The Coalition says it’s open to tax reform – but there’s a catch

The Coalition has offered support for bipartisan “holistic” reform of the nation’s creaking tax system as long as it does not involve higher taxes, ahead of Prime Minister Anthony Albanese’s first major post-election speech, in which he is expected to map out his agenda for the next three years.

Opposition finance spokesman James Paterson said on Sunday that the Coalition could find common political ground with the government in finding ways to make the tax system more efficient as part of a process to help pay for an increase in defence spending.

New Coalition finance spokesman James Paterson says he is open to tax reform as long as taxes don’t go up.Credit: Alex Ellinghausen

The Coalition opposes the government’s planned changes to tax on people holding over $3 million in superannuation. Treasurer Jim Chalmers estimates the changes will raise about $2.7 billion a year towards repairing the budget and covering the cost of spending initiatives.

Chalmers has said the proposal is key to the government’s tax agenda, pushing back at calls from economists, business groups and parts of the social welfare lobby for him and the prime minister to be more ambitious.

Paterson, who as the Coalition’s home affairs spokesman previously backed a substantial increase in defence spending, said he and the rest of the opposition would work on “strong fiscal rules” over the next 2½ years that would improve the budget and allow for more investment in national security.

Admitting the Coalition had been wrong in opposing the government’s cut to personal income tax ahead of the last election, Paterson said he was not opposed to a broader and bipartisan approach to tax reform.

“If the Albanese government and the Treasurer, Jim Chalmers, were talking about genuine tax reform, holistic tax reform across the board that, for example, reduced the collection of taxes in inefficient areas and collected that revenue in less distortionary ways, we’d be up for that conversation,” he told the ABC’s Insiders program.

“We’d be happy to sit down and have that. But that’s not what [the superannuation tax change] is. This is a grab for revenue from people’s family savings in a way that will have severe unintended consequences.”

The last wide-scale overhaul of the nation’s tax system was the introduction of the GST in 2000. Personal income taxes were cut when the 10 per cent GST was introduced, while welfare payments were lifted to help people deal with the new impost.

Paterson made clear the Coalition was opposed to higher taxes.

“We’re happy to talk to the government about tax reform. But we are not interested in increasing taxes, because I don’t think that’s what the Australian economy needs right now,” he said.

His comments come ahead of Albanese going to the National Press Club on Tuesday to deliver his first major post-election speech on his planned agenda for the next parliamentary term.

Albanese, who travels to the G7 meeting of world leaders in Canada next week, when he is expected to meet President Donald Trump for the first time, will flesh out how he will implement his pre-election pledges, while touching on the key issues facing the country.

One of those issues continues to be the Trump administration’s tariff agenda, which the OECD last week warned would reduce growth and lift inflationary pressures around the globe.

Trade Minister Don Farrell said on Sunday that the Trump tariffs would “inevitably … impact growth on all nations, led by the US.

“I think it’s incumbent on Australia, on the rest of the world, to say to the Americans, look, these are exactly the wrong policies to adopt. You should be adopting the opposite policies. You should be opening up, opening up your economies,” he told Sky News.

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