No May budget cash splash as Jim Chalmers goes for growth

Jim Chalmers has declared the government is leading the biggest tax reform agenda “certainly for 15 years, maybe 25 years” and is prioritising rolling tax reforms ahead of “big bang” changes.

Jim Chalmers says boosting investment will be a key priority in the May budget. Picture: NCA NewsWIRE / John Gass

Jim Chalmers has declared the government is leading the biggest tax reform agenda “certainly for 15 years, maybe 25 years” and is ­prioritising rolling tax reforms ahead of “big bang” changes.

After a CEDA speech in Sydney outlining his priorities for the May 14 budget, the Treasurer defended the government’s ­commit­ment to tax reform and flagged a greater focus on making big tech companies pay their share under Labor’s multinational tax crackdown.

Acknowledging the tax base “is not what it could be”, Dr Chalmers said instead of embarking on a “big bang review” the government had identified areas that could be progressed in their first parliamentary term. “Changes to the PRRT, changes to high balance superannuation, big multinational tax reform agenda, we’ve got the personal income tax cuts, we’ve cut taxes on EVs, we’ve cut taxes on small business and energy efficiency,” Dr Chalmers said.

“There is a big agenda on tax that I don’t think is always recognised when people are thinking about and talking about tax in our political system. We’ve actually got a lot before the parliament right now. If you make a list of tax reform efforts over recent times, what we’re doing is probably the biggest agenda certainly for 15 years, maybe 25 years.”

Dr Chalmers, who some in the private sector fear is laying the ground for a radical anti-business tax reform agenda if Labor wins the 2025 election, said the government was identifying meaningful action and bedding it down rather than “big bang changes that people have been proposing”.

As the government targets Mark Zuckerberg’s Meta after the social media giant terminated funding agreements with Australian media companies, Dr Chalmers said a key component of multinational tax reforms related to tech companies had “stalled”.

“We’re all trying to work out how can we make the multinational tax regime more effective, how can we make the tax base more sustainable and where do the tech companies fit in that. And whether that is a kind of perfect multilateral solution or whether countries are going to have to do the heavy lifting at home. That is still something that we’re working through.”

Dr Chalmers, 46, said the government would not hesitate to pull regulatory levers during its two-year competition policy review.

“Whether it’s non-compete clauses, whether it’s mergers and acquisitions, whether it’s the biggest tariff reform in two decades … we’re trying to reform the economy in an ongoing way.”

In his speech, he announced a new whole-of-government budget strategy to supercharge investment in priority areas, fast-track clean energy projects, build a modern workforce, cut red tape, establish resilient supply chains and more effectively screen foreign investment.

Dr Chalmers, who flagged targeted cost-of-living relief rather than “cash splashes”, said the ­budget would save less of dwindling tax revenue upgrades to pay for a string of recent spending ­announcements, including on defence, superannuation on taxpayer-funded parental leave, and billions committed to invest in Northern Territory remote housing and in Southeast Asia.

“There will likely be additional cost-of-living help in the budget, but it won’t be anywhere near the magnitude of the tax cuts. Any extra help will be targeted, responsible and affordable. There will not be big cash splashes in the budget, simple as that.”

The December mid-year fiscal update included a forecast for a slim $1.1bn deficit for this financial year, but most experts expect Labor to be able to deliver a second straight surplus.

With concern among policymakers, business leaders and economists about a collapse in productivity, the May budget will have a “big, new focus on investment” to secure long-term growth.

“When we say we will go for growth we mean it. But we also mean sustainable growth. Think of it as protein, not carbs. By this I mean a bigger emphasis on foundations and drivers,” he said.