Does Chalmers really have the appetite to fight for big changes?
By Paul Sakkal
A cautious Treasurer Jim Chalmers has dipped his toe into the often toxic waters of tax reform. Whether he decides to go all the way in will help define his legacy, the new Labor era, and his relationship with Prime Minister Anthony Albanese.
His move has opened new horizons for the government and allowed the battered Coalition to retreat to its traditional terrain arguing against tax rises. It spent the Dutton years advancing populist ideas with little regard for the size of government.
Prime Minister Anthony Albanese with Treasurer Jim Chalmers and Treasury secretary Jenny Wilkinson at the economic roundtable.Credit: Dominic Lorrimer
It is common to the point of being clichéd to label the Albanese government timid. Chalmers’ three-day roundtable will do little to shake that perception.
In his defence, Chalmers may have had his hands tied by Albanese, who in the lead-up to the roundtable killed off tax proposals at the same time as the treasurer was trying to welcome all ideas.
Chalmers hinted at his curtailment when he emphasised the primacy of his cabinet colleagues’ decision-making.
But it was totally open to Chalmers to go into the event with at least one new policy to prosecute. Instead, he emerged with a list of 10 “quick wins” mostly already under way, including cutting red and green tape to speed up housing approvals and abolishing more nuisance tariffs.
This allowed Opposition Leader Sussan Ley to claim it was “no reform summit” but a pointless gabfest.
The truth probably lies somewhere in between Labor’s triumphalism and Ley’s putdown.
It’s useful to think about the roundtable outcomes as sitting into two categories.
To borrow a sporting term, the first is one-percenters. Productivity Commission chair Danielle Wood makes the point that doing a lot of seemingly small reforms at once can go a long way to turning around the Australian living standards malaise. Chalmers’ “quick wins” fit into this category, and economist Saul Eslake credits Chalmers for putting energy into the suite of policies now being pushed forward with speed.
The next category could be described as “holy grail” reform. Some commentators who yearn for the Hawke-Keating era of policymaking ignore that the dollar cannot be floated twice. The new era of productivity bounty is less sexy. But there is broad consensus that the tax system is broken.
The holy grail reform, advanced ad nauseam by economists, think tanks and MPs such as Allegra Spender, would include winding back tax concessions or hiking the GST to offset income tax cuts.
Chalmers only hinted that he might move in this direction on Thursday. He committed to nothing. But by deliberately highlighting the deficient tax system at such a key moment, Chalmers set a new course for the government after it took a limited economic agenda to the last election. A cabinet source said tax changes could be included in a midterm budget, without waiting to go the next election.
The next big test is if Chalmers and Albanese continue with the difficult work of making the case for changes that would create noisy losers. It is often said that the ambitious treasurer is held back by his uber-pragmatic boss, Albanese – mirroring the dynamic in the Hawke and Howard governments.
But other than during the stage three tax backflip and in the rhetoric before the roundtable, there is not much tangible evidence to prove that Chalmers, a gifted communicator as ambitious as anyone for the top job, has the conviction to fight hard for his vision.
And for Ley’s depleted Coalition, the tax debate returns Australian politics to its historical norm of the Coalition arguing for lower taxes. As a struggling John Howard sought to do when he threw up the GST in his first term, Labor’s fresh tax conversation allows the party of small government to return to its roots.
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