Analysis: Making a mark comes at a cost for Chalmers

Logan lad Jim Chalmers isn’t in Canberra to be a placeholder Treasurer, he’s here to make a mark, but the past week has shown him that doing so comes at a cost.

Logan lad Jim Chalmers isn’t in Canberra to be a placeholder Treasurer, he’s here to make a mark.

The past week has shown him that doing so comes at a cost.

A political and economic student of former Treasurer Wayne Swan, and like him a member of Labor’s right faction, Mr Chalmers has a mix of idealism and pragmatism.

With sense of fairness and equity, he is prepared to slug the top end of town but seeing it as practical means to an end and not doing so indiscriminately.

He is prepared to use government intervention to try and balance the scales of equity – though not as much as some left-wing commentators would want.

Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

The past week or so of debate on superannuation, his first budget and the much-talked about 6000-word article he wrote for The Monthly, has told us quite a bit about what he stands for.

There are three ways to fix the growing debt problem: Raise taxes, cut spending or grow the economy, with the Treasurer aiming for a mix of the three.

Multinational tax avoidance was Mr Chalmers first target in the October budget, but it was forecast to only net half of the $1.8 billion Labor anticipated before the election.

This week, he has gone after the super balances of people with more than $3 million in the balance.

It is a change that will impact 80,000 people in its first year, will raise about $2.3 million a year, while leaving the vast majority of Australians and particularly those less well off alone.

Those 80,000 people – and climbing as the threshold will not be indexed – will pay a 30 per cent tax instead 15 per cent on any earnings they make from super above that $3 million threshold.

That 30 per cent on earnings is still a lower tax rate than the top income tax on someone earning just over $45,000 a year.

He has been at pains to stress that this is not an attack on people who have achieved.

His initially reluctance to rule out touching the capital gains tax exemption on the family home, quickly shot down by the PM, as well as continued questions over negative gearing, suggests he is willing to at least consider going further as he weighs up to potential gains against the political cost.

Mr Chalmers last year also seemingly floated the idea of scrapping or altering the stage 3 tax cuts, though has since said it is not on the government’s current agenda.

He defended keeping it this week by pointing out the benefits for those on $45,000 a year and above, which indicates should the government choose later to target stage 3 it will tinker at the top and not scrap it entirely.

It is wrong to think Mr Chalmers is taking the Bill Shorten approach of targeting the top end of town in some sort of class warfare.

He has had good relationships with business circles and genuinely engages with the sector.

But that doesn’t mean he is not prepared to risk some political skin in a bid to repair the budget.