Australia’s addiction to dividends is killing us

The introduction of dividend imputation in the '80s has encouraged companies to increase their dividend payout ratios rather than retain earnings, which has led to chronic underinvestment and massive tax distortions.

Maybe the government really should have another look at Australia’s still relatively unique system of dividend imputation. Why haven’t other countries, apart from New Zealand and Malta, followed suit?

Well, Australia’s non-mining capital stock peaked in 1987 and has been declining ever since. It’s now the lowest on record as a percentage of GDP.

Graph for Australia’s addiction to dividends is killing us

Source: ANZ

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