Taxation is on the agenda of the Economic Reform Roundtable and, despite Albanese’s reluctance to consider tax changes, it will be impossible to achieve Labor’s goals without reform to raise more revenue.

Budget sustainability and tax reform are listed to be the focus of discussion on the third day of the government’s Economic Reform Roundtable. We should, therefore, not be surprised, as Paul Keating famously put it that, every galah in the pet shop has their own ideas about tax reform. So here’s mine as well.

Revenue needs

My starting point is that Australia needs to raise more tax revenue. Treasury forecasts that the budget will continue to be in deficit over the next few years by an average of 1.2% of GDP. This is a structural deficit which is a major risk to economic sustainability.

This deficit needs to corrected and sooner rather than later. Either taxation has to rise or expenditures need to be cut. The Opposition has declared that the Albanese Government is a tax and spend government, so we can presume that the Coalition would cut expenditures, although they never tell us where and how.

Frankly, I think the evidence strongly supports that during the nine years of the previous Coalition Governments too many services were underfunded. This underfunding was the inevitable result as the Coalition tried to get the budget back into the black, but without removing any services or reducing eligibility for those services.

Since being elected, Labor has made some effort to restore some services, but they are still underfunded, and this will remain the case unless more revenue can be raised to pay for them.

For instance, university funding is still less in real terms than it was more than a decade ago, and unfortunately they are now curtailing courses and laying off staff. This is bound to reduce Australia’s longer-term growth prospects. Similarly, the projected time to achieve equitable needs-based funding for all schools is too far out.

Health is generally underfunded, with waiting times too long, and too often the gap payments for the individual are too big, so that they postpone the care that they need, while most people agree the JobSeeker allowance for unemployed people should be increased.

In addition, there is general agreement that in our uncertain world, defence expenditure will have to increase relative to GDP.

We cannot be sure about........

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