Federal Treasurer Jim Chalmers issued a gloomy warning on the economic future of Australia prior to being sworn in for Labor’s second term.
“Productivity is a challenge which has been a feature of our economy for some decades, and it will take more than a couple of years to turn around,” Chalmers said, adding that he has been engaging with major business leaders over the past week to discuss solutions.
“It’s not one of those areas where you can just flick a switch and all of a sudden the economy is as productive,” he told Sky News.
“The problem’s been there for a couple of decades, the worst decade for productivity growth was the decade to 2020, the worst decade in the last half century or more.”
Calls to Give Businesses a Fair Go
The Business Council of Australia has repeatedly urged the federal government to prioritise the issue
“Business investment is critical to addressing our productivity challenge — with six out of every seven workers employed by the private sector, and 80 percent of Australia’s economic output coming from businesses of all sizes,” said Business Council CEO Bran Black in a release on May 12.
“The BCA looks forward to working with the treasurer, the finance minister and the broader economics team to deliver productivity solutions across the economy, including through the Productivity Commission’s ‘five pillar’ inquiries.”
Economist John Humphreys from the Australian Taxpayers’ Alliance warned that productivity remains stuck at 2016 levels.
“And the moribund economy is why many people are struggling,” he told The Epoch Times.
Humphreys criticised the government’s approach, arguing that long-term economic reforms have been sacrificed for short-term political gain.
“Australia desperately needs significant tax cuts, less regulation on small business, and cheaper energy prices if we want to kick-start the economy,” he said.
He described Labor’s tax plans—including modest income tax cuts and a proposed $1,000 standardised deduction—as “symbolic gestures.”
No Shift on Unrealised Gains Tax to Fund Pledges
Chalmers also confirmed the government would not change its plan to tax unrealised capital gains on super balances above $3 million—an approach expected to generate nearly $40 billion over a decade.
“We’ve made it clear that it’s a very modest change, it only affects half a per cent of people with balances over $3 million,” he said. “It’s still concessional tax treatment, just a little bit less concessional.”
Global Trade Tensions Easing—For Now
Meanwhile, Chalmers also welcomed the pause on the U.S.-China trade war but cautioned against over-optimism.“It’s a really welcome development, and I think the whole world is hopeful that this augurs well for the resolution of this effectively trade war between the two biggest economies in the world,” he said.
“But we have to be realistic about it as well—there’s still a lot of unpredictability, a lot of volatility and a lot of uncertainty in the global economy. This is not resolved, it’s been paused, in welcome ways,” he said.
