Preview of the Economic Reform Roundtable
ted o’brien previews the government’s economic reform roundtable in a special address to the menzies research centre.
It is an honour to be here today at the invitation of the Menzies Research Centre. No think tank in Australia champions liberal principles and advocates for a free, just and prosperous Australia like the Menzies Research Centre. The Liberal Party thanks you for everything that you do.
And to be in such esteemed company makes this honour a truly humbling one. In addition to paying tribute to the great work of the Executive Director, David Hughes, who is today’s moderator, let me join with him in acknowledging Senator Wendy Askew; NSW Shadow Treasurer, the Hon. Damien Tudehope; the Member for North Shore, Felicity Wilson; Honorary Treasurer of the NSW Liberal Party, Mark Baillie; Maurice Newman AC; former director of the Menzies Research Centre, Tony Shepherd AO; and former Chair of the Menzies Research Centre, Paul Espie AO.
The Candy Man
If there’s a book, or a movie, nearly everyone here would have engaged with at some stage in their life, it would have to be Charlie and the Chocolate Factory.
The story has it all.
The mystique of the secretive chocolate factory. The grand magician Willy Wonka and his army of obedient little Oompa Loompas. And the lucky few with a golden ticket granting them entry into the private world of Willy Wonka—otherwise known as the Candy Man.
My memory of this Roald Dahl classic was triggered recently when I received an invitation to the Treasurer’s productivity and tax roundtable. And I swear it had all the hallmarks of a golden ticket.
Sent from the Candy Man himself, Treasurer Jim Chalmers, spruiking his roundtable as a pivotal moment in shaping Australia’s economic destiny, where only a lucky few would gain access to the private cabinet room in Parliament House.
There they would behold the tasty temptation of higher taxes mixed with big doses of debt, and the endless treats these miraculous money streams allow the Candy Man to conjure up—with help from the Oompa Loompas on Labor’s backbench who walk around paying homage to the Treasurer singing: Oompa Loompa doompety doo...
Actually, there’s an even better song in the Charlie and the Chocolate Factory movie called “The Candy Man”.
“Who can take a sunrise, Sprinkle it with dew, Cover it in chocolate and a miracle or two. The Candy Man can. Oh, the Candy Man can.”
But for Australia’s Candy Man, Jim Chalmers, I think the following is more befitting:
“Who can take your money, Fritter it away, Saddle you with debt that you never can repay. The Treasurer can. Oh, the Treasurer can.”
Now, if you think I’m taking this analogy a little too far, you’re probably right.
Willy Wonka’s chocolate factory was, after all, a fiction. Whereas Labor’s roundtable is absolutely real.
Given the re-elected Albanese Government enters this term of parliament with no economic agenda to speak of, next week’s roundtable is critically important to Labor.
Indeed, the Treasurer has been working on it for the last three months and raising expectations all the way.
I was invited to attend the roundtable, and I shall. I will be constructive where I can and critical where I must.
To be clear, though, this is Labor’s roundtable, not the Coalition’s.
We in the Coalition have already started our own process of formulating a new economic agenda to take to the next election, and we will take the time to get it right.
Unlike Labor, our focus is not on 25 golden ticket holders talking privately behind closed doors in parliament, but rather on the 27 million Australians going about their everyday lives in the cities, the suburbs and the regions all across our great nation.
The forgotten people
To Sir Robert Menzies, they were the “forgotten people”: the "backbone of Australia" who had been "taken for granted" because they lacked wealth, organisation, or both.
As Liberals, the forgotten people are our people. We fight for them and for their empowerment—not the empowerment of government or of vested interests.
This doesn’t mean we want to take Australia back in time to the days of Menzies—for our ambition is not to build a future Australia fit for our grandparents, but rather an Australia fit for our grandchildren.
It does mean, though, that our path to building Australia’s future will be guided by the same timeless values upon which the Liberal Party was founded.
As my colleague and our Liberal leader, Sussan Ley, says: “our policies are under review, but our values are not.” And she is right.
It is our values that fill me with great optimism about the future of not only the Liberal Party but of Australia. And that is because Liberal values are Australian values.
