Treasurer Jim Chalmers wants tax reform to be discussed at this year’s productivity roundtable . Photo: Michelle Kroll.
Treasurer Jim Chalmers has declared productivity to be the Federal Government’s first priority, saying Australia has to get on top of its two-decade old productivity problem.
Speaking at the National Press Club this week (18 June), Dr Chalmers said he was open to new ideas and fresh approaches; looking forward to hosting the productivity roundtable in August, which the Prime Minister announced last week.
The Treasurer doesn’t want to be constrained by tired formulas, and tax reform will definitely be on the table for discussion.
“Productivity is our primary focus,” he said.
“Too often it’s seen as a cold, almost soulless, concept – when it’s really the best way of making people better off over time, creating more opportunities, making our economy and our society more dynamic.
“By now our shortage of productivity growth is well known and broadly understood.
“Almost every comparable country has the same challenge.
“Our own productivity problem hasn’t been with us for a couple of years, it’s been with us for a couple of decades.”
The Treasurer said in the 10 years before the pandemic, productivity grew only half as fast as it had two decades earlier.
He said the 2022 federal election coincided with the largest quarterly fall in productivity growth in almost half a century.
His incoming government brief received from Treasury last month identified four key reasons why.
“Firstly, our economy is not dynamic or innovative enough,” Dr Chalmers said.
“Secondly, private investment has picked up, but not by enough to make our capital deep enough.
“Thirdly, skills aren’t abundant enough or matched well enough to business needs.
“Finally, our changing industrial base and the growth in services – where productivity is harder to find, and where traditional measures don’t account well for quality…
“We’ve encouraged a broader approach to productivity that goes beyond the old, tired and formulaic fights.”
Along with productivity, the other top priorities for the government are budget sustainability and resilience in the face of global volatility.
For the Treasurer, that all adds up to placing tax reform on the table when the roundtable is convened.
“No sensible progress can be made on productivity, resilience or budget sustainability without proper consideration of more tax reform,” he said.
“I don’t just accept that, I welcome it. Tax is one of many ways our three primary economic challenges are related and reinforcing [that] in each case we know what the problems are.
“We’ve made good progress, with more work already underway, we know we need to do more, and now is the best time to work out the next steps.”
Accountancy umbrella group Chartered Accountants ANZ welcomed that news, with its CEO Ainslie van Onselen saying tax reform was an important part of boosting productivity.
“And it’s the right step forward to have it on the table,” Ms van Onselen said.
“I’m glad to see the Treasurer acknowledged this in his address today, and we look forward to seeing tax reform firmly on the agenda at the productivity roundtable.
“Our system is over-reliant on personal income tax, and that is unfairly punishing Australians also facing cost of living and housing pressures.
“We agree, we need to move beyond calling for tax reform, and actually do it.”
The productivity roundtable will be held over three days from 19 August and kicked off by Prime Minister Anthony Albanese.
It will be convened in the Cabinet room at Parliament House, which only seats about 25 people.
That means not everyone wanting an invitation will be getting one.
The Opposition, for one, isn’t likely to get a seat at the table, but the Treasurer assures there will be a mix of government, business, union and civil society representatives and experts.
“Ahead of the discussions we will publish the agenda, key issues and attendees,” Dr Chalmers said.
“There’s a lot of interest in being a part of it and I’m encouraged by that.
“But I assure everyone the roundtable won’t be the only opportunity to feed in ideas.
“We will ensure everyone has the ability to contribute both before and after these discussions and Ministers will play a key role here too.
“Soon we’ll call for targeted submissions, which can be submitted through a dedicated Treasury channel.”
Contributions will have to meet three preconditions.
“First, ideas should be put forward in the national interest, not through the prism of sectoral, state or vested interests,” the Treasurer said.
“Second, ideas or packages of ideas should be budget neutral at a minimum but preferably budget positive overall, taking into account the necessary trade‑offs.
“And third, ideas should be specific and practical not abstract or unrealistic.
“In return I give everyone this commitment – we won’t come at this from an ideological point of view but from the practical, pragmatic and problem‑solving middle ground we’re most comfortable on.
“A related point, and because the group will be small and focused – finding consensus will be everyone’s responsibility.
“We want to encourage participants to build broad coalitions on changes that cross the aisle, in the parliament and outside as well.”
