Major tax reform probably 'a bridge too far': CBA

The Advertiser

a day ago

A leading economist has poured cold water on hopes that the federal government could pull off a major tax overhaul at its productivity summit.
At the same time Luke Yeaman has urged Treasurer Jim Chalmers to consider increasing means testing to raise more revenue.
Mr Yeaman, the former deputy Treasury secretary under Dr Chalmers who now leads the Commonwealth Bank's economics team, said a "grand bargain" between the federal and state governments on tax reform was unlikely, at least in the short term.
While the government could find some joy in improving areas like housing and energy infrastructure approvals and capital gains tax, large-scale reform around areas like the GST would likely prove too difficult.
"There's no doubt that Australia needs a bolder reform agenda," Mr Yeaman said as he released CBA's economics update for the 2026 financial year on Wednesday.
"We've had a successful economy, steady growth that has led to a feeling of complacency in the system."
With Labor holding a large majority in parliament and Labor governments in most states, expectations will be high for the government to deliver something substantial a the August roundtable, he said.
But given fiscal challenges faced by all levels of government and Dr Chalmers's requirement that reforms be at least budget neutral will likely make large-scale reform around GST "a bridge too far" in the short term, although it could lay the groundwork for reform down the track.
Governments have typically needed to "buy" reform by spending extra to compensate people who are made worse off.
Increasing means-testing on major spending programs should therefore be revisited to achieve the government's aims of fixing the budget deficit and help fund tax cuts elsewhere to boost work incentives and abolish inefficient taxes such as stamp duty and payroll tax.
Large outlays in recent years on energy rebates and Medicare spending have typically benefited everyone, even high-income earners with more capacity to pay.
"So I think there's an opportunity to look at some of the key spending programs and whether you can drive more means testing and user contributions through that," Mr Yeaman said.
Another potential area for reform was around planning and zoning, where Mr Yeaman said he saw a real appetite for change.
Senior government figures, including Housing Minister Clare O'Neil and Assistant Minister for Productivity Andrew Leigh, have called to slash red tape slowing approvals for important projects like residential construction and clean energy generation.
"If the government wants to achieve its goals in infrastructure, housing, net zero and future industries - without that, I don't think you'll achieve those objectives," Mr Yeaman said.
"I think there's been too much focus on new regulation to protect and manage risk. There's an opportunity to rebalance that towards a more growth-focused agenda on regulation."
A leading economist has poured cold water on hopes that the federal government could pull off a major tax overhaul at its productivity summit.
At the same time Luke Yeaman has urged Treasurer Jim Chalmers to consider increasing means testing to raise more revenue.
Mr Yeaman, the former deputy Treasury secretary under Dr Chalmers who now leads the Commonwealth Bank's economics team, said a "grand bargain" between the federal and state governments on tax reform was unlikely, at least in the short term.
While the government could find some joy in improving areas like housing and energy infrastructure approvals and capital gains tax, large-scale reform around areas like the GST would likely prove too difficult.
"There's no doubt that Australia needs a bolder reform agenda," Mr Yeaman said as he released CBA's economics update for the 2026 financial year on Wednesday.
"We've had a successful economy, steady growth that has led to a feeling of complacency in the system."
With Labor holding a large majority in parliament and Labor governments in most states, expectations will be high for the government to deliver something substantial a the August roundtable, he said.
But given fiscal challenges faced by all levels of government and Dr Chalmers's requirement that reforms be at least budget neutral will likely make large-scale reform around GST "a bridge too far" in the short term, although it could lay the groundwork for reform down the track.
Governments have typically needed to "buy" reform by spending extra to compensate people who are made worse off.
Increasing means-testing on major spending programs should therefore be revisited to achieve the government's aims of fixing the budget deficit and help fund tax cuts elsewhere to boost work incentives and abolish inefficient taxes such as stamp duty and payroll tax.
Large outlays in recent years on energy rebates and Medicare spending have typically benefited everyone, even high-income earners with more capacity to pay.
"So I think there's an opportunity to look at some of the key spending programs and whether you can drive more means testing and user contributions through that," Mr Yeaman said.
Another potential area for reform was around planning and zoning, where Mr Yeaman said he saw a real appetite for change.
Senior government figures, including Housing Minister Clare O'Neil and Assistant Minister for Productivity Andrew Leigh, have called to slash red tape slowing approvals for important projects like residential construction and clean energy generation.
"If the government wants to achieve its goals in infrastructure, housing, net zero and future industries - without that, I don't think you'll achieve those objectives," Mr Yeaman said.
"I think there's been too much focus on new regulation to protect and manage risk. There's an opportunity to rebalance that towards a more growth-focused agenda on regulation."
