Australians want Albanese to act now to fix the economy – but want one tax left alone

Australians want Anthony Albanese to deliver important new reforms out of the government’s economic roundtable before the next election, but they draw the line at any move to lift the GST or broaden its scope.

As the prime minister said he would not “spring” ideas on voters that might come out of the roundtable that starts on Tuesday, a Resolve Political Monitor poll shows voters could be open to changes to capital gains tax and a new way to encourage businesses to invest in new technology.

There has been tension between Albanese and Treasurer Jim Chalmers over the ambitions for policies debated at the roundtable. The prime minister made it clear on Monday that while discussions would be held around the federal cabinet table, any final decision rested with the government.

Chalmers began the day saying that some reforms “will be implemented relatively quickly”.

More than 40 people will participate in the roundtable this week, and issues will include tax reform, the rise of AI and ways to reduce red tape across the housing sector.

Albanese and Chalmers will open the roundtable on Tuesday. The meetings will include union leaders Sally McManus and Michel O’Neil, business representatives Bran Black and Andrew McKellar, Productivity Commission chair Danielle Wood and NSW Treasurer Daniel Mookhey.

There has been a push by some advocates for the government to consider a change to the GST. Independent MP Kate Chaney has suggested a lift in the GST to 15 per cent offset by a $3300 payment to all adults.

But the poll shows Australians resolute in their opposition to any GST change. Just 20 per cent back a rise in the tax to 15 per cent, even with the extra revenue used to reduce personal or company taxes.

Most of those polled – 51 per cent – opposed the higher rate.

That level of opposition fell to 44 per cent for extending the GST to other goods and services such as fresh food, financial services and medicines. But just 26 per cent supported this move while 30 per cent were unsure.

The poll revealed that voters were open to other tax changes.

Forty-one per cent of those surveyed backed a reduction or ditching the capital gains tax concession which some advocates have suggested should be wound back or modified. Opposition to a change to the CGT was 21 per cent while 38 per cent were unsure.

The lowest level of opposition, at 19 per cent, was for reducing or axing negative gearing, with support at 37 per cent. Forty-four per cent of those questioned were unsure.

One of the new ideas likely to be discussed at the roundtable will be a proposal from the Productivity Commission for a 5 per cent cashflow tax on all businesses in a bid to encourage more capital investment. While the tax would be paid on all cash, the proposal includes instant and complete write-offs for new investments.

Firms with a turnover of less than $1 billion would benefit from a deep cut in the company tax rate to 20 per cent, but larger businesses face a tax increase under the proposal, which commission chair Danielle Wood said would increase economic activity by $14 billion.

Forty per cent of those surveyed said they were open to a cashflow tax, with just 15 per cent opposed, but 45 per cent were unsure about the proposal, which would be a world-first.

Albanese on Monday said while some policies could be put in place immediately after the roundtable, he was not going to surprise voters with ideas.

“One of the things that’s defined, I hope, my prime ministership is that we’re an inclusive government, we are open to engagement and that is how you bring people with you as well on that journey of reform,” he told Sky News.

“You don’t just spring things. And that is something that my government is determined to do.”

Chalmers said the roundtable would inform the government’s policy agenda over the next three years, adding that it would depend on their nature and magnitude.

“Ideally, I would be able to speak with you on Thursday night about broad reform directions, where we have built some consensus and we have built momentum,” he said. “But to illustrate that progress, it may be that there are some nearer-term opportunities that will be implemented relatively quickly.

“We have obviously done a lot of preparation, but the timing of any changes that come out of these discussions will be driven in part by the magnitude of the changes which are being proposed.”

Shadow treasurer Ted O’Brien said that Chalmers had not done the hard work of explaining to the public why the roundtable was happening in the first place.

“If you want to carry people on a reform agenda, it starts with taking the time to explain openly and honestly the problem you need to solve, but Jim Chalmers has failed to till the soil in this regard,” O’Brien said.

Wood told the National Press Club that without a change in policy settings, the country faced the same malaise it had confronted before the COVID pandemic, when the Reserve Bank was forced to slash interest rates to lift jobs growth.

“If productivity continues to flatline, we see anaemic economic growth,” she said.

“It looked like a pretty unhealthy labour market, high rates of underemployment, much higher rates of unemployment than we see now.”

The roundtable will hear first from Reserve Bank governor Michele Bullock, who will give a short address on recent trends in productivity growth.

The RBA last week downgraded its medium-term assumption for productivity, used for its own economic modelling, from 1 per cent per annum to 0.7 per cent.

Improving the skills of working Australians, or better use of those already in the workforce, is also on the agenda.

The Activate Australia’s Skills campaign, made up of business, union and community organisations, estimates there are 620,000 permanent migrants within the country who are working below their skill level despite a shortage of skilled workers.

It argues these people are being denied good jobs through the costly system of recognising overseas-acquired skills and qualifications.

Former Treasury and Department of Prime Minister and Cabinet secretary, Martin Parkinson, said fixing the qualification system was a political and economic no-brainer.

“Addressing this issue would provide an almost immediate boost to Australia’s economy and improve the impact of the migration program on an ongoing basis,” he said.

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