Last week’s Economic Reform Roundtable featured a mix of leaders from business, unions, civil society, government and other experts, who spent three days with Treasurer Jim Chalmers, Prime Minister Anthony Albanese and Finance Minister Katy Gallagher in the Cabinet room in Canberra.
Chaired by Dr Chalmers, the roundtable sought to build consensus on ways to lift living standards for Australians, with a focus on three main themes:
- Making our economy more productive
- Building resilience in the face of global uncertainty
- Strengthening the budget and making it more sustainable
Being a discussion forum, there were no real expectations of any major policy announcements as this requires a process in policy development and ultimately Cabinet approval.
However, there were several of what the Treasurer described as ‘quick wins’, such as abolishing remaining nuisance tariffs (which the Treasurer abolished 500 of this week), some red tape-reduction in construction and environmental approvals, and a road user charge for electric vehicles.
Tax reform
Beyond the above, the Roundtable shaped a commitment to a process of addressing ten longer term directions. They included creating a better tax system, expressed through three objectives:
- A fair go for working people, including in intergenerational equity terms.
- An affordable, responsible way to incentivise business investment, and what that means for productivity and for growth.
- Make the system simpler, and more sustainable for funding public services.
Although the Treasurer had said the Roundtable will inform the next three Budgets, the Prime Minister has stated that the only changes to the tax system in this term of parliament will be those taken to the May 2025 election. Hence, we will be unlikely to see any tax reform that may arise from this process before the next election.
On the one hand, this timing perhaps gives some certainty, but on the other, the need for reform is far more immediate.
Mandate vs leadership
Considering the reforms implemented in the 1980s and early 1990s – such as floating the dollar, removing trade barriers, reducing tariffs, deregulating the financial system, introducing capital gains tax and the superannuation guarantee – none of these reforms were put to an election.
Rather, they came about from governing and exercising leadership.
Danielle Wood, Chair of the Productivity Commission and one of the roundtable attendees, gave a three-word summation: ‘It’s a start’. Considering the historical challenges in advancing genuine tax reform, it's encouraging that the topic is now part of the conversation.
Next steps
We will continue to monitor the process, which hopefully in due course will produce a more ambitious reform agenda to meaningfully address the three objectives the Government laid out.
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