Jim Chalmers gives GST warning in roundtable revamp

Jim Chalmers is recasting Anthony Albanese’s productivity roundtable as a broader ‘economic reform roundtable’, warning the Labor states that any ideas they bring on GST and housing cannot favour self-interest.

Treasurer Jim Chalmers in Brisbane on Tuesday. Picture: David Clark

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Jim Chalmers is recasting ­Anthony Albanese’s productivity roundtable as a broader “economic reform roundtable”, securing the first seat in the exclusive talks for opposition Treasury spokesman Ted O’Brien while warning the Labor-dominated states that any ideas they bring on GST and housing cannot favour self-interest over the nation.

The Treasurer’s move to ­rebrand the August meeting – first announced as a “productivity roundtable” by Mr Albanese – comes ahead of a vital call the Treasurer has scheduled with ­Donald Trump’s top Treasury ­official, Scott Bessent, on Wednesday during which they will discuss global economic uncertainty, trade and tariff tensions, and a new critical minerals deal.

“This will be an opportunity to engage once again on issues which are central to this very ­important economic relationship between the United States and Australia,” Dr Chalmers said.

US congress is currently considering legislation that mandates collaboration with Australia on mining and processing critical minerals, as well as US funding for shared critical mineral data ­collection and management, to reduce reliance on “foreign adversaries” such as China.

“The global economy is in a dangerous place right now, and that’s why one of our overriding economic goals is to make the Australian economy more resilient,” Dr Chalmers said.

The Treasurer said he had ­already been engaging with ­unions and business leaders on a new way forward for economic ­reform, with Mr O’Brien to be at the table of up to 25 people.

Mr O’Brien accepted the Treasurer’s invitation to attend what he called “the productivity roundtable”, saying he would be “constructive” where he could be, but would not “rubber stamp a talkfest”. “I believe rhetoric is no substitute for reform,” he said. “I want to see honesty in how the government defines the economic problems our nation faces, and I will be looking to tangible outcomes as real measures of success.”

Reiterating discussions about the GST would be on the table, Dr Chalmers said he was “trying not to artificially limit the contribution that people might want to make in and around the economic reform roundtable”.

He said a precondition for considering changes to the GST would be that the package is at least revenue neutral and in the national interest, while noting from “time to time, tension ­between the commonwealth and the states about commonwealth funding”.

“I hope that at the economic reform roundtable, however, we work out the best way to involve the states in this process, whether inside or outside the room, I hope that people come to this in a constructive way, and I suspect they will,” he said. “Every state and ­territory wants more funding from the commonwealth, from time to time they pitch up ideas like (GST reform). I like to engage with the states and territories in good faith.”

After delivering an $8.6bn ­operating deficit on Tuesday, Queensland Treasurer David Janetzki said he would be pressing for a seat at the roundtable and that he wanted the state to have a “very loud voice” in any review of the GST conducted by the Productivity Commission after its chair Danielle Wood said changes to the tax should be considered.

“I don’t think we should be penalised for advancing our state interest and, ultimately, national wealth in that carve-up,” he said.

In what was his first budget, Mr Janetzki blamed the state’s deficit on the “unprecedented” $2.3bn in GST that “punched a hole in revenue forecasts”.

“This redistributive loss comprises more than 25 per cent of this year’s operating deficit … It’s the biggest redistribution of GST revenue in Australian history.”

Among the GST reform ideas that the Dr Chalmers would be open to are those around housing, which is a key pillar in a review by the Productivity Commission due out in draft form in August, timed with the roundtable.

Economists such as the Centre for Independent Studies’ Peter Tulip has posed that the Albanese government could increase incentives for states to speed up the ­delivering of housing beyond the current $15,000 reward per dwelling. “Incentives could be further improved, in a revenue-neutral manner, if the Grants Commission allocated a larger GST distribution to states that build more,” Mr Tulip said.

On Tuesday, NSW Treasurer Daniel Mookhey, who announced a $5.7bn deficit and $47.5bn in GST revenue, said the state wanted to accelerate its housing rollout by guaranteeing residential pre-sales for up to $1bn of housing projects.

Other mooted GST ideas involving housing include encouraging states to scrap their own new taxes on short-term rentals such as Airbnb in exchange for expanding the national GST on such accommodation.

Property Council of Australia group executive for policy and advocacy Matthew Kandelaars said that while he was against new taxes, if states were determined to introduce them on short-term rentals it would be better to have a consistent tax collected via GST.

“There is no evidence to suggest that increasing taxes will do anything other than reduce housing supply and this holds true in relation to short-stay accommodation taxes,” Mr Kandelaars said, “however, if forced to choose ­between the lesser of two evils, then a national GST mechanism beats fragmented and inconsistent state-by-state taxes.” He said incentive-based approaches such as Western Australia’s Short-Term Rental Accommodation Incentive Scheme were preferred.

ACT Treasurer Chris Steel, who handed down a $1.1bn deficit on Tuesday, said questions about GST reform replacing the ACT’s new short-term accommodation tax were “best directed to the commonwealth in the first instance”.

“States and territories have narrow tax bases. In the ACT the Short-term Rental Accommodation Levy was first announced in the 2024-25 budget and is designed to be a revenue raising measure.”

Queensland Premier David Crisafulli was asked whether his government would accept an expansion to the rate or the base of the GST – for instance to cover short-term accommodation instead of introducing their own tax as the ACT and Victoria have done. He said it was up to the ­Albanese government.

“We get what the federal government collects. That’s a matter for them,” Mr Crisafulli said. But he said Queensland wanted a fairer deal when the GST was distributed. “What’s a matter for us is to advocate that (whatever) the model they use to collect, that we get our fair share.”

Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said states should consider GST reform over their own new taxes. “We don’t want to see states breaking out and going down the path of unilateral taxes,” he said.