Comment

John Hewson
Jim Chalmers’ reform agenda

The treasurer’s recent speech to the National Press Club seems to have caught many in the conservative media off guard. So much for the constant chant about a dangerous, mad, left-wing government. On the contrary, Jim Chalmers has outlined a reform agenda that may well be the envy of the Coalition. He has filled the vacuum that their policy inactivity has left.

Chalmers was pragmatic about the reforms needed to finish what the government started in its first term, to consolidate Australia’s economic position by “modernising our economy and maximising our advantages”. And they must be tackled to build the resilience necessary to meet the uncertain, volatile and therefore challenging global environment in years to come.

This particular focus on budget sustainability and productivity improvement –and Chalmers’ apparent willingness to address the tough interrelated issues of tax reform and deregulation – used to be very Liberal.

Notably, there was very little mention of the government’s Future Made in Australia signature policy to shore up a manufacturing base for the green transition, and no mention of the wellbeing economy. Opposition Leader Sussan Ley should be all over this.

The reality is the Albanese government initiated several important areas of reform in its first term that still need further implementation to complete – most notably in the child, aged and disability care sectors, as well as budget repair, climate change and the Reserve Bank. There are new challenges in addition to boosting productivity, including further diversifying our trading relationships in light of United States tariffs, and to developing a complete and affordable defence strategy in light of major geopolitical shifts, such as America’s retreat from long-held alliances and China’s more aggressive stance.

In his pursuit of reform, Chalmers has also recognised the essential prerequisite of consensus across unions, employers, government policy authorities and the broader Australian public. It is all too easy to forget that we are not just building and reshaping our economy but also our society. To build that consensus, Chalmers has proposed forming a relatively small reform round table as an advisory group.

The productivity round table will meet over three days from August 19. While the full guest list is yet to be made public, Ted O’Brien is among those to have accepted an invitation, in a departure from the obstructionist approach under the leadership of Peter Dutton. Nevertheless, the deputy opposition leader’s response carried a note of defiance in the assertion that “Australia is becoming a poorer, weaker and a more dependent nation” under Labor. “The Coalition will hold the government to account every step of the way and won’t be there to rubber stamp a talkfest,” O’Brien said.

Unfortunately, it is all too easy to dismiss such summits in this way – but they certainly don’t need to be talkfests. An egregious example was then prime minister Kevin Rudd’s “Australia 2020” summit in 2008, which included actress Cate Blanchett among its advisers but resulted in no action.

By contrast, I recall how former prime minister Bob Hawke’s proposed summit was mocked in the 1983 election campaign, yet it developed and instituted the concept of a social contract that was successful in moderating inflation and served as a significant influence on public policy thinking for decades to come.

I am optimistic that the Chalmers round table, with an appropriate mix of expert and representative attendees, can make a very constructive contribution in this term of the Albanese government. While the thrust will be a quest for creativity and innovative proposals, contributors should also be required to consider how much their proposals might cost, with some plans as to how they could be paid for and associated revenues used.

Chalmers has already set the stage for a meaningful discussion of productivity given his appointment to the Productivity Commission of Danielle Wood, and her role in the forthcoming round table. In February he wrote to the commission about its task to research ways to “streamline regulations and remove unnecessary duplication” as a matter of priority.

Chalmers also recognised the need to involve his ministerial colleagues in the productivity policy development process – each one, working within the commission’s framework, should be challenged to propose what they can contribute through their portfolios.

There are also areas the government identified in its first term but that were not acted upon, the most notable being reform of the Australian Securities and Investments Commission (ASIC). The Senate inquiry chaired by the Liberals’ Andrew Bragg generated an authoritative report clearly identifying ASIC’s failures as a corporate cop. Among them, the inquiry noted that ASIC only investigated a small proportion of complaints it received, failed to prosecute some identified cases of “bad corporate behaviour” and was unsuccessful in the few cases it decided to pursue. The main recommendation was tough and definitive – namely, to abolish ASIC and to start again, giving consideration to the Twin Peaks (Agencies) model currently in place in Britain, Hong Kong and Singapore. The Albanese government did not formally respond to the Bragg report tabled late in its first term.

Completion of the reform of the financial sector is urgent because everyone is exposed to that sector – 99.3 per cent of the population aged over 14 have a bank account and there is considerable community concern about the value of their superannuation. Bad behaviour in the finance sector is relevant to the whole community and can be as harmful as misconduct in any other sector.

Chalmers committed to significant action on financial services in the government’s first term, along the lines of what he was delivering for the Reserve Bank and the Productivity Commission, but he never got around to it. The minister who was directly responsible at the time, Stephen Jones, retired from politics at the last election.

It is a national disgrace that the cases identified by the 2019 Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry are left unaddressed, along with actions in clear breach of the anti-money laundering laws administered by AUSTRAC. Indeed, the major offenders seemed to wallow in the fact that they were not prosecuted, by promoting and paying generous bonuses to key executives. When the penalty fines for breaches by the Commonwealth Bank were announced to the market, CBA’s share price actually went up, as market participants seemed relieved that they weren’t hit with the full penalties for each identified breach.

It’s concerning that tax has been particularly toxic in terms of political reform discussions over the past several decades, and riddled with dishonest scare campaigns. The business community has mostly reduced the focus to corporate tax, claiming our headline tax rates are globally uncompetitive. However, they deliberately ignore that effective corporate tax rates are considerably lower than those headline rates and therefore more accurate as a base for comparison with other jurisdictions. More broadly, genuine tax reform needs to review tax expenditures and other expensive concessions to see whether the current circumstances still justify such breaks. Specifically, superannuation concessions are particularly generous and have become an effective means of tax minimisation for the wealthy. Reduction or even removal of these breaks would certainly risk a negative public reaction, as we are seeing at the moment with the proposed increase in the tax on superannuation balances above $3 million. Also worthy of revisiting are the costly concessions in relation to property investments – such as negative gearing and capital gains tax – and GST. One obvious distortion in the current GST arrangement is the very large, indefensible distributions to Western Australia at the expense of the other states. A Labor reform could see the state allocations replaced by direct grants.

It is unfortunate that “reform” is a dirty word to so many, or at least is considered somewhat boring and disruptive. Reform is important. This should be obvious as the challenges facing us – from inequality to climate change – necessitate a break from business as usual. Opponents of reform are usually most concerned about disruption to the cosy world they enjoy or indeed thrive in.

Unfortunately, the baser proponents of political debate in this country are often inclined to use the word “reform” as a trigger for a scare campaign. The endgame should be our national interest, even if some are disadvantaged – it’s about the greater good and what will make the country better off. In some cases, those likely to be worse off could be compensated. This may certainly be the case in tax reform where, say, a higher rate of GST and/or a wider application is proposed to underwrite broader reform of the tax system, as the government may want to offer some cushion for people on lower incomes.

This is no talkfest – it’s much needed debate. After all, genuine reform will always test our maturity as a nation – our willingness, with some inevitable give and take, to look beyond our personal circumstances and tackle the biggest problems together.

This article was first published in the print edition of The Saturday Paper on June 28, 2025 as "Walking the talkfest".

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