Voters will punish anything less than painless pandemic repair

Jim Chalmers’ long-term ambition is similar to that of most treasurers. He wants to be prime minister. More immediately, he aspires to be a reformer, which has become harder in today’s electorate, with its low tolerance for pain.

Chalmers likes to talk about having “conversations” on economic matters with the public. On Tuesday – when he was playing down some good news about the $50 billion windfall in the budget outcome for 2021-22 – he spoke of the need for a “national conversation” about how we pay for all the expensive programs people want.

He’d been asked about Reserve Bank Governor Phil Lowe who last week said our fiscal problems demanded higher taxation, spending cuts or economic reforms to grow the economy, or all three. Desirably with a start this parliamentary term, said Lowe.

The governor, who’s in the gun for holding out the prospect of low interest rates continuing until 2024, is not elected and anyway, is not expected to be in his post beyond the expiry of his term in September next year.

Lowe has nothing to lose by being blunt. As a senior minister Chalmers has to be more careful. But he was pleased with Lowe’s words, as he was with similar public sentiments from treasury secretary Steven Kennedy recently.

“I do think we need to have a national discussion about the structural position of the budget, and how we fund the expectations that Australians legitimately have,” Chalmers said.

The cynic might say, talk’s cheap, action could cost votes.

Chalmers highlighted that five big spending areas – health, the National Disability Insurance Scheme, aged care, defence, and servicing the large public debt – were creating “substantial structural concerns”.

The spending represented “a combination of the unavoidable and the desirable”.

Chalmers knows there must be a reckoning. But when, and in what form?

The government is squeezed by the promises it made (to remain a small target in order to get elected), the risks in breaking its word, and a volatile electorate.

We hear endless commentary about the (protected) Stage 3 tax cuts, but they are only one constraint. Apart from a crackdown on multinational tax avoidance, Labor pledged there would be no discretionary increases in tax this term.

In theory, it has got greater flexibility on spending cuts and we can expect to see quite a few in the October budget, targeting the former government’s programs. This is not just a matter of removing “rorts” but also replacing that government’s priorities with its own.

Chalmers says this will be a “bread and butter” budget, suggesting the more fundamental attempts at reform will come later.

After this “standard” budget “there are multiple opportunities in multiple budgets over the course of the next three years or so, for us to properly engage the people in a proper national conversation about the services that we provide, and how we fund them,” Chalmers said.

Even so, making major changes this term will be difficult; equally challenging would be putting at the 2025 election a program for structural reform of the budget.

In 2019 Labor took to the election a big spending-big taxing policy; in 2022, it went for minimalism. Nevertheless, the election commitments involve extra spending, notably the generous child care policy, and improvements to aged care, including funding the (uncosted) wage rise for workers that will be handed down by the Fair Work Commission.

The government is also under pressure to do more on various fronts, for example, to extend paid parental leave.

Any “conversation” about what services people want from government can quickly get into tricky issues.

These include the sustainability of what’s being offered (think the ballooning NDIS, costing about $28.6 billion in 2021-22 rising to an estimated $34 billion in 2022-23), and the extent to which users should pay more for some services (think aged care).

Serious attempts to put spending on a better basis in the big areas would be met with loud protests from those losing out.

Then there’s the “conversation” about revenue. Leaving aside the Stage 3 tax cuts, many economists see the tax system as unfit for purpose. Certainly over the long term we need more revenue to finance programs.

But major tax reform takes political backbone, and efforts don’t necessarily come off. John Howard and Peter Costello introduced the goods and services tax, but the Coalition nearly lost the election at which it sought a mandate for it. Years before, when treasurer, Howard failed to get support in the Fraser government for a broad-based indirect tax.

And who can forget treasurer Wayne Swan’s attempt at a mining tax? Certainly not Chalmers, who worked for Swan at the time.

There was treasurer Scott Morrison’s spruiking of GST reform in Malcolm Turnbull’s government, which ended with him being slapped down by his prime minister.

Robert Breunig, Director of the Tax and Transfer Policy Institute at the Australian National University’s Crawford School says, “We’re really stuck on tax”.

