Role of Government

What is the responsibility of the local government?

To maintain and improve public utilities in the local area, and providing welfare services

What is the responsibility of the state government?

To maintain and improve public services in states, for example educaiton

What is the responsibility of the commonwealth government?

laws affecting the nation

What are the different sources of revenue for the local government?

grants, rates, fines, fees and charges

What are the different sources of revenue for the state government?

Grants, taxes, income from PTE, fines, revenue from private utilities

What are the different sources of revenue for the commonwealth government?

income tax, GST, company tax, customs, captial gains tax

How much of GDP does the spending of the three levels of government account for

43.1%

Commonwealth budget spednidng represents how much of the public sector?

27.3%

How much of employment makes up the public sector?

17.2%

What is the aim of reallocating resources?

to direct resources towards the production of Merit goods dn away from demerit goods, promoting more efficient use of scare resources

How can the government affect the allocation of resources through behaviour?

by influencing consumer and business behaviour through taxation, and spending measures

How can the government affect the allocation of resources through production?

producing the goods and service themself

What are direct taxes?

Paid by the individual or firm on which they are levied can’t be passed on

What are some examples of direct tax?

income tax, comapny tax, captial gains tax

What are indirect taxes?

levied on individual/firms but can be passed on, attached to good/service rather than individual/company

What is an example of indirect tax?

sales tax

What else can taxes lead to?

shifting resources away from their production like tobacco, and for the higher prices to lead to fewer consumers and benefit society such us lower pollution

What is a benefit of the government providing goods and services?

they are better able to provide important G&S to a larger number of people at a lower price.

What does the government providing goods and services ensure?

that monopoly ownership does not lead to overpricing and exploitation

What is a cost of the government providing goods and services?

inefficient in operating their enterprises, which increased costs for customs, because they do not have strong incentives to make a profit

What is the aim of redistribution of income?

to create a more equitable distribution of income

How is the redistribution of income achieved?

Through taxation, transfer payments such as social welfare

What is a tax base?

the items that are taxes, such as income, wealth and consumption

What is the Average rate of tax (ART)?

the proportion of total income earned that is paid in the form of tax

What is the marginal rate of tax (MRT)?

the proportion of any increase in income that must be paid as tax, therefore it represents how many cents in every extra dollar that is taxes

What is progressive tax?

higher income earners pay greater proportion of income as tax than lower income earners, ART rises as income increases

What is regressive tax?

higher income earners pay smaller proportion of income as tax lower income earners, ART falls as income increases

What is proportional tax?

higher income earners, pay greater proportion of income as tax than lower income earners, ART remains constant as income rises

What is the tax free threshold?

Income level below which no tax payable

What is the current tax free threshold?

18,200

What are transfer payments?

Social welfare, redistribution tax payments to lower income earners

What is a government business enterprise (GBE)?

are businesses owned and managed by a government at either common wealth or state level

What is a corporatisation?

occurs when the government encourages public trading enterprises to operate independently from the government as if they are private businesses in order to improve efficiency and profitability

What is privatisation?

Occurs when the government sells public trading enterprises to the private sector

What is competition?

is the pressure on business firms in a market economy to lower prices or improve the quality of output to increase their sales of G&S to customers

What are the key ideas in competition policy?

to have competition that is compatible with the market system, which producers more efficient use of resources

What are the key ideas in consumer protection?

to ensure fair business conduct by prohibiting practices that restrict competition and imposing penalties

What are the key ideas in Environmental policy?

the impact of economic activity on the environment and sustainability

What are the two debates in environmental policy?

the use of renewable or non-renewable energy and to what extent does the price mechanism does not reflect externalities involved in production