David Littleproud says Australia must have ‘mature conversation’ on tax reform

Amid a grim warning about the future of Australia’s economy, politicians are being urged to leave politics to the side to talk about one thing.

Politicians must put politics aside and have a “mature conversation” on tax reform, Nationals leader David Littleproud says.

The latest Intergenerational Report – to be released on Thursday – is set to provide a detailed assessment of Australia’s economy over the next 40 years.

The report will show that the five biggest pressures on the budget – health, aged care, the NDIS, defence, and servicing government debt – will put an even greater strain on the government’s coffers, rising from one-third of government spending to one-half by the 2060s.

While it will outline an expectation for Australia’s economy to double off the back of a booming labour market, the report will also warm how a rapidly ageing nation and projected population slowdown will grind economic growth to just 0.9 per cent – well below the last IGR’s projection of 2.6 per cent.

It will mean the larger labour market will be required to do more of the heavy lifting to meet the structural demands facing the budget.

Anthony Albanese said the report was an “important signpost” for where Australia was heading over the coming decades and wasn’t designed with the purpose of “freaking people out”.

Treasurer Jim Chalmers says there is no quick fix. Picture: NCA NewsWire / Martin Ollman

“We need to be collectively planning for it,” the Prime Minister told ABC Melbourne.

“That’s why we need to respond to the aged care royal commission properly, that’s why we need to consider issues such as the way that we build our housing to be more adaptable so that people can stay in home … which is what most people of course prefer to do.

“We need to just prepare for it.”

In the lead-up to the report’s release, Treasurer Jim Chalmers has warned that there is no quick fix to the nation’s productivity challenge – suggesting the country is heading into an era of higher taxes and lower growth.

Nationals leader David Littleproud says the country needs to have a ‘mature conversation’ about tax reform. Picture: NCA NewsWire / Martin Ollman

The report will warn that “structural changes to the economy” are projected to put pressure on the revenue base over the decades ahead, with the tax-to-GDP ratio projected to be at 24.4 per cent by 2033-34, a figure the report assumes will remain out to 2062.

After comments made by opposition finance spokeswoman Jane Hume, who on Monday said the IGR report was “essentially a Trojan horse for higher taxes”, Mr Littleproud said if tax reform was needed, politics needed to be put to the side.

“I think it’s important we look at what the tax mix looks like, what our economy looks like in 30-40 years with the demographic of the population, and I think that’s about making sure that it’s equitable and having a conversation about (whether) the current system is fit for the future,” Mr Littleproud told ABC Radio.

“These are the types of conversations I think the public is up for.

“We should have a mature conversation so that this isn’t ideological or one-sided.”