CAMERON MILNER: Reform or regret? Voters want big tax change, and Labor’s out of reasons not to

A JWS poll out today says the number of Australians wanting serious structural reform to our taxation system and balancing the Budget has more than doubled since people were asked the question six months ago.

So much has changed since then. The RBA is cutting rates, inflation has a 2 in front of it, and Labor has an unassailable majority in the Federal Parliament.

Labor members and MPs can rightly ask — if not now, when, for Labor’s Big New Tax?

The Liberals and Nationals couldn’t even organise a decent scare campaign on unrealised capital gains tax before the election, and now look to be locked into permanent couples therapy for the foreseeable future.

Labor has one of the finest treasurers ever in Jim Chalmers. He’s smart, and we know he agitated for and won the argument for stage three tax cut changes despite Anthony Albanese’s feet of clay.

Chalmers is also joined by two towering intellects in Andrew Charlton and Daniel Mulino, both PhDs in economics, to give Labor the intellectual firepower to deliver the tax reforms Labor voters and working families still under cost-of-living pressure need.

Think of Australia’s other great treasurers, Chalmers could join as a truly reforming Labor legend.

Ben Chifley, the true believer, was Labor’s prime minister and treasurer in 1946 when Labor won 43 out of 74 seats and then proceeded to commission the Snowy Mountains hydro, introduce the Pharmaceutical Benefits Scheme and the Commonwealth-State Housing Agreement that delivered direct, meaningful housing supply.

Labor’s next treasurer of note, Frank Crean, saw the Whitlam government deliver Medicare all while navigating the inflation surge delivered by the oil crisis of 1973.

Then came Keating. He floated the dollar, deregulated the financial sector, delivered the Prices and Income Accord, started compulsory superannuation and delivered independence to the Reserve Bank to set interest rates.

All in all, a remarkable period of economic reform that set Australia up for back-to-back years of growth.

Labor has also had some notable failures, with Wayne Swan leading the pack.

Despite having a road map for reform delivered by then treasury secretary Ken Henry, Swan squibbed it, shelved the report and then decided to over-promise and then deliver not a single budget surplus.

The GFC saw pink batts schemes and banks rewriting debts using the Commonwealth guarantee and thereby setting them up for even greater super profits going forward.

Chalmers worked for Swan and learned firsthand how not to follow in his footsteps.

But Labor doesn’t need to look any further back than the policies Chalmers and Albanese were part of taking to voters in 2019 to start the great Labor tax reform process. The Albanistas have used Labor’s narrow loss in 2019 to justify total timidity in Government, yet so many of Labor’s tax reform ideas are still valid today, never more so with at least a two-term majority of Labor MPs able to finally implement these changes in full.

Labor should hold a tax and productivity summit and, just like Keating did in 1984, have an open conversation with both unions and businesses, large and small alike, about fair tax reform.

We need to stop a decade of deficits and buying today’s elections with tomorrow’s debt.

As Kevin Rudd once declared, “This reckless spending must stop”.

Capital gains tax reforms, including a maximum available amount, need to be top of the list.

Franking credit reforms for all those but industry super funds also need to be introduced.

Labor needs to deliver tax reform in the housing sector by limiting to one additional property the tax perks that come with negative gearing of existing residential properties.

Sure, incentivise new builds as preferred by people like Chris Bowen, but stop defending investors with preferential tax arrangements with three, five or more than 10 rental properties to their name.

These were all Labor tax reforms already put before Australian voters.

Now come the ones that Labor has discussed in detail around the Cabinet table, but have yet to announce.

Diesel fuel rebate is a tax benefit handed to miners and farmers and costs the Federal Budget huge amounts.

Likewise, the health effects of excess sugar in people’s diets are well known. Just as tobacco and alcohol are taxed to provide revenues for our health system, so could the sugar content of all foods, starting with fizzy drinks.

The UK already has such a tax called the Soft Drink Industry Levy.

Scott Morrison introduced a banking industry tax by stealth in 2018, and it remains in place.

Swan failed to explain the Resource Super Profits Tax that led to Labor being canned over a “mining tax”, but in the end, Labor has a strong history of railing against billionaires and banks.

Labor has at least two terms of government ahead according to those closest to the PM, so why not be a Labor government, rather than a paler, knock-off, Labor Lite government?

Labor already has so many tax reform ideas they could take to a summit — capital gains, unrealised capital gains, negative gearing, franking credit changes, a fuel tax on Miners and a sugar tax on everything.

The only other way to balance the budget would be to rein in spending. Labor could ask the existing public service to deliver expected services within existing means instead of endlessly employing more.

But, nah. Labor likes to be spend and tax.

Voters are now telling Labor they want to see serious tax reform.

Labor has an opportunity not gifted to any of the previous Labor governments that delivered an overwhelming change to our tax system and government program: an unassailable majority at the next election.

Voters are crying out for reform. We have one of the most impressive Treasury teams in memory.

So, if not now, when will Labor deliver as it has done in the past: lasting, structural changes that increase productivity and reward working families?