Latest news with #Chalmers
West Australian
19 hours ago
- Business
- West Australian
Michelle Grattan: Bold reform a taxing journey
Next week will be the 40th anniversary of the Hawke government's tax summit. Dominated by then treasurer Paul Keating's unsuccessful bid to win support for a consumption tax, it was the public centrepiece of an extraordinary political and policy story. That story was about the possibilities for, but constraints on, bold reform; how a determined treasurer can muster a formidable department to push for change, and the way the ambitions of a minister can clash with the pragmatism of a prime minister. Ken Henry, later secretary of the treasury, was then part of what they dubbed the 'treasury tax reform bunker'. He kept a timesheet, averaging 100 hours work a week for a three-month period. Officials brought sleeping bags and their small children (Henry's were aged three and five) into the office. Before the summit, the government produced a comprehensive draft white paper. Keating battled to keep the conflicting interests 'in the cart' for his blueprint. But the four-day summit, attended by business, unions, premiers and community groups, was inevitably divided by stakeholders' self-interests. In particular, the unions couldn't wear Keating's consumption tax, and Bob Hawke kyboshed it unceremoniously. Keating, who had to settle for a more limited but still very significant set of reforms, was furious with Hawke, and it left a fracture in their relationship. Jim Chalmers was aged seven in 1985. But he's a student of Keating (he did his PhD on his prime ministership) and you can be sure he's boned up on what went right and wrong in that tax reform exercise. Now he is preparing for the Government's August 19-21 'roundtable' and his own bid at major tax reform. The roundtable, as first announced, focused on 'productivity', and that will be central. After all, a fit-for-purpose tax system is one key to improving productivity. The roundtable (for which invitations to business and the union movement are now going out, with more to follow) is nothing like on the scale, in size (the summit had about 160 attendees, the roundtable will have about 25) or preparation, of the elaborate 1985 conference. And crucially, while that summit was the culmination of a process, Chalmers is using the roundtable to kick off a process. Chalmers is lowering expectations in regard to specific outcomes on tax from the roundtable. While those might be obtainable on some productivity issues, on tax he is likely to look for broad support for a direction of reform. For instance, is there a general appetite for reshaping the tax system towards lower personal and company tax, offset by higher taxes on certain investments and savings? ` Most tax experts argue Australia's system is too skewed towards taxing income rather than spending. This leads to calls to increase or broaden the GST, financing cuts to personal income tax. Chalmers has been a long-term opponent of changing the GST, but he says he is not ruling the GST out for discussion at the roundtable. (That's a contrast to when prime minister Kevin Rudd, commissioning Henry to lead a major tax review, excluded the GST from its terms of reference.) Almost certainly, however, it would not be possible to get 'consensus' from business and unions for GST changes. Not least of the constraints is that compensating the losers in such a change is very expensive and there is not the money to do so these days. That immediately limits the extent of reform. Henry tells The Conversation's podcast that if he were designing a tax reform package 'I'd be looking at opportunities to broaden the GST and maybe to increase the rate as well'. But 'I do think it is possible to achieve major tax reform … without necessarily increasing the (GST) rate or extending the base'. Henry's (non-GST) wish list includes getting rid of the remaining State transaction taxes, such as stamp duty on property conveyancing. Notably, he argues for extracting more revenue from taxing natural resources and land, and also from taxing pollution from various sources. 'We're going to need to tax those things more heavily if we're going to relieve the tax burden on young workers through lower personal income tax and introducing tax indexation.' Henry is particularly focused on the unfair burden at present put on these younger taxpayers. He has come around to the idea of income tax indexation as one means of assisting them. A system more geared to younger workers raises immediate questions about the present generous treatment of superannuants. Chalmers is already caught in that hornets' nest with his proposed changes for those with balances more than $3 million. To what extent will the roundtable tax debate revive the issues of negative gearing and the capital gains tax discount? The Government hosed down before the election the prospect of any changes to negative gearing this term. Chalmers, however, had work done on this last term and he would likely favour reining it in. But would this be a bridge too far for the Prime Minister? Indeed, where will Anthony Albanese's limits be when it comes to reform? Would he only support changes that had strong consensus? And how far would he feel constrained in going beyond what he considers he has a mandate for? If Chalmers stays serious about the tax push, it is going to take many months of intense work. It can't be rushed, but nor can it be delayed. If it ran for much over a year it would likely find the Government's political capital had been eroded. The size of its capital store can appear deceptive because so much of it is thanks to Peter Dutton and Donald Trump. In 2022, the Liberals boycotted Labor's jobs and skills summit (although Nationals leader David Littleproud attended). This time, shadow treasurer Ted O'Brien has accepted Chalmers' invitation and will participate in the roundtable. It will be a tricky gig for O'Brien, new to this shadow portfolio. He has to avoid being too negative, but nor can he endorse things the Opposition might later reject. The Coalition will not have a tax policy against which to judge what's said. The occasion will be a chance for O'Brien to make contacts and get more insight into stakeholders' views on the key economic debates, much wider than just tax. Importantly, however, O'Brien will need to remember judgments will be being made about him by other participants in the room. Business in particular will be seeking to get a fix on whether Opposition Leader Sussan Ley's declarations about wanting to be constructive where possible are fair dinkum. Michelle Grattan is a professorial fellow at the University of Canberra.
