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Updated ,first published
Treasurer Jim Chalmers has declared himself and the government open to tax reform to address intergenerational unfairness driven by the nation’s dysfunctional property market, saying the inability of young people to buy a home is one of Australia’s defining issues.
In an interview with Nobel Prize economics winner Joseph Stiglitz for The Monthly magazine published on Friday, Chalmers said the government was “impatient but not impetuous” for reform. He opened the door to tax changes, while signalling any measures would have to be explained methodically so they could be locked in permanently.
Chalmers will hand down his fifth budget in early May, under pressure to reduce inflationary pressures across the economy that are expected to force the Reserve Bank to lift official interest rates when it meets next week. He has also said the budget will look to lift productivity growth, which has flatlined since the pandemic.
In his last budget, Chalmers revealed two modest personal income tax cuts that will be rolled out this year and next. But the budget is increasingly reliant on personal income tax collections, prompting calls for Keatingesque or Howard-era type changes to the tax system.
Chalmers told Stiglitz that while he had already introduced a series of tax changes, including the overhaul of the stage 3 tax cuts, reforms to the petroleum resource rent tax and tax credits for the critical minerals sector, more measures were on the agenda.
“As we think about what tax reform might come next, we’re guided by this idea of intergenerational fairness, especially for working people,” he said.
“We want to attract more investment. We want to simplify the system. So the job of tax reform is never done.
“While we’ve had a substantial tax agenda, we know that people would like us to do more. From my point of view, I think there is more to do on tax reform, and we’ll be guided by those principles.”
Chalmers, who revealed another intergenerational report into the long-term state of the budget and economy will be released this year, said the cost of housing was a “defining part of this intergenerational challenge” for Australians and the developed world.
He said much of the anger in many countries was tied to the surge in property prices that had effectively locked younger people out of the chance to buy a home.
“This idea that a lot of young people have in our societies, and not unfairly, that they are not getting the same deal that their parents and their parents had. I think that’s what’s driving a lot of the understandable angst that we see in our politics,” he said.
A Greens-initiated Senate inquiry into the capital gains tax has already been inundated with submissions calling for the 50 per cent concession on assets held more than a year to be either reduced or axed because of its impact on the property market.
Chalmers would not be drawn on whether the government would back changes to CGT.
“We know that there’ll always be that pressure to do more when it comes to the tax system and how that applies to housing. We listen respectfully to people when they put those views to us,” he said.
The treasurer has previously suggested this year’s budget will build on ideas that came out of the 2025 economic roundtable and five reports compiled by the Productivity Commission into ways to lift the nation’s economic speed limit.
Chalmers signalled the government may repeat how it revealed its changes to the stage 3 tax cuts in early 2024, describing the public discussion at the time as a “template” for future reform.
The interview was released after new Finance Department figures suggested Chalmers is on track to deliver a smaller budget deficit than he forecast last month due to ongoing strong income tax collections.
The data showed that through the first six months of the 2025-26 financial year, the government collected $170.3 billion in income tax, almost $15 billion or 10 per cent up on the same period in 2024-25.
When the budget was released in March last year, Chalmers had expected to have raised $160.6 billion by this point in the financial year. He had also forecast the full-year deficit to reach $42.1 billion.
In last month’s mid-year budget update, Chalmers revised down the expected deficit to $36.8 billion.
The figures suggest income tax collections from ordinary workers are running at least $10 billion stronger than Treasury had expected in December. Part of that is due to the jobs market doing better than expected, with the jobless rate easing to 4.1 per cent.
Business tax collections are also running ahead of what had been expected last month, with iron ore prices remaining above $US100 a tonne, while gold – which has soared by 27 per cent since the start of the year – is also adding to the government’s coffers.
However, the figures suggest indirect tax collections, which include the GST, excises and customs duties, are running short of expectations.
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Shane Wright is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via X or email.From our partners
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