Shadow treasurer Ted O’Brien has drawn a line in the sand ahead of Treasurer Jim Chalmers’ productivity summit, saying the Coalition will only agree to tax reform that results in no net increase to the tax burden.
After Chalmers gave himself leeway last month to increase taxes by saying he was open to ideas that were “broadly budget-neutral or better”, O’Brien, who is one of the 25 partakers invited to the summit, said the Coalition, while open to reform, would not countenance a higher tax burden.
“As far as I’m concerned, this roundtable is about raising living standards, not raising taxes,” he told The Australian Financial Review.
“I will put a ruler over ideas on the principle [any tax changes] be at most budget-neutral.
“Higher taxes will not be an acceptable outcome of the roundtable, you don’t make a more productive economy by raising taxes.”
The summit will run for three days from August 19-21. Tax reform will be discussed on day three.
O’Brien expressed concern that in the lead-up to the summit, not enough attention was being paid to the high levels of government spending that had the Treasurer searching for more revenue. Spending growth was running at 6 per cent last financial year.
“Budget repair begins with spending restraint, not raising taxes,” he said. “This Treasurer has driven government spending to its highest level since 1986, outside of recession.”
Any tax changes that emanate from the summit will need the support of either the Coalition or Greens to pass parliament.
In question time on Thursday, O’Brien continued to push Chalmers over his plan to impose an additional 15 per cent tax on superannuation balances above $3 million, including on unrealised gains.
Asked about Paul Keating’s criticism of the tax as “unconscionable”, as it will trap more and more young people over time by introducing bracket creep into the super system, Chalmers acknowledged he was at odds with his political idol.
“I value my relationship with Paul Keating, someone I have known for a long time and somebody who I continue to admire,” he said.
“It is possible to admire Paul Keating and respect him and to occasionally have a different view to Paul Keating, and this is what has happened on this occasion.”
He claims the only reason more people over time would have $3 million in super was because Labor had succeeded over the course of three different governments in raising the super guarantee to 12 per cent.
“The reason that Paul put out a statement talking about the balance that people have in their superannuation is because he was rightly celebrating the fact that this side of the house is delivering 12 per cent superannuation guarantees.”
As The Australian Financial Review reported, Chalmers has yet to discuss with the Greens their demands that the $3 million threshold be reduced to $2 million and that it be indexed.
The legislation for the super tax rise is likely to be associated with other tax changes that emanate from the summit, in the belief that will make it less contentious.
Chalmers has previously ruled out redesigning the tax to spare unrealised gains as part of a broader tax reforms package after the summit.
He said on Thursday that remained the case.
“We announced this superannuation change more than two years ago. We intend to proceed with it, and we’ll legislate it when the parliamentary schedule allows,” he said.
“We’ll engage with the Greens when we can. Parliament sits in a few weeks after this. We’ve got the economic reform roundtable between now and then, and that’s really my focus.”