The Diplomat
a day ago
- Business
- The Diplomat
Achieving Australian Abundance
The central operating principle of Australia's current Labor Party government has been a 'whole-of-nation' approach to both national and foreign policy. The idea is that each sector of Australian society contributes to the country's overall capabilities, and each sector should see itself as part of a converging web of interrelated components that influence and affect one another. The key to effective statecraft is getting the fundamentals of a prosperous society right, and making sure these fundamentals are capable of adapting to changing circumstances. Urban planners may not recognize themselves as foreign policy actors, but if the most important capability Australia has is its human capital, then the environments that allow people to excel are imperative. This is the crossroads Australia currently finds itself at. Australia's present and future capabilities face two extraordinary hurdles. The first is the exorbitant cost of housing in the country – particularly in its major cities – and persistent impediments to boosting supply. The second is that Australian cities have urban rail networks that – due to irresponsible government neglect during the second half of the 20th century – are decades behind where they need to be for today's city populations, let alone projected future city growth. Combined, these two problems inhibit the flourishing of individual Australians, and the flourishing of the country's most economically productive urban centers. The result is a stifled country that is unable to fully unlock its potential, and therefore unable to navigate an increasingly complex and unstable world with confidence and sophistication. In recent interviews, Australia's treasurer, Jim Chalmers, recognized that this is a problem, and has begun discussing the Ezra Klein and Derek Thompson book, 'Abundance.' Or, as the kids say, Chalmers has been 'Abundance-pilled.' The central thesis of Klein and Thompson's book is that a dense web of regulations, processes, consultations, and reviews are getting in the way of producing outcomes that should be deemed 'progress.' They argue that in the United States – but this is also true of Australia – it is becoming to difficult and inefficient to build the things that are necessary for thriving societies. Or, as Chalmers has said, 'We want good things to happen, we've got to stop strangling good things from happening.' Yet in order to seriously address this problem, there is a major structural issue that needs to be both acknowledged and dealt with. Australia has one of the highest rates of tertiary education in the world. This is an absolute positive, and education should never be discouraged. But the unintended consequence of the rise of widespread tertiary education has been the lack of productive outlets, well-paid, or status-providing jobs for university graduates in the private sector. As a result, the state has felt the need to absorb this cohort into the bureaucracy. This has created a larger class of rule-makers and consultants, making rules and seeking rents for a greater array of aspects of life. According to the Australian Bureau of Statistics (ABS) there are now almost 1 million people working within Australia's various bureaucracies (state and federal), with an addition of 50,000 people in the last year alone. This is not a positive trajectory, but given the difficulty in actually reducing the size of the bureaucracy – especially in a city like Canberra, where government is the industry – the solution Chalmers and the rest of the Cabinet (as well as their state counterparts) may have to tackle is one of culture. For this, the government would need to find a way to shift the culture of the bureaucracy to see its personal rewards not in the administration of a web of complex rules, but in the production of efficient and effective outcomes. That is, a way of making pride flow from green lights, not red. Being able to unlock both a new vast supply of housing stock, and a great expansion of public works, is fundamental to addressing Australia's dire cost of living, but also addressing the country's major capability deficit in its lack of economic complexity. Affordable housing is essential for people to be able to take economic risks, and creativity thrives in urban centers with dense public transport networks. Therefore shifting the culture of the bureaucracy to have a laser-like focus on efficient outcomes also should create the conditions for tertiary educated Australians to find well-paid and high status jobs in the private sector – or create these jobs themselves. This would weaken the need for the state to absorb these highly educated people itself, and subsequently weaken some of the mechanisms that inhibit Australia's abundance.