While no one brought political expression and political momentum to these values better than Robert Menzies, their roots are buried far more deeply in Australia’s past.
Modern Australia was born a Christian nation at a critical juncture of Western civilisation. When Captain Arthur Phillip arrived in Botany Bay in 1788, it was only five years after the American Revolution and just one year before the French Revolution, two culminating events of the Enlightenment.
As historians such as David Kemp recognise, the Enlightenment in Australia, with its ideals of reason, science and progress, didn’t cut against long-standing orthodoxies of culture, church or tradition, as it did elsewhere, for we didn’t carry the baggage of an “old world”.
In Australia, like nowhere else, Enlightenment and Christianity learned to co-exist—both supporting the notion of individual dignity and morality and the potential for self-improvement through discipline and endeavour. Ideals that are core to liberalism.
As Liberals and as Australians, we believe in freedom, equality and a fair go. We believe in entrepreneurialism and enterprise; in property rights; in opportunity, self-reliance and reward for effort; and in the importance of the individual, the family, and the local community. We believe in the rule of law, and the need to balance rights with responsibilities.
You might argue these values exist in other liberal democracies, but nowhere like here in Australia. To my mind, it’s what makes us the most successful liberal democracy on Earth.
You see, we live these liberal values differently here. And I say this after spending much of my 20-plus years prior to entering politics in business, living and working abroad.
There is something unique in the DNA of the everyday Australian. I’ve seen it in negotiations, and I’ve seen it in workplaces around the world.
You want someone to lead an international team, ask an Australian. You want someone to think outside the box and lead change, ask an Australian. You want someone who will be friendly and respectful, but speak plainly and forthrightly, ask an Australian. You want someone who can charm with humility but take their gloves off and fight when the going gets tough, ask an Australian.
I believe Australia has become more liberal over time. And the unique characteristic of the everyday Australian and how we express our values have also evolved.
Today, we reflect not just the ideals of the time of our European settlement, but the British institutions we inherited, our indigenous heritage, and, increasingly, the myriad ethnicities that have joined the Australian family from every corner of the globe.
I believe the more diverse we become as a nation, the more important our values are. And, by extension, the more important the Liberal Party is to ensure these values are maintained as the bedrock of Australian society.
Because what has the capacity to unite us as a diverse people is clearly not from where we’ve come. It’s not a shared religion, the colour of our skin, or the way we talk.
The one thing that has the capacity to unite us, more than anything, is a common set of values. Liberal values. Australian values.
And these values must be defended, especially now as our political opponents trash them.
Labor believes in an Australia where government, not the individual, is at the centre.
They believe government should instruct you on how to live your life, rather than granting you the freedom to choose your own path.
They believe a Labor government knows what’s best for you, better apparently than you do yourself.
They believe they are best placed to spend the money you earn, instead of trusting you to decide for yourself how you wish to spend it.
Unlike Liberal values, Labor’s values are not Australian values. And values really matter because the values a government believes in are ultimately expressed through government policy.
Stop the spending spree
In Opposition, in this 48th Parliament, we will hold the Albanese Government to account for its disastrous management of the Australian economy.
And our starting point is to impress on Labor two imperatives:
one, stop the spending spree; and
two, start growing the economic pie.
These two imperatives are closely related.
Under Labor, government spending has exploded to its highest level outside of recession since 1986. Per the average Australian household, this Labor government is spending $16,000 more each year than when the Coalition left office.
Do you think the families of Australia are getting value for this money? Do you think they feel their lives have been made easier because of all of this additional spending? I think not.
If anything, Labor’s spending spree is crushing our economy and worsening the living standards of everyday Australians.
The problem with Labor’s approach is that big government begets bigger government.
In the last three years, the Albanese Government has enacted 5,000 new regulations.
In the last two years, 80% of new employment has been in the non-market sector, which accounts for just 30% of employment.
As the RBA has noted, the expansion of the public sector has tightened the labour market. This has put upward pressure on interest rates, which in turn has put downward pressure on the private sector.
It is the classic story of crowd-out that they teach in economics textbooks.
This has also crushed productivity—as the less productive public sector has squeezed out the more productive private sector.
Since Labor was elected, productivity has fallen by more than 5%, and 1% in the last year alone. That’s why our fellow Australians continue to suffer through a household recession.
