Opinion
Jim Chalmers promised this week that the May federal budget would be built on three ambitious packages that address tax reform, budget repair and boosting productivity.
Bold words from the treasurer, but with the war in Iran causing sharp rises in petrol prices and fuel shortages in the bush, inflation spiking, another interest rate rise and RBA governor Michele Bullock warning a recession may be unavoidable, will Chalmers and Anthony Albanese follow through, or will they bottle it?
With less than two months until Chalmers’ fifth budget, it’s still possible the treasurer will deliver on his promise of a tough, targeted and reforming budget. But there are now some senior figures in the government who believe the uncertain international outlook will force Chalmers to park his more ambitious plans.
His plans to wind back tax breaks for capital gains tax and negative gearing, and the too-generous tax break for electric vehicle leasing, may not survive until budget day.
Caution has been the defining characteristic of the Albanese government since it was elected nearly five years ago. There have been one or two risky decisions – not so risky in hindsight – such as altering Scott Morrison’s stage 3 tax cuts to make them more equitable and increasing the tax paid by people with a super balance over $3 million. For the most part, however, Albanese’s Labor has hardly been bold.
In the last sitting fortnight, West Australian independent MP Kate Chaney was toting around a basket with hundreds of pages of reports in it. Its label? The Albanese government’s “too hard basket”.
The teal MP’s basket was a visual metaphor for about 50 House and Joint Standing Committee reports that the Albanese government has authorised and then not responded to. There are another 80 or so Senate inquiries that have produced reports, now gathering dust, although some of those were not established by the government.
Chaney’s complaint about committees, backed by most of the crossbench, might sound dull but worthy. It isn’t. Her point is that this government has been coasting and has deferred difficult decisions, such as on when to implement road user charging for electric vehicles, or how to respond to the late Peta Murphy’s report on the need to tighten the rules on online gambling.
As Chaney says, 3500 organisations have spent countless hours putting together submissions and appearing before these inquiries, which are designed to find the answers to the big questions this country faces. The committee system plays a vital role in a functioning democracy in shaping, directing and interrogating government policy. And it’s being ignored.
Chalmers was visibly uncomfortable this week when asked by former Albanese adviser and veteran journalist Matthew Franklin about the government’s failure to act on the recommendations of the Peta Murphy report on gambling, but these types of questions are becoming more common.
Chaney says, “These reports cover everything from terrorism, illicit drugs, migration, domestic violence through to energy security.”
The government is supposed to respond to House and Joint Standing Committee reports within six months, and to Senate reports within 90 days, but frequently does not. Chaney hastens to add that it was a similar situation under the Morrison government.
“Organisations have participated in good faith, thinking the government will do something, but that trust has been squandered. Now is the time for the government to be bold. There is no looming election, they have a big majority and Australians really want to see the big challenges tackled head-on.”
Another report landed this week on Australia’s failure to invest in research and development. The “Ambitious Australia” report was itself anything but, making the predictable call for more funding for scientific research while it was short on specifics, such as how much more money the government should invest. It barely made a ripple publicly.
Sounds even more dull but worthy, right? It’s not.
It has been more than 30 years since Australia’s CSIRO invented Wi-Fi, a feat the government regularly refers to as an example of how this country can make things and innovate in a world-leading way. Without investment in pure research by government as well as business, there is little prospect of Australian researchers inventing th next Wi-Fi.
Figures from the Australian Academy of Science, which has been banging on about the lack of R&D investment for years, show just how badly Australia is lagging: the federal government spends 0.17 per cent of GDP on it, $1.8 billion less than what it would need to spend to meet the OECD average of 0.23 per cent. Business investment in R&D is weak, too, at just 0.89 per cent of GDP, $28.7 billion behind the OECD average of 1.99 per cent.
Chalmers’ major pre-budget speech on Thursday in Melbourne mentioned productivity 25 times, as the treasurer promised “productivity-enhancing reforms to boost supply, generate higher living standards and unlock more investment in the process, to help the economy grow without adding to price pressures”.
Chalmers did not mention science or R&D once. Industry, Innovation and Science minister Tim Ayres – regarded by many in the research sector as only interested in manufacturing – welcomed the Ambitious Australia report but didn’t commit a single dollar to it, though there is time for that to happen in the lead-up to the budget.
But here’s the rub. Pure research and development has led to the development of everything from the printing press to manned flight and artificial intelligence. The link between R&D and productivity is not in dispute. It’s messy, it’s expensive, it sometimes fails. But when it works, it has the power to transform society (as anyone reading this column on a device connected to their home Wi-Fi network would know).
Chalmers’ pre-budget speech was full of warnings about an uncertain international outlook and modelling that considered worst-case scenarios such as the oil price reaching $US120 a barrel and remaining there until the end of year, and inflation potentially surging past 5 per cent.
The treasurer is correct to prepare Australians for what could be a difficult couple of years. But if the Albanese government uses the war and a difficult global economy to avoid hard decisions, or to not fund research and development to drive productivity growth, it will only set up Australia for long-term mediocrity.
James Massola is chief political commentator.
