Raise taxes to fix budget, Treasury advises Labor in accidentally published advice
The ABC can reveal the advice, written by the independent Treasury and offered after Labor's re-election, warns the government's signature pledge to build 1.2 million homes over five years to address the housing crisis "will not be met".
That declaration was one of several subheadings in a table of contents accidentally included in Treasury's response to an ABC freedom of information (FOI) request.
Other subheadings reveal Treasury told Treasurer Jim Chalmers he would need to find "additional revenue and spending reductions" to meet his objective of a "sustainable" budget.
The materials do not elaborate on which taxes could be raised, but suggest that Treasury canvassed "indirect taxes" and superannuation tax as possible targets, and that it appeared to favour lower taxes on companies and personal incomes.
The department also briefed Mr Chalmers on its assessment of the consequences for Australia if there is a global loss of confidence in the US dollar or the independence of the US Federal Reserve, along with a framework for a crisis response in such a scenario.
The materials come from Treasury's "incoming government" brief to the department's ministers, including Mr Chalmers and Housing Minister Clare O'Neil.
Those briefs are routinely prepared by all departments during election campaigns, with no input or visibility from the ministers, and with an alternative version drafted for the opposition.
They include the department's advice about how to implement and add to each party's agenda, and its assessment of looming challenges.
Journalists can request the briefing given to the winning party through the FOI process, but often receive a heavily redacted copy, as was the case in this instance.
But the document emailed to the ABC mistakenly included headings and subheadings from the redacted sections, revealing sensitive elements of Treasury's briefing which the department did not want to make public.
Treasury asked that the document be deleted after realising the error, but the ABC has decided to publish it because it provides a rare insight into how top advisers view the major economic and policy challenges facing the Albanese government as it begins its second term in power, and so is in the public interest.
Steven Kennedy, who was Treasury secretary when the briefs were prepared, now leads the prime minister's department.
Treasury advised that "improvements to the budget will need to come from economic growth, additional revenue and spending reductions" and that "tax should be raised as part of broader tax reform".
Mr Chalmers has since declared an appetite for tax reform reaching beyond Labor's election platform, and will hold a roundtable in August with tax on the agenda, saying proposals should improve the budget bottom line, or at least be budget neutral.
The government also plans to double the earnings tax on super balances above $3 million. The reforms were introduced to parliament last term but are yet to be legislated amid debate about indexation of the threshold and whether the tax should capture "unrealised" gains in asset value.
Under the heading "opportunities to build on your agenda", Treasury gave advice about "building on" Labor's superannuation tax changes, but the heading does not reveal what was advised.
Other headings suggest Treasury favours lower taxes on individual and company incomes, advising on "rebalancing" personal income tax "to increase workforce participation and give workers a fair go", and "modernising" business tax to boost investment.
It suggests reform to "support budget repair", consistent with Labor's agenda, could be implemented through "the indirect tax system", a broad group of taxes including fuel excise, cigarette tax, state and territory stamp duty and land tax, and the GST.
The treasurer and prime minister have both fielded questions about whether they plan to raise GST through the roundtable process, both signalling reluctance but adding they are happy for contributors, including business, unions and experts, to raise any idea.
The department also advised Mr Chalmers and Ms O'Neil that the 1.2 million homes target "would not be met" and floated changing it, advising the government to "build on [its] agenda" by crafting a "coherent and well-prioritised" housing agenda.
There has been substantial public commentary about the viability of the target, with housing completions so far well off track, and the ministers have described the target as "ambitious" but maintained it can be met.
Ms O'Neil was presented with a range of options to support the construction of more housing, including using the migration and skills system to boost the construction workforce, and using its existing policy of grants to state and territories to better "leverage" them to boost building rates.
Treasury also briefed the minister on the "dysfunctional" funding model for the infrastructure that "enables" the construction of new housing, such as pipes and sewers, which was a key Coalition election policy.
It also identified "challenges" with the "responsiveness… capability… [and] speed" of key housing agency Housing Australia and suggests "steps to improve oversight and re-set the relationship with the CEO and Board" of the body.
The headings did not name any specific issues with the agency or explicitly state that there were any, but suggested a "review".
The materials also reveal Treasury has modelled a variety of world crises originating in the United States, appearing to suggest concern about the actions of the Trump administration.
"The global economic outlook has rapidly deteriorated, with implications for Australia," the department advised Mr Chalmers.
Treasury presented scenarios including a loss of confidence in the US dollar as the global reserve currency and the independence of its central bank, the Federal Reserve.
The headings do not reveal the details or assessments about the likelihood of these scenarios, which range from a milder "escalating tariff scenario" to more serious "financial disruption" and "worst case" scenarios.
