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‘There’s no excuse’: Kelty joins Labor MPs urging tax action now
By Paul Sakkal
Labor MPs and party elder Bill Kelty are urging Treasurer Jim Chalmers to go big on economic reform as productivity commission boss Danielle Wood puts on the agenda a major move to cut concessions for wealthier Australians or widen the GST to fund cuts for younger people.
A cabinet source, speaking anonymously to detail thinking inside the government, said Labor would not necessarily wait until the next election to propose new tax policies. They said the party was nowhere near announcing new plans, but the roundtable was an important starting point to lay the groundwork for policies that could feed into a midterm budget.
Treasurer Jim Chalmers after the third and final day of the Economic Reform Roundtable.Credit: Dominic Lorrimer
The opposition on Friday declared Labor had no mandate to slug Australians after Chalmers emerged from his economic roundtable declaring the tax system needed fixing.
Chalmers was vague on his intent but cited intergenerational fairness as a top priority, giving rise to the prospect of an often-discussed tax mix switch to take pressure off working people paying mortgages and rent.
As Labor prepares for a parliamentary session next week to promote its deregulation agenda, the government is again putting off debate on its proposal to wind back concessions for people with $3 million in super balances, with no plans to prosecute the bill in the upcoming sitting period.
PC chair Danielle Wood Chalmers’ post-roundtable moves opened up a discussion on winding back generous tax concessions. Wood is planning to maintain her focus on her proposal to reduce corporate tax through a novel cash-flow tax, aligning with Chalmers’ second theme of boosting business investment.
On intergenerational equity, Wood told this masthead, without endorsing a position: “You could be talking about negative gearing, you could be talking about the capital gains tax discount, you could be talking about trusts, or super tax concessions.”
“The GST is one way, there’s also reducing concessions to leakages from the base.”
Pressed on his plans on Friday morning, Chalmers did not rule out new tax policies later this term. Treasury and the productivity commission are expected to work up ideas which would either be rolled out in a budget or taken to the election.
“I want to be respectful to the views raised in the room at the economic reform roundtable, but at the end of the day ... the timing of any other tax changes will be a matter for me to determine with my cabinet colleagues,” Chalmers said on ABC radio.
Shadow treasurer Ted O’Brien during the final day of the summit.Credit: Alex Ellinghausen
Asked specifically about family trusts or the contentious capital gains tax discount, Chalmers said: “We haven’t changed our policies on those examples”.
The Coalition leapt onto the new conversation about tax, with shadow treasurer Ted O’Brien and finance spokesman James Paterson vowing to fight any hikes.
“There’s no doubt that the entire tax system needs to be reviewed so it can be more efficient,” O’Brien said on Channel Nine’s Today show. “But you do not increase taxes to grow the economy.”
Former ACTU Secretary Bill Kelty.Credit: Justin McManus.
Bill Kelty, doyen of the Bob Hawke and Paul Keating area, implored Albanese to seize the moment. He said if Hawke and Keating were in power today, they would act to fix what the former union leader said was an “outrageous” system.
“They would say, ’I’ll tell you what I’m going to do for young people: completely review HECS, create a simpler income tax system with lower marginal rates, and build the homes,” Kelty said, arguing in favour of winding back tax concessions.
“For f— sake, design a tax system for those people who do not use tax breaks. There is no excuse.”
“Do we want some fundamental reform here? Does society want a big change? I think the evidence is that we tax our resource exports at too low a price; if that is the case, tax them and give it back by reducing marginal tax rates.”
Kelty has long argued that Bill Shorten’s 2019 election policy, which included changes to negative gearing and family trusts, was sound but should have been offset by income tax cuts. Three Labor MPs spoken to by this masthead on Friday said many members of the caucus, now containing more Left faction MPs, still believed in the tax changes but were haunted by the loss of the 2019 election.
Backbencher Mike Freelander urged Chalmers to lean into tax reform.
“We need to reduce our reliance on personal income tax. And we need to look at areas of government spending and how we can reduce pressure; the NDIS is a part of that, as well as some of the generous tax concessions for wealthier people,” Freelander said.
In the roundtable, former treasury boss Ken Henry, Wood and some other experts all backed a Coalition-championed idea of stronger fiscal rules to manage the budget. Chalmers resisted the change in the meeting, according to two sources in the room who did not want to be identified, prompting O’Brien to fire up and attack Chalmers’ record.
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