Australian Treasurer Jim Chalmers has reignited debate over tax reform, stating the government is 'open' to big ideas and will focus on intergenerational inequity in Labor's second term. In an interview with Guardian Australia, Chalmers rejected opposition claims that government spending is fuelling inflation, calling such criticism hypocritical.
Chalmers noted that the same critics did not blame the budget when inflation was falling last year and the Reserve Bank cut rates three times. He highlighted $20bn in savings from the December budget update, asserting the government's fiscal responsibility. The treasurer also confirmed a new intergenerational report (IGR) will be released mid-year, with an unusually strong focus on geopolitics.
On productivity, Chalmers said he is 'impatient for reform, but not impetuous'. He pointed to an independent review of thin capitalisation rules, designed to prevent companies from using excessive debt deductions to minimise tax. Any further tax reforms, including potential GST changes, would be decided by cabinet, he added.
With inflation rising to 3.8% in December, expectations of another rate hike have grown. Chalmers acknowledged the short-term challenge but emphasised longer-term priorities: tackling inflation, boosting productivity, and addressing housing affordability as a key intergenerational issue.
Chalmers praised Canadian Prime Minister Mark Carney's Davos speech on middle powers but stopped short of endorsing a coalition, saying Australia must navigate between China as a major trading partner and the US as a defence ally.