The financial disruption scenario includes an increase in US sovereign risk — the interest charged on US government borrowing, reflecting the market's assessment of the safety of the dollar — of two percentage points, proposing a tiered Australian response in the event of a "severe downturn".
US President Donald Trump has repeatedly insulted Fed chair Jerome Powell and vowed to replace him with someone who will cut interest rates when his term expires this year.
Treasury officials have previously discussed their assessment of the consequences of a trade war and warned of the risks of broader financial uncertainty, and Mr Chalmers released some trade-related modelling during the election campaign.
That modelling found only modest impact on the Australian economy from a trade war.
Treasury's modelling of more serious scenarios was accompanied by a proposed "framework" for a stimulus response, including "direct support" (e.g. cash payments) and "liquidity support" to calm financial markets — a similar response to those used during the 2008-09 Global Financial Crisis.
A spokesperson for Mr Chalmers said the government would not "go into the detail" of Treasury's briefings.
"Of course Treasury provides advice for incoming governments … We've already made it clear we'll need to do more to meet our housing goals and make our economy more productive and our budget sustainable," the spokesperson said.
"These issues were a focus of the treasurer's recent address to the National Press Club and we will grapple with some of them at the upcoming roundtable."
Mr Chalmers has also repeatedly highlighted global volatility as an economic risk, including in the context of the Trump administration's trade restrictions.
"The uncertainty, volatility and unpredictability in the global environment I think will be the biggest influence that will shape and constrain the government's choices in this term," he said in an interview on Sky News on Sunday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Sky News AU
35 minutes ago
- Sky News AU
Target income tax brackets, leave major concessions alone, AMP's Shane Oliver says as Treasury warns Labor about budget
Labor has been warned against cutting tax concessions such as negative gearing or those found in the superannuation system as it eyes fundamental economic reform for its second term. Leaked information revealed Treasury has warned the government it needs to hike taxes and slash spending to ensure a 'sustainable budget'. It comes as Treasurer Jim Chalmers looks to boost productivity and revamp the tax system while Australia disproportionately relies on income tax for revenue. The Albanese government will examine this at its productivity roundtable in August, where leaders from the business, political, union and economic worlds will brainstorm Australia's path forward. AMP's chief economist Shane Oliver said a 'danger' facing Australia's economy was the productivity roundtable becoming 'a way of finding new tax revenue rather than actual tax reform'. 'If your solution is, 'We're not going raise personal income tax … we might actually cut them',' Mr Oliver told 'If the way that's done is by winding back superannuation concessions, negative gearing and so on, then it's a furphy because you still end up with a highly progressive tax system. In fact, you make it potentially more progressive. 'The reason we have people relying on these tax concessions - negative gearing, capital gains tax and discounts in superannuation - is because marginal tax rates are quite high and they kick in at relatively low levels to people's income.' About 52 per cent of the Federal government's tax take in the 2024 financial year was from income tax, as Australian income earners contribute at some of highest rates in the OECD. 'We've got a situation where 10 per cent of taxpayers pay something like half of the tax revenue going to Canberra,' Mr Oliver said. Australia's highest tax threshold applies to income above $190,000. This is less than double the average salary in Australia and is proportionally much lower than the ratio of the average salary to the highest tax bracket in similar economies. The USA's highest tax bracket of 37 per cent applies to income above US$609,000. A 37 per cent tax rate applies to income in Australia between $135,000-$190,000, while a 45 per cent rate applies to income above this threshold. Mr Oliver warned against minimising income tax without meaningful change to the tax brackets. He stressed without substantial changes to the income tax scale and the removal of tax concessions, the government could 'actually increase the burden on income earners' as less Australians invest into areas where they are covered by these concessions. 'You could be giving on the one hand and taking on the other. That's the risk in all of this,' he said. Australia can afford to lower income tax if it re-examines the GST, Mr Oliver has previously warned. Deloitte Access Economics boss Pradeep Philip said reducing Australia's reliance on income tax was critical as the demographics of the nation change. 'The income tax burden will increasingly fall on a smaller and smaller proportion of Australia's population because we have an ageing population,' Mr Philip told 'We do need to engineer a tax mix switch and reduce our reliance on income tax and move to other kind of bases.' He stressed there was opportunity for 'holistic reform' for the tax system by revamping the GST. 'It's also important for the states and territories to think about reforms to the GST,' Mr Philip said. 'That can help the states and territories in terms of getting rid of inefficient taxes and boosting economic growth around the country.' The ABC on Monday revealed Treasury told Labor that "improvements to the budget will need to come from economic growth, additional revenue and spending reductions" and that "tax should be raised as part of broader tax reform". Uncertainty surrounding the United States and its trade war was also analysed by Treasury with the department presenting an array of scenarios including if there was a loss of confidence in the US dollar.
