EDITORIAL: Australia needs to simplify its tax system to boost its productivity
Jim Chalmers is dreaming big.
He wants to be a reforming Treasurer, of his great hero Paul Keating’s ilk.
In a speech to the National Press Club last month, he talked an ambitious game, saying now was the right time for a grown-up conversation about productivity and taxation reform.
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By continuing you agree to our Terms and Privacy Policy.He’s right. Productivity has stagnated. There has been no significant reform to our nation’s tax system since John Howard and Peter Costello brought the GST into effect a quarter of a century ago.
In the years since, governments have flirted with reform before ultimately chickening out. Among those to lose their nerve is Dr Chalmers’ former boss Wayne Swan.
Dr Chalmers reckons he can succeed where Mr Swan failed.
He has a unique opportunity to bring about genuine, lasting reform.
Fresh off a convincing election win, the Albanese Government has plenty of political capital to spare.
It also has time. At least three years, likely more.
But what it doesn’t appear to have is any good ideas, or any genuine desire to recast our economic roadmap.
There has been plenty of soaring rhetoric about ambition but little in the way of specifics.
When the Government is pressed for detail, it responds with condescension and lectures about how we should all be above what Dr Chalmers refers to as the “rule-in, rule-out game”.
So far, the only glimpse we have seen of the direction the Government wishes to take its reformation ambitions is its planned raid on superannuation balances over $3 million.
Taxing unrealised gains represents a radical departure from accepted taxation principles. It’s certainly “bold reform”.
It’s also mildly terrifying to anyone with a sense of fairness or an idea of how this new direction could be extrapolated out in future.
Australia does need a new tax plan to boost productivity and kick start the spluttering economy.
But the key is to make taxes simpler, not more cumbersome.
Our onerous tax system is weighing us down. Small businesses in particular — the driver of our economy — are struggling to cope with the burden of complicated regulation. A simplified, agile system would free up the owners of the enterprises to redirect more time and capital into their businesses.
The Government also needs a complete re-think on housing. At its core, the solution is simple. We need more houses built more quickly.
That will require a relaxation of onerous regulations. That will require buy-in from State and local governments too and will inevitably attract criticism from the NIMBY crowd, unions and environmentalists. There is also the serious question of how to relax restrictions while maintaining build quality and safety standards.
Dr Chalmers’ productivity summit, which he has billed as the first step to untangling these knotty problems, has merit. There’s plenty to be gained by setting our nation’s bright minds on a task. What we’ve seen so far of the Government’s intentions however doesn’t inspire confidence that this will be much more than yet another useless PR exercise.
