Jim Chalmers, a rising star in Australian politics, is using his role as Finance Minister to jumpstart the cause of economic reform. He is holding a roundtable to talk about possible tax reforms, using lessons from ex-PM Paul Keating. This effort, led by shadow treasurer Chalmers, … In the middle of that process, Ted O’Brien – the new official shadow treasurer – has agreed to come in and participate in the discussions.
Not only that, Chalmers has form too, having done his PhD on the subject of Keating’s prime ministership. Changes to the Goods and Services Tax (GST) are something he has long opposed. He has left the door open to include the topic, saying that it should be discussed at the roundtable. This approach signals Chalmers’ willingness to explore various avenues for tax reform while managing expectations about immediate outcomes.
The roundtable also launches a broader process leading to tax reform. It should not function as an end-point. Chalmers’s goal is an inclusive platform that fosters honest dialogue about budget sustainability and Australia’s tax system resilience. During his last term, he was the chief architect behind the Gov’s successful tax reform effort, setting the stage for this new foray.
As concerns over superannuation continue to grow, Chalmers has proposed significant changes. These changes are deliberately aimed at those with very high superannuation balances exceeding $3 million. This proposal reflects a broader trend of seeking equitable tax solutions for varying income levels while ensuring that the tax burden is distributed fairly.
Chalmers is careful not to raise expectations about what will come from the roundtable discussions. He reiterates that though these discussions will happen, tangible results might not materialize right off the bat.
As history would have it, discussions around the GST have reached a surprisingly contentious boiling point. At the time, during the 1985 tax summit, Paul Keating faced stout opposition to his attempts to form a consensus in favor of a consumption tax. Keating’s call for reform served as a major impetus for this summit. Influential leaders such as Ken Henry, who would later serve as secretary of the Commonwealth Treasury, lent their expertise.
Henry remained deeply engaged with the “bunker of treasury tax reform.” This task force had a laser beam focus on reengineering the state of Australia’s tax landscape at the time. He also recently expressed support for eliminating state transaction taxes. Among various other measures, this includes lobbying state governments to remove stamp duty on property conveyancing.
Henry has long championed broadening the GST. He goes further, proposing to raise its rate as part of a broader tax reform plan. He made a strong case for the need to impose greater tax burdens on some places.
“I’d be looking at opportunities to broaden the GST and maybe to increase the rate as well.” – Ken Henry
Henry thinks that these reforms would greatly reduce the impact of personal income taxes on young workers. This would relieve their economic pain and bring in tax indexation so that fairness is permanently enshrined over time.
Chalmers’ roundtable provides an intriguing opportunity for collaboration between advocates, researchers, and other stakeholders. It certainly bears the imprint of Henry’s vision of a fundamental realignment of taxation in Australia, particularly given today’s pressing economic circumstances.
