Australia’s economic outlook: Anthony Albanese not for lifting over GST reform

Anthony Albanese says raising the rate of the GST ‘doesn’t fit’ with his support for progressive taxation, signalling he will be unlikely to seriously consider reforming the measure as part of the economic reform roundtable.

Anthony Albanese said he would like to see income and company taxes ‘as low as possible’ but would not say whether he believed they should be lower than they are now. Jane Dempster/The Australian.

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Anthony Albanese says raising the rate of the GST “doesn’t fit” with his support for progressive taxation, signalling he will be ­unlikely to seriously consider ­reforming the measure as part of the economic reform roundtable.

The Prime Minister said the GST was “regressive”, meaning it disproportionately hit the poor, and the government had never considered increasing it from 10 per cent.

But Mr Albanese said he would not “rule things in or out” ahead of the roundtable to be held in Canberra from August 19-21, declaring “people are entitled to put forward whatever they want to put forward”. His comments against changing the GST are firmer than those delivered in the past month by Jim Chalmers, who reiterated his historical opposition to raising the consumption tax but opened the door to it being debated at the roundtable.

“I’m a supporter of progressive taxation,” Mr Albanese told the annual Australia’s Economic Outlook forum, hosted by Sky News and The Australian. “Consumption taxes by definition are regressive in their ­nature so that is something that … doesn’t fit with the agenda. But people are entitled to put things up.”

Mr Albanese said he would like to see income and company taxes “as low as possible” but would not say whether he believed they should be lower than they are now.

In his address, Mr Albanese said he was concerned by the number of children joining the NDIS and claimed his industrial relations reforms had been good for business. He did not directly answer whether he was considering changes to Labor’s under-siege proposal to tax the unrealised capital gains of high-value superannuation funds, saying “we went to an election on it” while arguing it would impact “a very small number” of people.

Crown Resorts CEO David Tsai. Picture: Jane Dempster

AustralianSuper CEO Paul Schroder. Picture: Jane Dempster

As he comes under growing pressure over failing to secure a meeting with Donald Trump, Mr Albanese said he did not expect any change to the 10 per cent tariff on Australian products when the US lifts its 90-day pause next week. The Prime Minister said he expected “several meetings” this year with the US President and defended the performance of Kevin Rudd. “No American political person would talk down the US ambassador to Australia – I make that point,” he said.

As Mr Albanese declared that the August roundtable would be about more than tax reform, the Treasurer and Finance Minister Katy Gallagher wrote to 37 regulators asking them to identify red tape that could be cut in their sectors to improve productivity.

The regulators – including the Australian Taxation Office, the Australian Competition & Consumer Commission, the Clean Energy Regulator and the Australian Prudential Regulation Authority – have been asked to submit a list of proposals by August of measures they believe can increase productivity.

Senator Gallagher said reducing regulatory burdens on business would be “key to building a more productive economy”.

“Regulators across industries have been invited to provide us with ideas to encourage investment, spur growth, and bring down compliance costs,” Senator Gallagher said. “We’ve been clear that this roundtable is about being practical and pragmatic which is why we want to hear from, and work with, voices from across the economy.”

Mr Albanese unveiled plans for a “productivity roundtable” last month, which has been broadened by Dr Chalmers to an “economic reform roundtable” that includes discussions about tax reform. There will be about 25 people at a time at the roundtable, which will involve leading members from the government, business and unions. It will also be attended by opposition Treasury spokesman Ted O’Brien, Productivity Commission chair Danielle Wood and Australian Council of Social Service chief executive Cassandra Goldie.

Myer executive chairwoman and director Olivia Wirth. Picture: Jane Dempster

Uber Eats managing director ANZ Ed Kitchen. Picture: Max Mason-Hubers

With GST reform increasingly looking unlikely, former ­Treasury deputy secretary Luke Yeaman is tipping the government to target capital gains tax discounts. Mr Yeaman, who served in Treasury for five years before becoming the Commonwealth Bank’s chief economist in March, said he expected reforms to the CGT discount and family trusts would be considered.

“I think there are some things on tax that will be looked at,” he said. “I think that the capital gains tax discount will be looked at by the government – whether they move is an open question – but I think they will certainly look at that. Trusts have been talked about. I personally think trusts is an area that is worth looking at, and I think the government will focus there.”

Mr Yeaman indicated there was interest within government in expanding means testing across major public spending programs, highlighting Labor’s recent moves to curb the rising cost of aged care through a new funding model.

“If you look at energy bill rebates, which went to everybody, the investment in Medicare pre-election, everyone benefits from that, even high-income earners,” he said. “I think there’s an opportunity to look at some of the key spending programs and whether you can drive means-testing and user contributions through.”

Dr Chalmers has ruled out changing taxation arrangements of the family home or introducing “death taxes”, but has left open considering the GST in anticipation it would be raised by the states.

Mr Albanese said cost of living remained the big concern for voters and denied claims by business leaders that his first term industrial relations reforms were a handbrake on productivity. “I think that paying people fairly actually assists business,” he said. “I’m proud of the fact that real wages have risen now seven quarters in a row, and prior to us coming to office, they were falling. One of the things that we have the opportunity to do in Australia, and what my government is laser-like-focused on, is making sure that people don’t feel like they’re left behind.”

He denied claims most jobs growth under his government was driven by public spending, despite ABS figures showing 80 per cent of all jobs filled in the past two years have been in the non-market sectors including education, the public service and the care economy.