“The Scandinavian countries are able to reform tax in anticipation of problems. Anglo-Saxon countries generally get into big trouble and are then forced into reform,” he says.

Breunig argues we have too much reliance on personal income tax and company tax, reducing economic incentives. He advocates targeting wealth, through changing tax arrangements on superannuation and imposing a national land tax, which would replace state stamp duties.

While reducing the tax breaks for superannuation might be obvious, the backlash when the Coalition undertook modest change some years ago was sharp. And a land tax-stamp duty trade off would involve getting the states on board.

What about changes to the GST? They would have been easier, Breunig says, in the days when the budget had multi-billion surpluses and losers could have been paid off.

Of course if Chalmers was really brave, he could push the idea of an inquiry into federal-state revenue arrangements, or even propose a tax summit as in 1985 (guarding against treasurer Paul Keating’s experience of his PM leaving him high and dry).

The reforming ambitions of a treasurer affect the dynamics of their relationship with the prime minister.

Bob Hawke, himself committed to economic reform, was supportive of Keating’s zeal, including on tax. But he also reined him in, when the politics came to the fore or there was insufficient stakeholder support for Keating’s goal.

Keating – whom Chalmers often speaks with and greatly admires – chafed under such restrictions.

So far Anthony Albanese has shown himself a cautious leader, in opposition and now in government. The exception is in a non-economic area – his commitment to a referendum on the Voice to Parliament.

Albanese and Chalmers appear to have a good relationship. It remains to be seen whether they will continue to march to the same beat on policy, or whether Chalmers will push for more and faster change, and how Albanese and other ministers react if that happens.

For a treasurer a “conversation” with the Australian people about economic reform must involve a whole other set of “conversations”, with the prime minister and colleagues. And those can test the mettle of all of them.

Michelle Grattan is professorial fellow at the University of Canberra. This article first appeared on The Conversation.

News Related

OTHER NEWS

Breaking: NFL Fan Died After Fall At Stadium On Sunday

(Photo by Justin Berl/Getty Images) Justin Berl/Getty Images A tragic story out of Pittsburgh as a fan who was hurt at Acrisure Stadium succumbed to his injuries on Sunday evening. ... Read more »

Perth dad drowns at Yallingup Beach while trying to save his teenage children

Police say swimming inexperience played a role in the incident. (ABC South West Sam Bold) A Perth father has died at a popular beach in Western Australia after he swam ... Read more »

The slick moment Jack Grealish made sitting down Casemiro look so, so easy has gone viral

Jack Grealish has come under plenty of scrutiny since signing for Manchester City to the tune of a British record transfer fee. An untameable dynamo in midfield during his Aston ... Read more »

Arsenal star issued apology to teammates at half-time during Spurs win

Granit Xhaka scored Arsenal’s third goal in their 3-1 win over Tottenham (Getty) Granit Xhaka issued an apology to his Arsenal teammates at half time during their 3-1 victory over ... Read more »

Little Olly's eviction from Frankston foreshore questioned as community rallies

A bayside council has been asked to explain why it has given a much-loved beachside caravan kiosk the boot. Co-owner and manager of Little Olly’s Carl Ashdown said he was shocked ... Read more »

Is property actually a good investment? I'm a financial adviser and this is what I tell people.

As we’ve seen, you can win or lose with property. Just the same way as you can win or lose in the share market, every investment has its risks. Before ... Read more »

NRL Grand Final 2022: Parramatta Eels player ratings

NRL Grand Final 2022: Parramatta Eels player ratings The premiership drought for the Eels has continued for another year, completely outclassed by Penrith in a disappointing NRL Grand Final. Parramatta ... Read more »

Watch: Ball gets deflected off Rishabh Pant's gloves, Rohit Sharma narrowly avoids 'low blow'

Watch: Ball gets deflected off Rishabh Pant's gloves, Rohit Sharma narrowly avoids 'low blow' David Miller’s explosive ton went in vain as Indian bowlers hold their nerve to clinch the ... Read more »

Widespread rainfall forecast for Australia

Much of Australia is set for a drenching, with rain forecast from the far north to Tasmania. Large swathes of Australia are set to be drenched and shivering, with heavy ... Read more »

