’None of those’: Australia’s big tax problem

Independent member for Wentworth Allegra Spender is campaigning for an overhaul of Australia’s tax system. Picture: NCA NewsWire / Martin Ollman

Australia’s housing crisis, falling international competitiveness, lacklustre wages growth and the impact of climate change all risk worsening if wholesale tax changes aren’t pursued, independent MP Allegra Spender has warned.

Inviting representatives from unions, environmental and social services groups and community sector organisations to the latest round of consultations for her independent tax review, the Wentworth MP said reform was a pressing priority.

Speaking to the roundtable held in Canberra on Friday, Ms Spender said tax reform was one of the most “neglected” issues facing the country.

“Tax is not the only driver of some of the challenges that we face as a country. But frankly, it's an issue too important to ignore.

“A tax system should be sustainable, simple, fair and drive strong economic outcomes – ours is none of those things.”

Independent MP Allegra Spender convened a roundtable on tax reform in Canberra on Friday. Picture: NCA NewsWire / Martin Ollman

Australia faces a tax reform deadlock that has lasted more than two decades, with no major changes to the tax and transfer system since the introduction of the GST in mid-2000.

Ms Spender also hit out at the major parties that she said had sought to “wedge each other” over the issue and consequently deal themselves out of debate.

“The truth is that neither major party is willing to embark on a reform process alone. Both sides have tried and both have been burned by the experience.

“It’s something which could be cause for despair – but I choose to look at it as an opportunity,” she added.

Following consultation, Ms Spender plans to release a white paper on tax reform by mid-2024.

Despite Ms Spender’s advocacy, breaking the ongoing inaction on meaningful tax reform faces resistance from both the government and the opposition.

Treasurer Jim Chalmers ruled out changes. Picture: NCA NewsWire / Martin Ollman

As recently as this week, Treasurer Jim Chalmers ruled out major changes, arguing the government would instead pursue incremental improvements to the country’s tax system.

“We've made it clear that when it comes to multinationals, when it comes to the petroleum resource rent tax, and when it comes to high balanced superannuation, that there are changes to be made there to make the tax base more robust,” Dr Chalmers told reporters in Canberra.

Meanwhile, opposition representatives were not present at the consultations on Friday despite attending previous meetings.

The third round of consultations Ms Spender has hosted follow meetings with tax policy experts including former Treasury boss Ken Henry and ANU Tax and Transfer Policy Institute director Robert Breunig in March. Ms Spender also met with peak business groups in July.

Aust politician Prime Minister John Howard (r) shaking hands with Treasurer Peter Costello while promoting GST tax package 14 Aug 1998.
Australia has not seen major tax reform since the introduction of the GST in 2000 by former treasurer Peter Costello and prime minister John Howard.

Ms Spender’s new round of consultations come after fresh GDP figures revealed the Australian economy expanded by just 2.1 per cent in the year to June, with Australia now facing a “per-capita recession”, as population growth outstrips economic growth in the first half of 2023.

The data also showed Australia’s productivity problem continued to deepen, with productivity growth sinking by 3.5 per cent in the year to June 2023 to reach its lowest level since March 2016.

Campaigning in the May 2022 federal election, Ms Spender previously pushed for a wide-ranging tax review to consider the competitiveness of Australia’s corporate tax rate while also canvassing changes to state-based taxes including stamp duty and payroll tax.