Jim Chalmers’ reform cry: Generation Next needs it now

Treasurer Jim Chalmers says the long-term impact of economic reform ‘demands collaboration and compromise’ from politicians, union leaders and business figures.

Treasurer Jim Chalmers says the benefits of economic ­reform would ‘take time to ­realise’, making it essential there was broad community support for taxation and regulatory changes. Picture: Dan Peled / NewsWire

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Jim Chalmers has issued a plea for a new era of “collaboration and compromise” from politicians, unions and business ­leaders, ­declaring a generational ­approach from all parties is ­needed to secure economic ­reforms that will drive increased productivity and produce a sustainable budget.

The Treasurer’s comments came as Department of Finance figures released on Friday revealed a budget deficit of $5.5bn in the financial year to May, a big ­improvement on the expected position of a $20.2bn deficit.

Dr Chalmers told The Australian the benefits of economic ­reform would “take time to ­realise”, making it essential there was broad community support for taxation and regulatory changes.

After unveiling the first group of people invited to the economic reform roundtable in August, the Treasurer said that achieving consensus on reform to lift living standards “won’t be easy, but we owe it to the generations that follow us to have a go”.

With four business representatives and four union leaders ­invited, Dr Chalmers promised to chair the roundtable discussions “from the sensible centre, not an ideological extreme”.

The Department of Finance figures showed an improvement in the budget bottom line from a windfall in tax receipts, leading to a possible third consecutive surplus, but underlying structural problems remain, with deficits having been forecast for the next decade.

Tax receipts were $9.8bn ­higher than what was expected when Dr Chalmers handed down the March budget, while total payments were $4.9bn lower.

NAB chief economist Sally Auld said that, given the position to May, the government could achieve a third surplus for the 2024-25 financial year.

“Unless something goes drastically wrong in June they are going to end up in a good position, maybe a potential small surplus,” Dr Auld said.

“That’s very different to other countries such as China, Japan, France and Germany, so on a relative basis that’s a good thing.”

After new Opposition Leader Sussan Ley this week warned she was unlikely to back an economic reform package with higher taxes, Dr Chalmers urged the ­Coalition to be prepared to compromise with the government to secure ­bipartisan support for reforms to address long-term ­fiscal challenges.

The government is understood to be reluctant to pursue a reform package needing the support of the Greens in the Senate, putting the onus on the major parties to strike a deal that would lock in the changes across election cycles.

“This isn’t about one PM or one treasurer; it’s about bringing people into the effort to see what we can all achieve together,” Dr Chalmers said.

“It’s about reform that will take time to roll out, where the benefits will take time to realise, and that demands collaboration and compromise, not just from our political counterparts, but from the broader community too.”

In a move aimed at helping to achieve that consensus, Dr Chalmers this week invited opposition Treasury spokesman Ted O’Brien to the roundtable.

Anthony Albanese this month revealed plans for a “productivity roundtable”, with Dr Chalmers later broadening the initiative to include options for tax reform. Writing in The Australian, Mr O’Brien says 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,” Mr O’Brien writes. “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.”

Mr O’Brien writes that Dr Chalmers’ budget surpluses were driven by “two massive windfalls” of record terms of trade and high inflation, and accuses the government of worsening the structural deficit through undisciplined spending.

“It is wrong for Chalmers to claim he has made the budget stronger,” Mr O’Brien writes.

“(The government) 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.”

Last month, the OECD said governments must start saving revenue windfalls.

“The widening of the fiscal deficit in 2024-25 and the further budgeted increase in 2025-26 are justifiable, given the weakness of private demand, but governments should look to save any windfalls relative to current plans,” the OECD said.

Among the first people invited to the reform roundtable are ­Business Council of Australia chief executive Bran Black, Australian Chamber of Commerce and Industry chief executive Andrew McKellar, Australian Industry Group chief executive Innes Willox and Council of Small Business Organisations of Australia executive director Matthew ­Addison.

Four members of the ACTU have been invited: secretary Sally McManus, president Michele O’Neil, assistant secretary Liam O’Brien and assistant secretary Joseph Mitchell.

It is believed that there will be only two ACTU members at the roundtable at any one time.

Other early invitations have been sent to Productivity Commission chair Danielle Wood and Australian Council of Social ­Service chief executive Cassandra Goldie.

The Treasurer said there would be an opportunity for premiers and territory chief ministers to participate, although it is understood that they are unlikely to be invited to the roundtable of 25 people running from ­August 19-21.

Dr Chalmers has opened a public consultation process so that people can send ideas for economic reform to the roundtable through the Treasury ­website.

He said more invitations would be “issued in tranches and in due course, as the agenda takes shape”.

The Productivity Commission is currently calling for submissions on tax reform as part of its bigger, five pillars review of productivity in Australia.

Ms Wood has already called for a rethink of the GST and as ­little regulation on AI as possible to ensure investments are made and productivity gains are achieved.

Mr Black said the BCA would push for “red-tape reduction, ­faster approvals on major projects, future industries’ growth, ­research and innovation, harnessing AI and tax reform”.