Tax reform ‘crucial to budget sustainability’, Chalmers says

Jim Chalmers has hinted Labor’s proposal to roll back concessions on ultra high super accounts could just be the start of broader tax reform.

Labor’s proposal to roll back concessions on ultra high super balances is just the start of broader tax reforms needed for “budget sustainability”, Jim Chalmers says.

The Treasurer used a major speech on Wednesday to outline the Albanese government’s second-term economic agenda.

Warning of revenue challenges stemming from “global economic volatility”, Australia’s ageing population and the transition to net zero, Mr Chalmers said it was time to rethink how to keep cash flowing into the federal government’s coffers.

Treasurer Jim Chalmers has hinted at tax reforms beyond Labor’s plan to roll back concessions on ultra high super balances. Picture: NewsWire / Martin Ollman

“Australians have achieved so much in our economy these past three years, but there’s more to do,” he told the National Press Club.

“Let’s not talk this down or talk it up – let’s just put our progress in its proper perspective.

“We’ve come a long way, we’ve got a lot going for us, we’re better placed and better prepared than other countries.

“But some of the pressures on our economy and budget are intensifying rather than easing.”

He noted that inflation was on its way down and unemployment remained low while real wages were rising and Australia was outperforming peer economies in terms of jobs growth.

But Mr Chalmers conceded there were “three blunt truths”.

“Our Budget is stronger, but not yet sustainable enough,” he said.

“Our economy is growing, but not productive enough.

“It’s resilient, but not resilient enough – in the face of all this global economic volatility.”

He warned the “international environment and the global economy will be the main influences which shape and constrain our choices this term”, pointing to recent oil price fluctuations due sparked by the spiralling conflict between Israel and Iran.

Labor did not take broader tax reform to the federal election. Picture: Mark Stewart / NewsWire

“In this world of churn and change we like our chances,” Mr Chalmers said.

“But only if we make our economy even more resilient.

“By securing capital and shoring up supply chains, building more partnerships in our region and diversifying our trade, modernising our economy and maximising our advantages.”

Spruiking the Albanese government’s so-called productivity roundtable, he said reforms, including any further tax reforms, must be motivated by the national interest rather than “through the prism of sectoral, state or vested interests”.

He also said ideas should be “budget neutral at a minimum but preferably budget positive overall” and “specific and practical, not abstract or unrealistic”.

Talking to the revenue challenges posed by an ageing population and shift to green energy, Mr Chalmers said they showed why “tax reform is so crucial to budget sustainability, on top of restraining spending, finding savings and working on longer-term spending pressures”.

“But tax reform is bigger than just managing the difficult balance between spending and collecting,” he said.

“It’s also about lifting productivity and investment, lowering the personal tax burden and increasing the rewards from work, creating a more sustainable, simpler system to fund vital services, and improving intergenerational equity.”

Teal Independent MP Allegra Spender told Afternoon Briefing she thought the Treasurer’s stance on tax was “really encouraging”.

“I didn’t expect him to go as far...(it) is positive to put (tax reform) so firmly on the table,” Ms Spender said.

“That is where it needs to be, because it has a profound impact on people getting ahead on the productivity and growth in our country, but also on the energy transition.”