Albanese’s great certainty is the need for revenue



But what happened in the next few days was instructive. None of his caucus colleagues took up the obvious invitation to go public with a call for change to the stage three tax cuts. The Prime Minister’s Office did not encourage a free-for-all in the public square.

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Chalmers was right, again, to be sanguine about this. “People have put a lot of views to me privately from all parts of the conversation,” he said on Thursday. It would be a strange government that didn’t have contrasting views on big calls. So far, however, the weight of opinion inside the government is to stick with the tax cuts.

So this steam train has barely left the station. Chalmers got it moving but nobody else turned up to shovel coal into the boiler. The debate did not even reach a point where cabinet ministers had enough facts – or modelling of the options – in front of them. A decision before the October 25 budget looks impossible, so the point of this week was to start a longer conversation for next year.

What happens outside Australia will shape the decision. The humbling of British Prime Minister Liz Truss, who had to abandon her tax cuts under orders from the financial markets, is a sign for Albanese and Chalmers to be on guard – especially when they are warning of a global recession.

For a man with a taste for 1980s cult classics – the PM has been putting his old Joy Division albums on the turntable in The Lodge – Albanese is now stuck in an earlier decade. He has to deal with rising oil prices, soaring inflation, growing debt and global economic stagnation. The soundtrack to this crisis is a Skyhooks album: Living In The ’70s.

This global disruption has strengthened the economic case to drop the stage three tax cuts. And Chalmers promised this week to put the economics before the politics. But some of his colleagues see it the other way around. For them, a broken election promise is political dynamite.

This means increasing revenue on other fronts. A thoughtful speech on Thursday from Rod Sims, the former chief of the Australian Competition and Consumer Commission, sets out a pathway. Sims, now at the Australian National University, listed options such as higher taxes on oil and gas exports and a carbon pricing scheme that raises revenue.

“If you want more spent on health care or education, then taxes must rise,” he said. “And sensible, saleable options are available if we all put in the effort.”

Importantly, Sims could not identify a way to reduce the deficit and debt without a tax increase, and he cast doubt on the idea of using spending cuts alone to bring the nation’s finances into balance.

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One early option is to do more to tighten the tax rules for multinational corporations. Chalmers is already finalising a budget measure on this but Sims said there were ways to increase revenue by scaling back the way Australian subsidiaries borrow money from parent companies at artificially high interest rates in order to lose money and minimise tax.

Sims also set out changes to Petroleum Resource Rent Tax (PRRT) to increase revenue by limiting the way oil and gas exporters can carry forward past losses. He then called for the restoration of the Minerals Resource Rent Tax, the tax on miners that Labor legislated in 2010 and the Coalition repealed in 2014.

Asked on Thursday, Chalmers said a change to the PRRT was not a priority for the budgets in October or May but did not rule out a change at a later point.

This is where the debate will have to go. If the stage three tax cuts must stay in place, the government has to consider new ways to raise revenue.

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