Cost of living payment: Why not everyone will get money at same time

Watch: Millions of Kiwis will be expecting a third and final cost of living payment on Monday – but prices look set to keep climbing higher. The Government’s final $116 ... Read more »

Rate rises tipped to slow in coming months

Borrowers can expect to be shelling out more for repayments after the RBA’s board meeting. One last oversized rate rise is broadly expected before the central bank is tipped to ... Read more »

Celtic have 'advantage' after 'phenomenal' Parkhead news - journalist

Celtic’s recent announcement of last year’s profits totaling up to £6.1m will come as a boost in terms of the club being able to keep hold of players. That is ... Read more »

New Discovery Means Parkinson's Could Be Diagnosed With a Swab in Just 3 Minutes

Series of brain scan images When it comes to developing treatments and eventual cures for diseases, being able to diagnose a condition early and accurately makes a huge difference – ... Read more »

Grand final stars selected for Jillaroos World Cup squad as two big names left out

Newcastle Knights grand final hero and Karyn Murphy Medal recipient Tamika Upton has been selected for the Harvey Norman Jillaroos in the upcoming Rugby League World Cup. The Australian Rugby ... Read more »

PM Ardern refuses to call Davis' comments about ACT's Chhour racist, says they were 'too personal'

Watch: Jacinda Ardern speaks with AM. Prime Minister Jacinda Ardern has refused to call Kelvin Davis’ comments to ACT MP Karen Chhour racist, instead calling them “too personal”. The deputy ... Read more »

NFL World Reacts To Sunday Night's Cris Collinsworth News

INDIANAPOLIS, IN – JANUARY 31: NBC game analyst Cris Collinsworth looks on during the Super Bowl XLVI Broadcasters Press Conference at the Super Bowl XLVI Media Canter in the J.W. ... Read more »

MAFS star booted out of bar for bizarre fight

Former MAFS star Jessica Seracino was reportedly kicked out of a Melbourne bar after getting into a heated argument with another patron. Jessica, who was briefly “married” to Daniel Holmes ... Read more »

WATCH: SNL season opener pokes fun at overdone Trump sketches, not covering Biden

WATCH: SNL season opener pokes fun at overdone Trump sketches, not covering Biden The new cast of Saturday Night Live kicked off its 48th season cold opener with some self-deprecating ... Read more »

The Best Free iCloud Alternatives for All Your Food Pics and Cat Videos

The double-edged sword of being an iPhone user is iCloud. On the one side, it provides a free, convenient cloud syncing service for your phone, but on the other it ... Read more »

NFL World Reacts To Embarrassing Trevor Lawrence News

PHILADELPHIA, PENNSYLVANIA – OCTOBER 02: Trevor Lawrence #16 of the Jacksonville Jaguars attempts a pass during the first half against the Philadelphia Eagles at Lincoln Financial Field on October 02, ... Read more »

The Jillaroos announce Rugby League World Cup squad as they attempt to defend their title

The Jillaroos announce Rugby League World Cup squad as they attempt to defend their title The Jillaroos have announced their 24-player squad ahead of the Rugby World Cup which begins ... Read more »

Rare Australian penny released during the Great Depression sells for nearly $60,000

The Australian penny from 1930 is considered one of the rarest in existence.  (Supplied: Lloyds Auctioneers and Valuers) A rare 1930 Australian penny that was never meant to be minted ... Read more »

'Dad brain' is real: New study shows men's brains shrink after becoming fathers

Ask (almost) any mum if ‘mum brain’ is real, and they’ll tell you they were a lot sharper pre-kids. Although it’s widely accepted that pregnancy can change a woman’s brain, ... Read more »

Aaron Rodgers Has Brutally Honest Bill Belichick Admission

DETROIT, MICHIGAN – JANUARY 09: Aaron Rodgers #12 of the Green Bay Packers looks on from the sidelines during the second quarter against the Detroit Lions at Ford Field on ... Read more »

