View from The Hill: Jim Chalmers wants to get on with economic reform and tax is in his sights

Jim Chalmers cast his Wednesday National Press Club speech as a second instalment in a two-part presentation that was kicked off by the prime minister in an address there last week.

But it didn’t sound like that at all. In fact, the two performances were chalk and cheese. Albanese’s contribution was cautious, showing no inclination to splash too much of the political capital amassed from a huge election win. The prime minister looks to a legacy of Labor’s longevity in government, and extols a measured and steady style.

In contrast, Chalmers on Wednesday came across as a man on a mission, anxious to seize this term to do bigger things, because no matter how large the majority, you never know what the future holds. And that’s apart from his ambition to ascend to the top rung of the political ladder.

Albanese announced a roundtable in August to discuss productivity; in elaborating on it, Chalmers put the hot button issue of tax reform prominently on the table.

The treasurer believes the community is up for significant economic reforms, if the changes are crafted and sold the right way and if sufficient of that elusive political grape, “consensus”, can be harvested and bottled. He’s also willing to stretch or exceed the electoral mandate Labor won on May 3. Remember, it was Chalmers who wanted to break the Stage 3 tax cut promise long before Albanese did so.

He said on Wednesday: “This is all about testing the country’s reform appetite […] I am personally willing to grasp the nettle, to use an old saying. I am prepared to do my bit. The government is prepared to do its bit. And what we’ll find out in the course of the next few months is whether everyone is prepared to do their bit as well.” He was heartened, post election, by a “welcome and encouraging discussion about the level of ambition that Australia has”.

Albanese was involved in Chalmers’ Press Club speech, even interacting on its points from Canada, where he was attending the G7. Either the prime minister is deliberately letting his treasurer “front run” a more ambitious agenda for the government, or he doesn’t choose to get in his way.

Albanese announced the roundtable, but Chalmers is in charge of it. Held in the cabinet room on August 19-21, it will be small and, Chalmers hopes, non-performative. Details are still being finalised, but Chalmers doesn’t anticipate “permanent cameras” in the cabinet room, which has just 25 seats around the table.

“We want participants to make contributions that meet three important preconditions,” he said.

“First, ideas should be put forward in the national interest, not through the prism of sectoral, state or vested interests.

"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.”

Chalmers argues that last term the government did a range of things on tax. But most would describe them as modest, and he would not then contemplate a major overhaul, such as a shift from direct to indirect tax.

He was seared, on his own admission, from his days as then treasurer Wayne Swan’s staffer, by the memory of the Henry tax review, the last major look at Australia’s tax system. That triggered Labor’s mining tax debacle, which helped end the prime ministership of Kevin Rudd. Most of that valuable review was totally wasted.

Now Ken Henry, former head of treasury, has had input into Chalmers’ Press Club speech; he was in the audience to hear it.

“Australia has to recognise that this is genuinely a defining decade. The decisions we make in the 2020s will determine the sort of living standards and intergenerational justice that will have in the decades to come,” Chalmers said. Intergenerational justice is a major preoccupation of Henry’s.

If Henry is in Chalmers’ ear, another proponent of tax reform, Steven Kennedy – who has just left the post of secretary of the treasury – is well-placed to be in the prime minister’s ear. Kennedy has just become head of the Department of the Prime Minister and Cabinet.

While the roundtable is focused on “productivity”, Chalmers emphasised he is also focused on budget sustainability.

“Tax reform is important to budget sustainability , but also to productivity.

"I think it would be unusual if I said to the country, we’re going to have this big national reform conversation about productivity, sustainability and resilience, but nobody’s allowed to talk about tax.

"And so I anticipate, I welcome the fact that people will come to the roundtable, outside the roundtable, people will pitch up ideas about tax.

"We don’t see that as an opportunity to walk back on some of the things that we’re already committed to, in this case, some years ago. We see it as an opportunity to work out what the next steps might be.”

Chalmers is the latest treasurer to walk down the tax reform road. The stakes are high. It will be easy to slip, or be forced to lose ambition. On the other hand, if he can navigate the rocks it will make his reputation.