Future ‘not made with industry handouts’, says former ACCC chair Graeme Samuel
Graeme Samuel has urged the Albanese government to stop big-spending industry subsidies and tell companies seeking handouts that ‘enough is enough’.
Australia’s former competition tsar Graeme Samuel has called on Anthony Albanese and Jim Chalmers to end multi-billion-dollar industry subsidies and tell companies seeking handouts or bailouts that “enough is enough”.
Ahead of the Treasurer’s three-day economic reform roundtable this month, which will discuss how to encourage greater competition in the market to drive productivity and investment, Professor Samuel urged the government to allow the private sector to stand on its own feet.
Professor Samuel, who was Australian Competition & Consumer Commission chairman from 2003 to 2011 and led reviews for both Labor and the Coalition into environment law, defence controls and supermarkets, said the Albanese government must “numb the political nerve and the special pleadings that are coming from vested interests”.
The Monash University Business School academic and former National Competition Council president also cited political consideration as a motivation behind the federal and South Australian governments’ $2.4bn taxpayer-funded rescue package for the Whyalla steelworks.
Since the Prime Minister rolled out his big-spending Future Made in Australia vehicle, which is underwriting investments that align with Labor’s policy agenda across clean energy, green metals, solar panels, quantum computing, artificial intelligence, critical minerals and rare earths, critics have accused the government of picking winners.
Amid a growing push by countries across the globe to subsidise clean energy, defence and critical minerals production, Professor Samuel told The Australian: “National security is the latest rage … it used to be about energy and climate change … and now it’s national security they’ve caught on to. I’m hoping that what’s coming out of all the roundtables, and what’s coming out of Chalmers’ statements, is that he’s really saying to industry, ‘look, enough is enough … the budget doesn’t allow for it’.
“Those making special pleadings are touching upon a political nerve, but the government is in extraordinarily fortunate, and almost unprecedented position, that the political nerve can be numbed. They should say; “we’ve got 94 seats now in the House of Representatives, we don’t need to be doing this anymore’. So my urgings to government would be to say, numb the political nerve and the special pleadings that are coming from vested interests.”
Productivity Commission chair Danielle Wood last year warned that Future Made in Australia subsidies and incentives would come at a cost and divert investment from more productive parts of the economy.
Professor Samuel endorsed Dr Chalmers’ questions of industry and other stakeholders ahead of the roundtable about “who’s going to pay” for various proposals being put to government.
The former ACCC boss said if he had any influence over the Whyalla Steelworks bailout decision he would have said “just stop”. “A lot of that is political as well,” he said. “It’s South Australia and certain seats. We had this with (former Liberal prime minister Scott) Morrison and Western Australia,” he said.
The Albanese government’s $15bn National Reconstruction Fund on Thursday announced a $50m equity investment stake in the Gina Rinehart-backed Liontown Resources to support lithium production at the company’s Kathleen Valley operation in Western Australia.
As Dr Chalmers continued his “boardroom blitz” on Thursday, Mr Albanese categorically ruled out any new tax changes during his second-term of government.
Speaking in Melbourne, the Prime Minister said “governments make government policy, and … the only tax policy that we’re implementing is the one that we took to the election”, referring to reducing incomes taxes from July 1 next year.
Ahead of another round of meetings on Friday, Dr Chalmers met private sector leaders in Sydney on Thursday including BHP Australia president Geraldine Slattery, Business Council of Australia president Geoff Culbert, Wesfarmers managing director Rob Scott, Rio Tinto chief executive Kellie Parker, Mirvac chief executive Campbell Hanan, Google Australia managing director Mel Silva, Gilbert+Tobin chair Danny Gilbert, GrainCorp chief executive Robert Spurway, Cochlear chief executive Dig Howitt, AirTrunk chief executive Robin Khuda and BCA chief executive Bran Black.
The Australian understands that business leaders have been told the roundtable will not be a launching pad for sweeping tax reforms pushed by the unions and others. However, the government is expected to focus discussions heavily on addressing “intergenerational equity”, which will likely drive new tax policies ahead of the 2028 election.
Treasury issues papers released on Thursday – described by Dr Chalmers as “deliberately flat and factual” – outlined the government’s agenda for the three-day summit, to be held at Parliament House from August 19 to 21. Included in the resilience, productivity and budget sustainability and tax reform issues papers were references to the implications of the current tax system and public spending on productivity and “intergenerational equity”.
In the wake of Treasury’s post-election warnings to Dr Chalmers that he would need to lower spending and increase taxes to maintain a sustainable budget, the government is under pressure to pursue new tax measures and address concerns about negative gearing, GST, capital gains tax, company tax rates, and the need for road user charges.
Treasury’s budget sustainability and tax reform issues paper warned that the return to deficits was fuelled by higher spending and lower revenue. “The budget is forecast to continue to be in deficit over the forward estimates by an average of 1.2 per cent of GDP,” the paper said.
The seven “key structural spending pressures on the budget” were listed as interest costs growing by 9.5 per cent a year over the medium term. the NDIS, defence spending, hospital funding, Medicare, aged care, and childcare.
“The tax system is under pressure from demographic and economic shifts, and its design is critical to productivity, budget sustainability and intergenerational equity,” the issues paper said. “Structural changes to the economy, including an ageing population and the transition to net-zero, are expected to change the composition of the revenue base.
“The share of indirect taxes will fall, as the decarbonisation of the transport industry and changing consumer preferences erode the fuel and tobacco excise bases. This will increase reliance on the income tax base, which is expected to comprise an increasing share of total tax receipts.”
The Treasurer said the issues papers had been released now “so we can spend time at the roundtable on specific ideas not just problem identification”.
The Productivity Commission’s interim report on the national competition policy reforms inquiry, released on Thursday night, estimated that harmonising standards across all jurisdictions and aligning them to those that existed internationally would be worth more than $15bn over the forward estimates, or up to $3.8bn a year. The commission identified three main benefits from such a move: lower compliance costs incurred by businesses, lower administrative costs for government and the increase of products designed overseas to be sold in Australia. “Greater (product) range would imply consumer welfare gains from greater competition, lower prices and greater product diversity, productivity gains,” the report stated.
The commission said 21 mandated standards were not aligned with international standards, while a further 169 had no existing counterpart overseas. “Despite the small number of internationally unaligned standards, these standards can create trade barriers when mandated,” it said.
The commission reiterated its call for a road user charge, which Dr Chalmers has nominated as a reform priority that would help abate falling fuel excise.
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