australia on a path to be ready for this shift.

TAXING OUR WAY TO PROSPERITY?

You know Labor’s solution to everything is just tax the crap out of something until people stop doing it and I’ll bet my bottom dollar their solution will be a “tax on robots”. Unfortunately, this “solution” has the backing of one of the leading players in artificial-intelligence: Bill Gates. Gates goes as far as arguing that we should. A slippery slope argument would be: well does Bill Gates intend to pay a tax on all the postmen/typists he made redundant by use of Outlook/Word? Probably not… The main aim of this tax would be to “slow down the speed of automation” and give the labour force the chance to move into new roles.

One thing for certain is that welfare is going to go through the roof in 5 years’ time, robot tax or otherwise… the bigger question is how are we going to pay for it?

UNIVERSAL INCOME?

Basically, it’s a welfare system where everyone gets welfare, even Clive Palmer. Everyone regardless of their assets or whether they are even looking for a job gets an income paid to them which would be enough to meet a person’s basic needs; in Australia, it would be around $20,000 each.

Currently in Australia, we have an unemployment rate of around 6% and our welfare system costs us around $170 Billion per year. A universal income would cost $380 billionish. Double the unemployment rate due to automation and well… starts to look affordable.

Hawaii could soon implement Universal Income as a bill to seriously consider the idea passed their state parliament unanimously (FYI Switzerland said no at a referendum). The Democrat leading the idea in Hawaii says that his concern is that automation will result in fewer jobs particularly in the services sector. “We’ve seen automation of the retail space, with self-checkout systems proliferating, as well as automation in fast food and similar sectors, and the biggest thing, which obviously is yet to come but surely around the corner, is on the transportation side with respect to autonomous driving.”

So tax robots to fund universal income seems to be the only strategy so far.

IF YOU DON’T LIKE SOCIALISM THEN WHAT?

You can always just leave it for the free market to correct itself… but when you think about it, the free market isn’t as free as you think in Australia. Regulation is rife and that won’t be changing anytime soon. One of the most fundamental controls is the idea of a national curriculum which prevents schools from setting their own curriculum which would prepare children for this automation age. If I was to set the curriculum for my children I would want them learning robotics, coding or biology rather than geology, maths or history. Now would I advocate to remove the national curriculum and let the free decide? I have no idea… but if the government are going to intervene and prevent parents from guiding their children into “the jobs of the future” then governments need to perform that role instead. Reskilling programs are also going to be very important.

This change is coming. Are we going to prepare for it now, give the market the freedom to prepare for it or wait till it hits our economy like the GFC on steroids?