Jim Chalmers took to the National Press Club stage in Canberra yesterday with all the polish of a practiced political performer. But beneath the smooth delivery came a message that should make voters twitch: Labor’s just getting started.
Framed as a vision for ‘Second Term Economic Reform’, Chalmers signalled (without spelling out any details yet of course) that the promises made before the election weren’t the full story.
The subtext? Hold onto your wallets everyone, more taxes are on the way!
Yes, the Treasurer talked up productivity, resilience and an ‘evolution’ of the tax system, whatever that means. But reading between the lines it’s a different story.
Chalmers has now confirmed that if he gets his way Labor is about to start breaking election promises: putting taxes up and cutting spending wherever it can get the Greens to agree to it in the Senate.
That would be under the guise of ‘tax reform’, which wasn’t flagged during the election campaign even though the perilous state of the budget patently required changes.
Budget repair isn’t magic – it’s arithmetic.
Therefore, pain is coming.
Jim Chalmers told the National Press Club this week that he wants to ‘dial up the ambition’… That usually means more spending with this government, but this time could be different
Chalmers also said he wants to ‘dial up the ambition’ when it comes to economic reform.
More ambition usually means more spending, so far as this government is concerned. But maybe not this time. Not in the context of a budget crisis.
And now that two serious economists have joined the ranks of Labor’s finance team, assistant treasurer Dan Mulino and cabinet secretary Andrew Charlton, perhaps we will get thoughtful economic reforms. The pair hold PhDs in economics from Yale and Oxford respectively.
Whether old school big government types like Chalmers accept it or not, less spending simply has to be on the agenda – beyond the spending that has already been promised before and during the election campaign.
Given the terrible state of the federal budget, Chalmers knows that. In fact, he knew it well before the election, but it didn’t suit his purpose to flag it back then.
Now that Labor has won – and won handsomely – it appears set to tackle the underlying structural deficit, even if none of the details as to how that might unfold were produced at a time when voters had the chance to judge the plans.
To fix the budget Chalmers needs more revenue or he has to find savings to help restore fiscal discipline. That means… you guessed it: tax hikes, spending cuts, or both.
Chalmers was even prepared to leave changes to the GST on the table when asked. He did point out he’s not in favour of doing anything on that front, and Labor probably won’t, but at least he’s not already playing the rule-in, rule-out game.
What else might be looked at? Negative gearing cut backs? Capital gains changes? Taxing the family home or inheritance? Presumably, all are also now on the table.
Working Australians could be stung by a range of different tax tweaks under the Albanese Government
What about shifting the GST to become a federal tax, or giving states the right to set their own GST parameters? New sin taxes on sugar, perhaps? And we haven’t even got to the sorts of cuts that might be coming too, including duplication in the federation.
It is worth noting that the Treasurer was quick to rule out a backflip on his piecemeal plans to tax unrealised gains on super accounts. Anyone hoping for a responsible debate on that policy fail can think again.
That suggests that all other options for reform might genuinely be on the table.
The Treasurer had actually ruled out major tax reform during this term when he was on the ABC’s election night panel, but now he’s laying the groundwork for a possible post-election pivot.
It is ambition without a mandate, mind you, dressed up as acting responsibly. While we certainly do need far-reaching tax and federation reforms, such changes need to be done holistically – otherwise piecemeal changes (such as to super) usually result in more taxes, not real tax reform.
If this all sounds familiar that’s because it is: another page from the well-worn political playbook of saying one thing before an election only to do things differently afterwards.
It is a classic Canberra sleight of hand: declare bold intentions in the vaguest of terms, delaying the details until after the votes are counted. Then claim necessity demanded a new direction, just as Chalmers did yesterday.
Albanese did it with the stage three tax cuts three years ago; now Chalmers appears set to do it with almost everything else.
When governments go beyond their promises, they usually break them.