A leading economist has poured cold water on hopes that the federal government could pull off a major tax overhaul at its productivity summit.
At the same time Luke Yeaman has urged Treasurer Jim Chalmers to consider increasing means testing to raise more revenue.
Mr Yeaman, the former deputy Treasury secretary under Dr Chalmers who now leads the Commonwealth Bank's economics team, said a "grand bargain" between the federal and state governments on tax reform was unlikely, at least in the short term.
While the government could find some joy in improving areas like housing and energy infrastructure approvals and capital gains tax, large-scale reform around areas like the GST would likely prove too difficult.
"There's no doubt that Australia needs a bolder reform agenda," Mr Yeaman said as he released CBA's economics update for the 2026 financial year on Wednesday.
"We've had a successful economy, steady growth that has led to a feeling of complacency in the system."
With Labor holding a large majority in parliament and Labor governments in most states, expectations will be high for the government to deliver something substantial a the August roundtable, he said.
But given fiscal challenges faced by all levels of government and Dr Chalmers's requirement that reforms be at least budget neutral will likely make large-scale reform around GST "a bridge too far" in the short term, although it could lay the groundwork for reform down the track.
Governments have typically needed to "buy" reform by spending extra to compensate people who are made worse off.
Increasing means-testing on major spending programs should therefore be revisited to achieve the government's aims of fixing the budget deficit and help fund tax cuts elsewhere to boost work incentives and abolish inefficient taxes such as stamp duty and payroll tax.
Large outlays in recent years on energy rebates and Medicare spending have typically benefited everyone, even high-income earners with more capacity to pay.
"So I think there's an opportunity to look at some of the key spending programs and whether you can drive more means testing and user contributions through that," Mr Yeaman said.
Another potential area for reform was around planning and zoning, where Mr Yeaman said he saw a real appetite for change.
Senior government figures, including Housing Minister Clare O'Neil and Assistant Minister for Productivity Andrew Leigh, have called to slash red tape slowing approvals for important projects like residential construction and clean energy generation.
"If the government wants to achieve its goals in infrastructure, housing, net zero and future industries - without that, I don't think you'll achieve those objectives," Mr Yeaman said.
"I think there's been too much focus on new regulation to protect and manage risk. There's an opportunity to rebalance that towards a more growth-focused agenda on regulation."
A leading economist has poured cold water on hopes that the federal government could pull off a major tax overhaul at its productivity summit.
At the same time Luke Yeaman has urged Treasurer Jim Chalmers to consider increasing means testing to raise more revenue.
Mr Yeaman, the former deputy Treasury secretary under Dr Chalmers who now leads the Commonwealth Bank's economics team, said a "grand bargain" between the federal and state governments on tax reform was unlikely, at least in the short term.
While the government could find some joy in improving areas like housing and energy infrastructure approvals and capital gains tax, large-scale reform around areas like the GST would likely prove too difficult.
"There's no doubt that Australia needs a bolder reform agenda," Mr Yeaman said as he released CBA's economics update for the 2026 financial year on Wednesday.
"We've had a successful economy, steady growth that has led to a feeling of complacency in the system."
With Labor holding a large majority in parliament and Labor governments in most states, expectations will be high for the government to deliver something substantial a the August roundtable, he said.
But given fiscal challenges faced by all levels of government and Dr Chalmers's requirement that reforms be at least budget neutral will likely make large-scale reform around GST "a bridge too far" in the short term, although it could lay the groundwork for reform down the track.
Governments have typically needed to "buy" reform by spending extra to compensate people who are made worse off.
Increasing means-testing on major spending programs should therefore be revisited to achieve the government's aims of fixing the budget deficit and help fund tax cuts elsewhere to boost work incentives and abolish inefficient taxes such as stamp duty and payroll tax.
Large outlays in recent years on energy rebates and Medicare spending have typically benefited everyone, even high-income earners with more capacity to pay.
"So I think there's an opportunity to look at some of the key spending programs and whether you can drive more means testing and user contributions through that," Mr Yeaman said.
Another potential area for reform was around planning and zoning, where Mr Yeaman said he saw a real appetite for change.
Senior government figures, including Housing Minister Clare O'Neil and Assistant Minister for Productivity Andrew Leigh, have called to slash red tape slowing approvals for important projects like residential construction and clean energy generation.
"If the government wants to achieve its goals in infrastructure, housing, net zero and future industries - without that, I don't think you'll achieve those objectives," Mr Yeaman said.
"I think there's been too much focus on new regulation to protect and manage risk. There's an opportunity to rebalance that towards a more growth-focused agenda on regulation."