CANBERRA, AAP – An incoming Labor government would review the taxation system and how Reserve Bank policy and federal budget policy work together, shadow treasurer Jim Chalmers says.
Labor’s problem with proposed tax cuts under the coalition government has been where the money to pay for them comes from, which has resulted in the recently proposed cut for big business being shelved and legislated personal tax cuts due in three years hanging in limbo.
But what Labor won’t being doing is raising the GST to pay for tax cuts elsewhere, Dr Chalmers told the National Press Club during the traditional shadow treasurer post-budget speech.
“We’re not up for that. Nobody’s beating down my door for an increase in the GST,” he said.
“Obviously I want to have a proper look at the tax system across the board.”
While he didn’t expect that to be as sweeping as the Henry Tax Review that was undertaken during the previous Labor government – which didn’t look at GST either – he believes there are opportunities in tax reform.
In particularly, he believes US President Joe Biden has shown leadership on the taxation of multinationals.
But when it comes to the so-called stage three personal income tax cuts due in 2024/25, Labor will make a decision closer to then.
At the same time, he believes it would be useful to review the operations of monetary policy at the Reserve Bank and how it works in tandem with budget policy.
“I have a mountain of respect for (governor) Phil Lowe and the Reserve Bank team and the board,” Dr Chalmers said.
“I think the primary problem with economic policy in the last little while certainly under this government has been a failure to understand the role of fiscal policy. But I think monetary policy cannot be left out of any reconsideration of how we go about it.”
Dr Chalmers used his speech to slam the government’s record on wages, while racking up $1 trillion in debt with little to show for it.
He says under the coalition government there has been eight years of wage stagnation, with growth the weakest on record, and the budget showed there will be a cut to real wages growth over the next four years.
That is, wages will grow slower than the rate of inflation.
“The real wage cut for workers is this government’s act of bastardry and betrayal. This is the thanks this government gives to the workers who carried our economy through last year’s crisis,” Dr Chalmers said.
“Josh Frydenberg has claimed Margaret Thatcher as his political inspiration. She’d be mighty proud of his record on wages.”
The wage price index for the March quarter released on Wednesday – a key gauge used by the RBA and Treasury to measure wages growth – rose 0.6 per cent.
It left the annual rate at 1.5 per cent – at least half the rate the RBA wants to see to return inflation to some normality.