Younger generations pay price for lack of tax reform, warns teal Allegra Spender

As Labor spruiks healthcare and cost-of-living relief as the centrepiece of its Budget next week, one leading independent MP says the Government is missing the bullseye on helping future generations.

Australia can’t afford to avoid meaningful tax reform, Allegra Spender, the member of Wentworth in eastern Sydney, told The Nightly, accusing Labor and the Coalition of running scared.

“We are not doing the right thing by our kids,” she said.

Ahead of a Budget that will set the tone for the Federal election campaign, Ms Spender said that “both the Budget and the Budget reply should be about setting out the reform agenda that we need for this country,”

Ms Spender called for a “very restrained Budget” that would increase competitiveness of businesses and improve regulation of the construction industry and care sector to drive productivity.

“We need to be fiscally very restrained, and that’s why I believe we need fiscal guard rails of saying we can’t grow spending more than GDP growth,” she said.

Big ticket items should focus on a hike in defence spending and on housing, while drawing back on big infrastructure projects while the construction industry is under pressure.

High on the crossbencher’s agenda is the need for an ambitious blueprint for income tax reform to give the overburdened younger generation a fairer deal.

“This is about both housing - that housing has become so unaffordable if you don’t have family money backing you, but it’s also the tax system,” she argued.

“We are currently having one of the highest reliances on income tax in our history,” she said.

“This is at a time when young people who are starting out and working, have the highest HECS debt in history.”

In November, Ms Spender tried to drive the conversation on the generational wealth gap in a tax green paper that highlighted growing inequity.

It said younger working people today are paying a greater share of the total tax and getting a smaller share of government benefits, despite having a smaller share of total wealth.

“While Australian wealth has soared so that households over the age of 65 are 50 per cent wealthier than older households 12 years ago, younger households got none of the uplift,” it said.

“We need to reduce our reliance on income taxes … the starting point could be to index income brackets,” said Ms Spender, criticising the tendency of major parties to deploy bracket creep to bring budgets back into the black.

Her comments come amid expectations that the trending decline in the share of the vote won by both major parties will continue in the upcoming Federal election, due in a matter of weeks.

In 2022, the share of Australians voting outside of the major parties reached 31 per cent, almost matching 33 per cent who voted for Labor and 36 per cent for the Coalition, and delivering a record number of independents to the crossbench.

Ms Spender said she did not hold out much hope for reform in the next Budget.

“I think this is why people are so disappointed with both the major parties at the moment - they don’t see the pathway for setting up the economy for the future,” she said.

Increased voter pessimism was backed by a recent survey by the Australian National University earlier this month, that revealed more than 50 per cent believed life will be worse in 50 years.

More than a third still report financial stress despite more jobs, and multiple cost-of-living relief measures.

Ms Spender did not claim to have all the answers, but she rebuffed fears that a minority government could stymie the chances of making progress on major policies, arguing much could be achieved by working constructively in the country’s best interests.

“I recognise as one crossbencher, I can’t determine the tax policy of the country, but we need a process under which these debates can be had,” she said.

“Part of this is actually building momentum and building within the community the case for change,” she added.

Major parties had long tried to wedge each other and run scare campaigns, said Ms Spender.

“With majority government, we haven’t had serious economic reform on these big issues, particularly tax, for the last 20 years.”