The groundwork has been laid for Australia’s most substantive attempt at tax reform in more than two decades as the treasurer promises to “grasp the nettle” on the thorny issue.
Outlining his government’s economic agenda for its second term of parliament, Jim Chalmers threw down the gauntlet to industry, media, civil society and the political class to find genuine consensus in a speech to the National Press Club.
While defending Labor’s progress, including changes to merger and competition laws, the treasurer argued Australia needed to go further to boost stagnant productivity, bring the budget into balance and make the economy more resilient.
Long called-for tax reform will be on the agenda at a productivity roundtable in August that will seek to “shape the direction for long-term economic reform”.
“This is all about testing the country’s reform appetite,” Dr Chalmers said on Wednesday.
“I am prepared to do my bit, the government is prepared to do its bit, and what we’ll find out in the course of the next few months is whether everyone is prepared to do their bit as well.”
He challenged the media not to play a game of “rule-in, rule-out”, which he said had a “cancerous” effect on policy debate and robbed the nation of the flexibility and maturity to respond to big challenges.
The only pre-conditions for reform were that proposals must be in the national interest, specific and practical, and when taken together improve the budget bottom line.
Dr Chalmers previously flagged removing onerous red tape to fix Australia’s productivity slump.
But calls for tax reform have grown louder as an ageing population erodes revenues and places increasing demands on the health and aged care budgets.
“No sensible progress can be made on productivity, resilience or budget sustainability without proper consideration of more tax reform,” Dr Chalmers said.
Reform would also be targeted at lowering the burden on personal income tax, increasing the incentive to work, simplifying the tax system and improving intergenerational equity.
Dr Chalmers did not confirm whether opposition politicians will be invited to the roundtable, but limited space in the 25-seat cabinet room will keep the attendance list concise.
The roundtable will be a “genuine attempt” to build consensus, he said, after business groups criticised 2022’s Jobs and Skills Summit as a Labor tool to rubber-stamp unions’ wishlists for workplace reforms.
The treasurer promised to consider any good ideas, but rolling back Labor’s changes to industrial relations laws – including multi-employer bargaining – won’t be on the table.
Cutting the company tax rate or providing more tax incentives for investment are expected to be at the top of priority lists for business groups after the issue was floated by Productivity Commissioner Danielle Wood.
Dr Chalmers knows intimately the challenges governments face in attempting ambitious reform.
As an adviser to then-treasurer Wayne Swan, he worked on Labor’s carbon tax that was ultimately repealed by Tony Abbott after the coalition won the 2013 election.
Dr Chalmers said he was realistic but optimistic about his chances of success.
“Let’s see what we can achieve together if we genuinely listen to each other, we genuinely try and find common ground, and try and engage in some of these difficult trade-offs,” he said.
Opposition productivity spokesman Andrew Bragg agreed it was better for all politicians to work together on fixing Australia’s economic challenges.
“I think the Australian people will get better value from all of us if we’re able to collaborate and we remain prepared to be very constructive in the upcoming process, whatever it looks like,” he said.
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