JACKSON HEWETT: Treasurer Jim Chalmers should have come clean on higher taxes after Treasury FOI bungle

It’s time to stop pussyfooting around Treasurer. We all know the Budget needs repair, so it’s time to rip the band-aid off.

Jim Chalmers had the opportunity today to confirm what Treasury revealed in error, that taxes have to rise, or spending needs to be slashed if the Budget is to be sustainable over the long term.

Dr Chalmers was referring to a pre-election briefing by Treasury that the ABC obtained via a Freedom of Information Request. The reports are usually heavily redacted but unlike previous years, some anonymous official accidentally forgot to redact the subheadings in the table of contents.

Treasury asked the ABC to delete the errant file, in the process tipping them off that there was more there than originally intended.

On closer inspection, the subheadings let the cat out of the bag, revealing the Government could only find its way out of a Budget hole by growing the economy, raising taxes or cutting services. They also revealed the Government was not on track to hit its target of 1.2 million new homes.

Behind the scenes, the official has probably received the mother of all bollockings, but in front of the cameras, Dr Chalmers was a picture of restraint.

“These things happen from time to time,” he said. “I’m pretty relaxed about it, to be honest.”

He may have been relaxed, but he certainly wasn’t amused, forced into an extended press conference to mop up the mess.

For a consummate media performer, Dr Chalmers spent far more time rifling through briefing notes than standard, and was evasive when pressed on the cold, hard truths.

In some ways, that is understandable. The Treasurer, and Prime Minister have been trying to carefully soften up the electorate on impending economic pain, starting with rebranding his upcoming Productivity Roundtable to an ‘Economic’ one. In doing so, he has put tax reform on the agenda.

Veteran Budget watcher Chris Richardson said the Treasurer should be grateful the unredacted headlines were revealed.

“It is marvellously good news for Australia and Australians that this leaked,” he said.

“We need a better national conversation, and it is at times a bit hard for politicians to tell the truth, because sometimes we punish them when they do.

“This is the Federal Public Service speaking at the moment where it it does its very best to be frank and fearless for whoever was to win the election. It is also a to do list for Australia’s national conversation.”

Mr Chalmers did not seem particularly grateful to have to spell out what medicine the Budget needed.

While he said it’s not “particularly surprising that the Treasury has highlighted that we need to do more to make the Budget more sustainable,” he became increasingly irritated about being pressed on the need for hard choices.

There was classic misdirection, such as comparing the current level of Government spending to GDP with the extremes of the COVID era, while his description of a Budget process that included a “combination of savings, spending, restraint, tax changes,” revealed more about the way Labor has been tinkering around the edges than acting with any real urgency.

Labor’s latest Budget is already looking in better shape than the original $28 billion forecast deficit thanks to higher than expected commodity prices but national debt is still predicted to pass the $1 trillion mark this year, and forecast to grow to $1.2t by 2030. With the NDIS expanding at 8 per cent a year, and ageing population and interest on debt the fastest growing line item, deficits are forecast well into the future.

On that basis, the Treasurer’s roundtable agenda simply doesn’t appear ambitious enough, given policy proposals are only required to be “broadly budget neutral or better”.

The Government, and to be fair the Opposition during the election, are too afraid of telling the public what it needs to hear.

“The election campaign we just had was an embarrassment to Australia and Australians,” Mr Richardson said.

“I called it a Seinfeld election, an election about nothing, as both sides pretended that there weren’t many challenges out there and that they didn’t need to do much.”

Mr Richardson said there was less than half a per cent of difference in spending proposals put forward before the election, something even “more embarrassing” given the decades long decline in Australia’s productivity.

“Australia’s policy has been in cruise control for two decades, but the challenges that we face are rising, and they’re rising at a faster rate than they’ve done for quite some time,” he said.

The biggest threat is external, with Treasury warning in not-as-redacted-as-the-Treasurer-would-have-wanted headlines that included “financial disruption”, “severe downturn” and “worse case scenario”.

The Treasurer understands that.

“We’ve got to recognise this is the fourth economic shock in less than two decades. This global economic uncertainty is most likely to constrain and guide and shape our choices,” Dr Chalmers said.

While Australia is a long way yet from the level of debt to GDP that is seriously constraining the choices of peers like the UK, Mr Richardson said Australia’s status as a small, relatively unsophisticated economy made the country especially vulnerable to geopolitical turmoil.

“If US policy blows up the world economy, there is enormous value in having a healthier budget, because a healthier budget at those moments of crisis can be a shield of steel,” Mr Richardson said.

But is the Government willing to truly do the hard yards?

One Labor insider told The Nightly that in order to deliver true reform, a party generally has nothing to lose, is running out of time, or has its back against the wall.

Labor’s landslide win with its business as usual agenda suggests it has everything to lose by upsetting an electorate. The roundtable, with three days of talks across “resilience, productivity and sustainability”, appears as much an exercise in getting lobbying groups clamouring for reform off the Government’s back by forcing them to come up with a consensus policy.

But that ambition is too timid.

“You can’t entirely outsource leadership. If business and unions can find consensus on some areas, that’s great, but that’s also unlikely to move the dial enough in terms of productivity, and hence Australian living standards,” Mr Richardson said.

“The risk is we go lowest common denominator and you know history books are kindest to those leaders who had a go.”

While the tax and productivity debate is one where the Government thinks it can evade the hard sell, it is housing that will see its feet held to the fire.

Treasury revealed that the Government’s signature policy to address the national housing crisis by building 1.2m new homes “will not be met”.

Dr Chalmers found himself trying to talk around that one.

“You’re responding to a subheading in a document, a partial release,” he said.

“It’s about as unambiguous as any of the headings get,” a journalist rejoined.

The Treasurer was asked if it setting a housing target would be seen a similar to the “mistake” in promising power prices would fall. He was also asked if Housing Minister Clare O’Neil should “stake her job” on meeting the target, as the Prime Minister had on increasing bulk billing under Medicare.

“We need to do more, and we need to do better to hit that target in four years time,” Dr Chalmers replied.

“We take responsibility for all of our efforts, whether it’s bulk billing, whether it’s the housing target or in other areas.”

The failure in housing, where house prices are now nine to 10 times the average income in major cities, was more of an issue than even the Budget, according to Mr Richardson.

“We’re going to fail the targets, and that’s par for the course, because we’ve failed everything else in housing now for a number of decades,” he said.

“Housing is the central challenge of the moment.”

Treasury has inadvertently revealed its frank and fearless assessment of the economy. Now it’s time for the Government to do the same and fess up about what lies ahead.