Jim Chalmers says he’s ready to tackle reform – we’ll see

Treasurer Jim Chalmers at a press conference this week. ‘Chalmers wants Australians to believe he’s a changed man. I hope he means it,’ says his opposition shadow, Ted O’Brien. Picture: David Clark

The Coalition is willing to work with the government in good faith on sensible economic reform, being constructive where we can and critical where we must.

It is in that spirit that I listened to Jim Chalmers’ speech at the National Press Club on June 18 and I have accepted his invitation to attend a roundtable on tax reform.

For now, I will give the Treasurer the benefit of the doubt that he is genuine about building consensus around sensible economic reform.

But he is on notice that the Coalition’s offer to co-operate will be withdrawn as quickly as it has been extended if he fails to honour his word on being open-minded, non-ideological and putting the national interest first.

Chalmers wants Australians to believe he’s a changed man. After three years of spending beyond our means, he’s ready to address fiscal sustainability. After three years of overseeing falling Australian living standards, he’s ready to engage in productivity-enhancing reform. And after three years of weakening our sovereign capability, he now wants a more resilient economy.

I hope he means it. But his press club speech wasn’t a promising start.

Deputy Leader of the Opposition Ted O'Brien at a press conference this month. Picture: NewsWire / Nikki Short

Chalmers spoke of three “blunt truths”, which were half-truths at best. First, he claimed “our budget is stronger but not yet sustainable enough”.

The Treasurer has delivered six budgets and mid-year updates promising a decade of deficits, while gross debt is set to exceed $1 trillion this year. He is right to say this is not sustainable. It’s curious he waited until after the election to admit it.

And it is wrong for Chalmers to claim he has made the budget stronger. He has been the beneficiary of two massive windfalls. Record terms of trade have boosted company tax and the strongest inflation in decades has boosted income tax via bracket creep.

Together, these have delivered Chalmers an unprecedented $400bn bonanza. When you remove this, the government’s spending spree is laid bare.

Budget papers show government decisions have turned a $6bn deficit this year into a $28bn deficit, and a $5bn deficit next year into a $42bn deficit.

The government should be within cooee of a surplus this year and next. But its fiscal irresponsibility puts it miles away. It has added more than $112bn in new debt our kids will have to pay back. And that’s not counting the billions in off-budget debt it has racked up.

Second, Chalmers claimed our economy is “growing, but not productive enough”.

Productivity has fallen by more than 5 per cent since Labor came to office, and it’s down 1 per cent in the past year alone. Government spending is rising faster than at any time outside recession since the Whitlam government, with an unproductive public sector squeezing out a more productive private sector. And it is wrong for Chalmers to claim he is overseeing a period of economic growth.

In the latest national accounts, GDP per capita shrank by 0.2 per cent. That followed a tiny 0.1 per cent increase in the prior quarter. And that was the only quarter across three years of a Labor government in which GDP per capita grew.

Third, Chalmers claimed our economy is “resilient, but not resilient enough”.

It’s true we are not resilient enough, and Labor has made us less so. We are losing sovereign capability as our manufacturers pay among the highest energy prices in the world because of Labor’s ideological energy policy, which takes cheap, reliable, low-emissions options off the table, making it tougher for Australian companies to compete.

It’s a similar story with Labor’s approach to industrial relations and regulation.

In the face of the AI revolution, Labor is preoccupied with helping the unions put the brakes on instead of securing the energy to power it. Labor wants to over-regulate AI rather than enabling its uptake to lift productivity and raise living standards.

Chalmers’ economic legacy is higher business costs, declining productivity, per-capita recession, falling living standards, over-regulation, rising taxes, a decade of deficits, over $1 trillion in debt and weakening capability.

But now he is a changed man, ready to tackle real reform. Or is he? Having spent more than 20 years in business before entering politics, I learnt to judge people by their actions and not their words. That will be my approach to Chalmers.

As shadow treasurer, I will engage in a businesslike way.

But Chalmers should know from the outset that I see rhetoric as no substitute for reform, and half-truths as a shaky foundation for building consensus. He is to be honest in defining the economic problems our nation faces, and his success will be measured by tangible outcomes.

The Coalition will hold the government to account and we won’t rubberstamp a talkfest.

Ted O’Brien is the deputy opposition leader and opposition Treasury spokesman.