Addressing the National Press Club on Wednesday, treasurer Jim Chalmers acknowledged the presence of a slew of ministerial colleagues, a couple of key appointees — productivity commissioner Danielle Wood and new treasury secretary Jenny Wilkinson — and one of Wilkinson’s predecessors, Ken Henry.
Henry’s presence wasn’t a huge surprise. He served as secretary to treasurer Wayne Swan when Chalmers was Swan’s key adviser through the Rudd and Gillard years.
But towards the end of his allotted time Chalmers name-checked Henry again, revealing he had run his draft speech past the former treasury secretary earlier in the week. They had discussed the “bizarre period that we’re living in” and their shared view that global turbulence was now the norm and nobody should expect a return to “decade-long periods of calm.”
Chalmers said it was in this context that he was considering options for economic reform. He didn’t say if these global circumstances had affected his thinking on what was required or just on timing, in that there’s never going to be a quiet time to make hard choices anymore. But either way, he declared himself determined to ensure Australia is “a beneficiary of that churn and change, not a victim.”
A key stage in this process will come next month, when Chalmers and prime minister Anthony Albanese convene a three-day roundtable meeting to thrash out ideas to boost national productivity. They are willing to risk the derision of cynics about yet another talkfest because they need some kind of public forum to earn the social licence for any changes they decide to pursue that they didn’t talk about before the election.
After such a thumping win, it was always going to be a major challenge to manage competing expectations. The government’s repeated no-surprises vow to only do what it promised aims to set those expectations firmly low. Then there’s the other view, that this is an opportunity for lasting structural economic and social reform, way beyond what was canvassed with the people who put it there.
Despite ministers protesting that their agenda is already very significant, they know the electorate’s attention span is short. And with boredom comes dissatisfaction.
They also know expectations management isn’t a binary task. Voters can demand potentially contradictory things at once — that the government not get ahead of itself but also that it keeps moving, improving, and making changes that serve their interests, however they choose to define them.
Ministers can — and do — want both these things too, with some leaning harder one way and some the other.
Over three days next month around a large table in a windowless Canberra room, Albanese and Chalmers will attempt to chart a course through this dilemma.
It’s a Labor government’s favourite thing: a post-election powow to gather ideas and craft agendas. Bob Hawke and Paul Keating did it in 1983 with their National Economic Summit. We hit peak summit — if that’s not too tautological — with Kevin Rudd in 2008, when 1002 people were invited to Parliament House with the objective of “Thinking Big” towards 2020. And Albanese and Chalmers convened the Jobs and Skills Summit after winning office in 2022, though business later derided it as a Trojan horse for a pro-union industrial overhaul.
Such gatherings are a way for governments to get public buy-in for the things they want to do without having to subject them to an election campaign first.
The 2025 productivity-focused roundtable will be a dramatically smaller affair. That may make it less performative than those that came before it, but the government can’t afford to ignore that aspect entirely. Being seen to assemble, argue and then (ideally) agree is crucial to the whole objective: to legitimise embarking on reform beyond what it said it would do.
“We’re trying to say ‘we have a big ambitious agenda and we’re going to roll that out as we said we would,’” Chalmers told the National Press Club this week. “But we’re going to test the country’s appetite for more than that. And reform succeeds when you can bring people with you. It requires courage but it requires consensus as well.”
That word — “consensus” — featured heavily at the Hawke–Keating economic summit and Chalmers used it more than once. He believes consensus is key to outcomes and outcomes are what he is after. To be held in the cabinet room this time, not the Great Hall, the pared-down size of the meeting is about outcomes too. Albanese and Chalmers don’t want a thousand-voices chorus singing songs of motherhood. Or protest.
“Ideas should be specific and practical, not abstract or unrealistic,” Chalmers warned.
Without confirming exactly who’ll be invited — only that they will be representative of business, union, government and community-sector interests — he’s urging the participants to form alliances around ideas that reach beyond their own stakeholders and share responsibility for making the case for change, “not just leaving it to the government to get everyone on side.”
The key outcome from both the ’83 and ’08 summits was that each spawned another, specifically on tax. The main product of Rudd’s endeavours was the Henry tax review, the most recent root-and-branch examination of the tax and transfer system, guided by, yes, the very same Ken. Most of what it recommended was never taken up. The two big proposals that were adopted — taxes on mineral resources and carbon emissions — were bungled politically and eventually repealed.
In an interview last year with the ABC, Henry lamented the subsequent failure to tackle serious tax reform and said the inequities in the Australian tax system had worsened in the fifteen years since his review. Government had to look again at the balance across the six sources of tax in Australia, he said: at labour income, capital income, consumption, land and natural resources, economic rents, and environmental externalities.
Henry believes a reconfigured system needs to rely less on personal, company and payroll tax and treat different forms of capital income — including interest, rent, and capital gains — in a uniform way.
He argues consumption tax needs an overhaul, stamp duty should be replaced by land tax, and insurance taxes and the fuel excise should be abolished, with the latter replaced by a road-user charge. Company tax should be lower, resources taxed more, and something substantial done about using tax for environmental outcomes in relation to climate change.
While Chalmers has said he’s happy to listen to all ideas, he and Albanese have put some stakes in the ground ahead of next month’s meeting. Chalmers has ruled out inheritance taxes or any change to arrangements for the family home. He’s also not for turning on his proposed changes to taxing unrealised capital gains on superannuation accounts above $3 million.
There’ll be an argument with the states over the goods and services tax and the special deal for Western Australia, increasingly unpopular in the rest of the country.
And giving his own Press Club speech a week earlier, Albanese appeared to dismiss any suggestion of stripping back penalty rates. That puts him at odds with sections of the business community before they even sit down, with the Australian Industry Group arguing that the flexible hours that working from home now allows must be accompanied by a trade-off on penalties.
The results of the upcoming roundtable will also be fascinating for what they suggest about consensus within the government. Before the Hawke–Keating tax summit in 1985, Keating won cabinet approval for a tax-reform proposal that included cutting marginal rates and introducing a broad-based consumption tax. But the summit convinced Hawke there was too much opposition from unions, business and the community sector. He kyboshed Keating’s consumption tax in a move that marked the beginning of the end of the pair’s professional relationship.
Clearly history can have some good ideas that end up on a dusty shelf. Among the Australia 2020 summit’s recommendations on productivity was a proposal to harvest the knowledge and experience of “golden gurus,” wise elders who could serve as mentors — something Chalmers has clearly taken to heart.
But history has its downside evidence too, including that the quest for consensus can sometimes deliver exactly the opposite. •