News.com.au
an hour ago
- News.com.au
Grollo family sell Kooroora Hotel on Mt Buller after 20-plus years
Melbourne's wealthy Grollo family have sold the Kooroora Hotel on Mt Buller in a $3.8m deal that's believed to be the biggest so far this year for the mountain. The Grollo Group, owned by the prominent construction and property family that first made headlines under the guidance of Bruno and Rino Grollo, bought the alpine watering hole in 2004. They have subsequently redeveloped the Kooroora site, including adding apartments and refreshing the basement nightclub, with the recent hotel sale just a fraction of the wider properties now at the address. Melb's biggest eyesore seeking $60m+ The family still owns significant chunks of the mountain under its Buller Ski Lifts firm, including the Mt Buller Chalet Hotel and the ABOM Hotel, as well as the nearby Mt Hotham airport, which it bought in 2023 for more than $6m, and plans to further develop. It's not the first time the Grollos have been behind a major sale on the mountain, having made headlines in 2012 as they sold off 17 properties in one afternoon as part of one of the biggest sell offs ever recorded for Mt Buller. Their latest sale attracted offers from 27 groups for the popular hotel, with the property ultimately sold to a Melbourne-based high-net worth individual. The hotel, set on 811sq m in the heart of the mountain's main village square, and includes a licensed bar and a basement nightclub, with an eight-year lease in place, and options for another 10 years for the Maisano Group that are currently running the venue. It currently pays $259,192, plus GST, a year in rent The 18-room Kooroora apartment complex above the hotel was not part of the sale. The sale was arranged by commercial real estate firm Burgess Rawson from CBRE's Raoul Holderhead and Mark Foster as well as John Castran, of Castran Real Estate. Mr Holderhead said he believed the result was the biggest this year on the mountain, and noted that the vast majority of the interest had come from Melbourne-based parties who already owned property on Mt Buller. Mr Foster said the recently renewed lease and the location had helped lure in buyers. 'The sale of the Kooroora Hotel confirms the strong investor demand for well-located hospitality assets in key regional centres,' he said. Mr Castran said the sale showed the mountain's continued appeal for tourists. 'The Kooroora Hotel benefits from consistent year-round trading and a loyal customer base, underpinning its strong investment fundamentals,' he said.
News.com.au
an hour ago
- News.com.au
‘Unbelievable': Two bedroom home in Rhodes sells for staggering sum
The owner of a one-storey house in Sydney's west has walked away with an eye-watering $8m in their pockets following years of controversy with surrounding developers. Located at 16 Walker Street in Rhodes, the two-bedroom, one-bathroom property is the last freestanding home on what is now an apartment-lined stretch of road. On Saturday, the 676 sq m block went under the hammer in front of a crowd of 150 people – selling for $8,150,000. The site had potential as 14 apartments, a boarding house, a pub, a fitness centre or a daycare, Strathfield Partners selling agent Vanessa Kim told 'It's not a normal house – it has a lot of potential,' she said. 'We had several inquiries for a lot of future development.' Ms Kim said the agency was not expecting the price range, with the owner originally asking for a hefty price of $9m. 'I asked the owner how they got the price? They said nothing,' she said. 'Then they finally said, 'it's my dreaming price'.' The bids started at $6m, and went up in increments of $25,000 and $20,000 to $7.2m. It then rose in bids of $10,000 to $8m, before the final $150,000 was achieved through quickfire round of $5000 bids. The guide sat between $6m and $7m. 'When (the price) was increasing, everybody said 'wow',' Ms Kim said. 'It was like watching the tennis (as the bidder's paddles went up). 'Eight (bidders) registered was unbelievable.' The home last sold in 2017 for $978,000. Before that, it brought for $1.7m in 2012. The house itself does look to be freshly renovated but has kept some of its older features, including ornate stain glass windows and detailed pressed ceilings and cornices. A fireplace still remains along with a grand sliding door from the living room, an open backyard and long winding driveway make up much of the large land. There's traditional fences however, with large blocks built to suit the surrounding units. A small outhouse sits at the rear of the home – a nod to its vintage. Sandwiched between highrises, the site has been a point of interest for developers in recent years. In 2022, the home was leased for $900 per week. Joe, who managed a nearby building, told Daily Mail Australia at the time the owner refused to sell for less than $20m. She had reportedly fought against property giant Billbergia, who started construction on Rhodes Central a few years prior, to stop building unit blocks around her property. It is understood she lost that bid.