Look: Baker Mayfield Reacts To Fans Booing Him

CHARLOTTE, NORTH CAROLINA – OCTOBER 02: Baker Mayfield #6 of the Carolina Panthers walks off the field during the fourth quarter of the game against the Arizona Cardinals at Bank ... Read more »

Ten civilians killed in an attack blamed on the ADF in eastern DRC

File – Military deployed against the Allied Democratic Forces (ADF) in North Kivu, Democratic Republic of Congo. – ALAIN UAYKANI / XINHUA NEWS / CONTACTOPHOTO At least ten civilians have ... Read more »

Colombia’s president congratulates Lula on his first round victory

Archive – Gustavo Petro, President of Colombia – CRISTIAN BAYONA / ZUMA PRESS / CONTACTOPHOTO The president of Colombia, Gustavo Petro, congratulated on Sunday night the leader of Brazil’s Workers’ ... Read more »

Police launch e-scooter safety blitz as man dies in hospital after crash in Melbourne's north

The man’s death has prompted Victoria Police to enforce e-scooter regulations. (ABC News: Michael Lloyd) A 28-year-old man has died in hospital after crashing his e-scooter in Melbourne last month. ... Read more »

Danial Andrews rejects proposal to include PSOs at hospitals

Daniel Andrews has rejected a proposal rehashed by the Victorian Liberals for 75 protective services officers to patrol five of Melbourne’s major hospitals. Danial Andrews rejects proposal to include PSOs ... Read more »

Lula is convinced he will win Brazil’s presidential runoff election

File image of Brazil’s presidential candidate Lula da Silva in Sao Paulo. – Fabricio Bomjardim/TheNEWS2 via / DPA Brazil’s presidential candidate, Luiz Inácio Lula da Silva, has shown on Sunday ... Read more »

Steve Irwin on the $5 note

It has been a long-term debate as to who should appear on the nation’s currency, but the change of monarchs has opened the opportunity for a new face to appear. ... Read more »

Optus hires Deloitte to run review into massive data breach after cyber attack

Optus has hired consulting company Deloitte to run an independent external review of the recent data breach that put the personal details of up to 9.8 million Australians at risk. ... Read more »

Australia on brink of care worker crisis

Brendan O’Connor says the delay in releasing the report has compounded problems in the care sector. Australia will have a shortage of nearly 100,000 care workers within five years if ... Read more »

Public announcement of ASIO mission will cause the ‘scale of difficulty’ to increase

Intelligent Risks CEO Neil Fergus says the Albanese government announcing their mission to repatriate dozens of Australians from Syria “increases the scale of difficulty”. The federal government has announced ASIO ... Read more »

On Loan Liverpool Player Suffers Nasty Looking Ankle Injury

Sepp van den Berg looks to have picked up a nasty looking ankle injury playing for Schalke. Liverpool’s on-loan Dutch defender Sepp van den Berg looks to have picked up a nasty ... Read more »

IAN LADYMA: Nottingham Forest's £150m spree could cost Cooper his job

Steve Cooper’s first notable success as a manager was winning the Under 17 World Cup with England in 2017. The tournament was in India and not logistically easy, but over ... Read more »

NSW motorway sale funds council projects

The $20.4 billion sale of WestConnex is being used to funding community projects in western Sydney. A southwest Sydney council is the first to benefit from the NSW government’s $5 ... Read more »

Facebook Marketplace scammer falsified bank transfers, Tasmania Police allege

Police reminded online buyers to be careful when buying and selling goods. (Reuters: Dado Ruvic) A 22-year-old man allegedly falsified bank transfers to scam people using Facebook Marketplace out of ... Read more »

Bride gets 'petty revenge' on demanding in-laws with black wedding dress

One bride has revealed the shocking way her in-laws tried to control her, so that her wedding day would be “done their way.” In a post made to Reddit, the ... Read more »

Bulgaria – First vote projections confirm uncertain outcome in Bulgarian elections

A man holding a Bulgarian flag in front of a policeman in riot gear in Bulgaria. – PPI / ZUMA PRESS / CONTACTOPHOTO The first real vote projections confirm a ... Read more »
Breaking thailand news, thai news, thailand news Verified News Story Network