Perth Now
a day ago
- Business
- Perth Now
Major super boost for 200,000 Aussies
Major superannuation changes are set to roll out across the country starting from July 1, set to help millions of women bridge the gender pay gap. Starting next Tuesday parents taking government-funded paid parental leave will also receive a superannuation payment. This additional payment is estimated to help the near 200,000 Australian mothers each year and narrow the gender superannuation gap by around 30 per cent. According to the ASFA a woman taking 24 weeks leave the superannuation contributions will lead to $7,200 more at the time of retirement. When the regime is extended to 26 weeks, the boost to the super balance increases to around $7,800. Mothers are tipped to be among the winners when the superannuation changes come into effect on July 1. NewsWire / Nicholas Eagar Credit: NCA NewsWire ASFA chief executive Mary Delahunty said this is a major win for Australian women who take time out of the paid workforce to have and raise children, and helps reduce the superannuation gender gap. 'While compulsory superannuation has been delivering on its purpose of providing a dignified retirement for most Australians, it's long been known that women are often financially disadvantaged in retirement due to time taken out of work to have and raise a family. she said. 'The introduction of superannuation payments on government paid parental leave from 1 July on will go a long way to closing the gender superannuation gap.' Australian treasurer Jim Chalmers said paying super on paid parental leave from this Tuesday is part of our efforts to ensure parents earn more, keep more of what they earn and retire with more as well. 'A sornger paid parental leave system is good for families and good for the economy as well,' he told NewsWire. 'This important change means a more dignified and secure retirement for more Australian parents and especially women.' A second change which will see nearly 14 million workers will see their superannuation guarantee increase from 11.5 to 12 per cent starting from July 1. While the changes seem small, the treasury uses an example of a 27 year old woman who has taken up a graduate position as a professional lawyer. 'During her career, she takes an extended six-year career break for the birth and care of her two children,' treasury estimates. 'Her balance will be $22,000 higher at retirement as a result of the permanent 0.5 percentage point increase in the SG rate from 11.5 to 12 per cent.' Treasurer Chalmers said this will make a meaningful difference for Aussies. NewsWire / Martin Ollman Credit: News Corp Australia Mr Chalmers says these reforms will make a meaningful difference for millions of Australians, helping them work towards a well-deserved and dignified retirement. 'Since we've come to government, we've increased the superannuation guarantee four times, and this means an extra $98,000 at retirement for a 30 year old earning the average full-time income,' Mr Chalmers said. While the Albanese government has implemented an increase of the Superannuation guarantee from 10 to 12 per cent. It was the then Morrison government who started the changes, which saw superannuation lift from 9.5 per cent to 12, at a 0.5 per cent increment a year. The treasury department says the changes to Tuesday's superannuation guarantee will see 14 million employees have their retirement lifted. The ASFA said this increase means a median 30-year old worker making $75,000 a year will add about $20,000 to their superannuation balance by the time they retire. This $20,000 increase will mean the median 30-year old will retire with $610,000 in superannuation, above the $53,383 a year or $595,000 they would need for a comfortable retirement. ASFA says a couple requires $73,875 a year or $690,000 combined in total to live comfortably in retirement using their super plus age pension top-ups. The major caveat to these figures for singles and couples is owning your own home by retirement. The National Minimum Wage and award wages will increase by 3.5 per cent from 1 July 2025, adding $0.85 per hour to $24.95 for full time staff. Treasury estimates this change will add $75,114 over the average working life of an employee. This includes 353,000 retail industry workers, 287,000 social, community, home care and disability workers, and 234,000 hospitality worker
Perth Now
a day ago
- Business
- Perth Now
Captains of industry, unions sit at economic roundtable
Trade unionists, business leaders and welfare advocates are among the confirmed guests for the federal government's economic summit. August's productivity roundtable will include ACTU secretary Sally McManus, Business Council of Australia chief executive Bran Black, Australian Council of Social Service head Cassandra Goldie along with productivity commissioner Danielle Wood. Australian Chamber of Commerce and Industry chief executive Andrew McKellar and Australian Industry Group head Innes Willox are also confirmed, as is ACTU president Michele O'Neil and Council of Small Business Organisations of Australia chair Matthew Addison. The summit will look to find ways to boost flagging levels of productivity in the economy. "Each participant will play an important role in helping to shape our national reform priorities to boost productivity, strengthen our resilience and improve budget sustainability," Treasurer Jim Chalmers said. "This initial group includes leading voices from business, unions, the community sector and our key economic institutions. "This is a representative group that we're asking to provide ideas and build and advance consensus around them." It comes after the treasurer extended an invitation earlier in the week to opposition counterpart Ted O'Brien. The summit will be held over three days in Canberra. Dr Chalmers said the roundtable would include opportunities for state and territory representatives to contribute, as well as those on the cross bench in federal parliament. "More invitations will be issued in tranches and in due course as the agenda takes shape," he said. "We will bring additional stakeholders, experts and representative groups to the roundtable, including for specific days, sessions and topics." Members of the public are also urged to offer ideas, with submissions open until late July. "We welcome proposals to improve productivity, build economic resilience in the face of global uncertainty, and strengthen budget sustainability," Dr Chalmers said. The ideas would need to meet criteria including being in the national interest, be positive for the federal, as well as being specific. Experts are concerned about Australia's lagging growth in productivity - a key economic measure of efficiency and long-term driver of improved living standards. The Business Council's chief executive said he looked forward to providing practical solutions the productivity challenge. "Productivity growth is the best way to sustainably lift living standards for all Australians, which is why it is critical that there is constructive engagement between all stakeholders," Mr Black said.
AU Financial Review
2 days ago
- Business
- AU Financial Review
Chalmers sues China-linked investor for defying sell order on stock
Treasurer Jim Chalmers is suing an alleged China-linked investor in ASX-listed Northern Minerals, a strategic rare earth miner, for defying a Commonwealth order to sell its stock due to national interest concerns. Chalmers lobbed the case in the Federal Court on Thursday against Indian Ocean International Shipping and Service Company Ltd and its former associate for not complying with Australia's foreign investment law.
