Source: The Conversation (Au and NZ)
It has been a year since the federal government convened its economic reform roundtable – the culmination of a process that flung the doors open on the reforms needed to drive a more prosperous Australia.
The roundtable followed a flurry of activity: almost 900 submissions, 75 meetings with chief executives and industry leaders, and 41 ministerial roundtables asking for ideas to improve productivity, build economic resilience, and strengthen the budget.
With a strong election win behind it, the Albanese government was in the rare position of being able to think beyond the three-year election cycle.
It even opened the door to a discussion of tax reform, which had seemed an impossible dream for economists and policy makers since the turn of the century – a “third rail” that neither major party was willing to touch.
When I addressed the roundtable on that topic, my message was that Australians need a tax system that is helping us, not hindering us, to adapt to a changing world. The longer we put off reform, the more ill-fitting our tax system is going to be for the future we face and the harder the reform task will get.
So, how much has the government achieved in the intervening year?
Some progress, despite ample distraction
At the roundtable, we grappled with income taxes, company taxes, the GST, and pricing carbon and road use: all difficult policy choices. And, as this year has shown, there will always be shocks and disruptions that pull our attention away from reform, whether they be geopolitical conflicts, or runaway AI agents.
On the final day of the roundtable, focused on the budget and tax, the clearest area of consensus was the intergenerational burden imposed by our current choices.
There was a shared sense we had to rebalance a tax system that was distorting the housing market and where wealthy, older Australians receive more favourable tax treatment than working-age salary earners.
It’s no surprise then in listing his achievements this week, Treasurer Jim Chalmers put the capital gains and trusts reform package at the top of the list.
These reforms will replace the previous 50% capital gains tax discount with a discount based on inflation, restrict negative gearing to new properties only, and set a minimum 30% tax rate on income from capital gains and trust income.
Some people pushed the panic button, suggesting these changes would tank property prices and punish savings.
Phil Yeo/Getty Images
But in fact the biggest impact of these reforms will be on the budget bottom line. This will free up funds to repair the structural budget deficit and cut personal income taxes for working Australians.
Keeping up momentum
The good news is that in ways small and large, the government has made real progress on many parts of its economic reform agenda that emerged from the roundtable. And at last, we have some tax reform.
The bad news is that economic reform is a marathon, not a sprint. The government’s challenge now is to embed the culture of reform our nation sorely needs, both within government and across society.
Many issues remain on the table:
- overly generous tax concessions on superannuation
- road user charging as fuel excise dries up
- the flawed design of our corporate taxes, and
- reform of the GST (how it is shared across the states as well as our underuse of it in our tax mix).
Smaller reforms add up too
The heated debate over housing tax reforms overshadowed many less well publicised measures the government has introduced to boost productivity.
The most notable of these is an updated National Competition Policy, which will pay state governments to reform poorly designed regulations. This includes harmonising the sea of different occupational licences that currently limit the ability of specialised workers to work across different states.
The government has also reformed environmental protection laws to speed up clean energy approvals. And to boost housing supply, it has committed to abolish paywalls for Australian Standards that are used in building regulation, and pay states to remove rules that block new apartments and townhouses.
We should be realistic about how much these kinds of policy changes will help economic growth.
Productivity – how effectively we turn labour and capital into economic outputs – is the result of thousands of decisions made by workers and companies. It’s not something governments control directly. But each of these measures should lessen the drag on productivity.
Building a culture of reform
The reform roundtable opened the door to ideas from across society on how to tackle our biggest challenges. This itself is progress, if we can use it to build a fiercer culture of economic reform and open deliberation.
In this regard, we could take inspiration from our cousins across the ditch. There, tax officials have been empowered to grapple openly with the challenges facing New Zealand’s tax system, allowing their reform plans to both shape and be shaped by expert opinion.
Australians’ trust in politicians is fragile and our nation’s social compact is under pressure. So it’s more important than ever that leaders across politics, business and civil society are candid about our biggest challenges – and do the hard work to tackle them head-on.
The Grattan Institute began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute’s activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website
Original source: https://analysis1.mil-osi.com/2026/08/20/one-year-isnt-enough-why-the-government-needs-to-keep-up-the-pace-of-economic-reform/