The Inside Word

Don’t forget the Teals if you’re pushing for Tax reform  

Controlling the economic narrative is crucial if governments are to maintain political momentum.

The challenge with The Voice Referendum, set for the 14th of October, is that the Albanese Government’s policy agenda will be drowned out by an election style campaign, Yes or No for the next 6 weeks.

Current polling indicates the referendum will fail with potentially three states voting No, missing the mark on one of the two criteria necessary for a constitutional amendment. Rather than uniting the nation the trajectory is set for a divided nation, which will take time to heal.

In the bigger picture much-needed reforms highlighted by the Intergenerational Report, released last week, will be put on-hold again, as crucial political oxygen is consumed by the referendum debate. The bottom line is that by 2061 there will only be 2.7 workers for every person over 65 compared with 3.8 today, and 6.6 workers 40 years ago. As noted, in The Australian revenue streams will fall but spending on the NDIS, health, aged care and debt repayments will grow from one-third of all government revenues to half. 

In other words, there will be a smaller pool of working people supporting more and more people who aren’t. Tax and productivity reform is essential if Australia is to maintain its living standards into the future. 

For business or clients of the SAS Group advocating for substantial reform, the idea that we are about to see a rush of bold new ideas is unlikely. The reason being, in the Australian political system to win government you must win Middle Australia. To win Middle Australia, major reform is an anathema, more likely to get you tossed out of office than elected into it.

In recent months, a new voice for tax reform has emerged through Teal representatives. Whilst the seven notionally Teal representatives sit in the lower house and currently have no political power this could rapidly change should the ALP Government fall into minority after the next federal election. Unless, the Government squarely focuses back on the economy and rising cost-of-living as opposed to social issues, this future election scenario is a high probability.

Political courage is needed to tackle the challenges outlined in the Intergenerational Report. Without this there will be decades of deficit fueled by an aging population, rising social service costs, and shrinking tax bases like the GST and PAYG.

For the next 6 weeks The Voice Referendum will dominate parliament and national discourse. For the camp that does not win, the fallout will be felt for some time. Any meaningful debate on tax reform can only begin in earnest in 2024 a potential election year. 

For those arguing for major tax reform, it’s probably a good strategy to start socialising with Teal representatives since they may hold the balance of power come the next election. 

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