Labor has license to be ‘bold’ on tax and economic reforms, new research shows

Australians want Treasurer Jim Chalmers to use Labor’s huge election victory to tackle broad tax reform and make “difficult” decisions to reduce budget debt.

EXCLUSIVE

Australians want Treasurer Jim Chalmers to use Labor’s huge election victory to tackle broad tax reform and make “difficult” decisions to reduce budget debt, but economists are sceptical the Albanese Government will take the risk of being bold.

Eight in ten voters are giving Labor a license to pursue “some of the more difficult and complex reforms needed to grow the economy and balance the budget” in its second term, a survey by JWS Research in the wake of the federal election has found.

Australians are supportive of broad tax reform and want Treasurer Jim Chalmers to tackle budget repair. Picture: NewsWire / Martin Ollman

About 23 per cent of Australians “strongly support” broad tax system reforms, while a further 33 per cent “somewhat support” and 26 per cent are neutral, giving Labor a clear opening to consider new ways to raise revenue to help bring down the $150.5 billion in deficits forecast over the next four years.

JWS Research business development manager Tom Cameron said the survey of about 1000 people conducted after the May 3 federal election, where Labor is on track to secure 94 out of 151 lower house seats, showed while cost of living remains a primary issue, Australians “still see thrift as a virtue”.

“That is something the recent election campaign either deliberately or inadvertently failed to acknowledge,” he said.

Mr Cameron said 12 months ago about 24 per cent of Australians surveyed felt the tax system was working well, suggesting there was a growing interest in substantial reform.

“Frustration with the state of our tax system is now an embedded reality for most of the Aussie community,” he said.

The research was not designed to prescribe a reform pathway, but economists have said there are plenty of options if Labor is brave enough.

Economist Saul Eslake says there are a lot of bold options Labor could pursue, but all will be politically challenging.

Independent economist Saul Eslake said welcomed Mr Chalmers’ second-term focus on productivity, but feared Labor would struggle without a mandate for specific measures given how past governments were “smashed” for surprise cuts or taxes.

“The problem is he doesn’t really have a mandate for the kind of reforms I and others think are needed,” Mr Eslake said, though he praised Labor’s plan to ban non-compete clauses.

Incentivising the states to get rid of stamp duty by introducing a land tax, raising GST while also decoupling it from payments to states to stop Western Australia getting a larger share than it needs, and introducing a high-threshold inheritance tax are among the bold ideas Mr Eslake said would help the budget.

Economist Chris Richardson is sceptical Labor will have the public support to do the big reforms needed. Picture: AAP Image/Lukas Coch

Economist Chris Richardson said people were often in favour of reforms until governments got “specific” about winners and losers.

He also backed cutting stamp duty in favour of land taxes as a “sensible” reform, but argued it would be “tricky” to do anything after an election where “both sides promised to do almost nothing” on tax.

“It’s increasingly less than inspiring as time has gone on the economic challenges have gradually gotten worse, the barnacles have built up,” he said.

After the Reserve Bank announced a second rate cut for this year, Mr Chalmers said Labor wanted to “finish the fight against inflation at the same time as we make our economy more productive over the medium term”.

“This second term gives us an opportunity to lay down some of the longer term foundations for a more productive economy,” he said.

Mr Chalmers listed getting the energy transformation “right,” maximising investments made into the care economy, capitalising on AI and ensuring Australians have the right skills to adapt to technology as priorities.

Originally published as Labor has license to be ‘bold’ on tax and economic reforms, new research shows