At the household level, today’s economy is smaller than when Labor took office.
It’s not a matter of growth being weak. We haven’t grown at all. We’ve shrunk.
Like little Mike Teavee in Willy Wonka’s chocolate factory who gets shrunk to fit inside a television set.
This is why Australians have experienced the sharpest fall in living standards in the developed world and in our history. At the household level, the economy has shrunk.
This is Jim Chalmers’ economic legacy.
There is little nutrition in the Candy Man’s treats, for he is making Australians poorer and our economy weaker.
Making matters worse, Jim Chalmers’ spending spree will be paid for by future generations.
Labor has thrown every dollar of its spending spree on the national credit card, growing the debt that our kids and grandkids will have to repay.
The Treasurer’s own budget papers lay bare this fiscal recklessness. The hard truth is, had the Treasurer simply sat on his hands over the past three years, the national debt would be $100 billion lower this year.
Had the Treasurer run a proper, disciplined budget process that ensured all new spending was offset by savings, this certainly wouldn’t have been the outcome.
That kind of fiscally disciplined process is one that Middle Australia—today’s forgotten people—have been undertaking throughout this cost-of-living crisis. Families have been living within their means to make ends meet.
But the Albanese government thinks it is above that. To them, fiscal prudence need not apply.
Labor’s spending spree over the last three years has already saddled our kids and grandkids with an extra $100 billion of debt. And it will be for these future generations to carry as they try to make their way in an increasingly challenging world—a world in which they don’t know if they’ll ever be able to realise the Australian dream of buying their own home and starting their own family.
This is Jim Chalmers’ budget legacy.
For all the talk over the past few years about the monetary policy framework—for all the rules and targets the RBA must abide by in controlling inflation—we have heard nothing at all from this government about a fiscal policy framework. Nothing about fiscal rules.
That’s because there are none.
On coming to office, Jim Chalmers threw the former Coalition Government’s fiscal rules out the window. And thus began his spending spree.
It’s the arrogance that comes with a Labor Treasurer who thinks he has a God-given right to spend other people’s money however he pleases.
He is, after all, the Candy Man. And if anyone can, the Candy Man can.
Australia is about to breach $1 trillion of debt, and we will reach $1.2 trillion by the next election. What’s more, Jim Chalmers’ budget settings consign us to a decade of deficits.
As my predecessor as Shadow Treasurer, Angus Taylor, said repeatedly: the focus must be on restraining spending growth to less than economic growth.
He was right, and budget experts agree—for basic logic dictates that it is the only way to ensure government declines as a share of the economy over time, without slashing the essential services we all rely on.
This reflects the kind of approach we will take in defining a set of rigorous fiscal rules to guide our own policy development process, and I will have more to say about that in the period ahead.
What I can say today is that, if elected in three years, the Coalition will restore fiscal responsibility.
Working together with our economics team in shadow cabinet—James Paterson, Tim Wilson, and Andrew Bragg—along with other members of the shadow expenditure review committee, we will run a disciplined budget process, with a strong focus on identifying saves across the budget to help fund new spends.
This is precisely where Jim Chalmers, as Treasurer, has dropped the ball.
It’s why the national debt is $100 billion higher than if he had simply sat on his hands. When it comes to the budget, the Treasurer isn’t focused on mending but spending.
He is clearly too preoccupied with pleasing his colleagues. He is too focused on getting the big job he is striving for. He is not focused enough on doing the job he has.
Start growing the economic pie
This takes me to the second imperative for the Treasurer and the Albanese government: to start growing the economic pie.
Growing the economic pie requires, above all else, genuine economic leadership.
Leadership that has been sorely missing from this government.
If we want to raise living standards, we can start by clearing away bad policy that shrinks the pie and replacing it with good policy that grows the pie.
If we do that, over and over, across the whole of government over time, Australians will become richer not poorer and our economy will grow stronger not weaker.
That is how we turn things around. And that is what we will do in government.
We need to restore prosperity as our lodestar. To unleash the aspiration of everyday Australians. To put their economic interests before everything else.
No more crude hacks that make our tax system more complex, encourage gaming and soak up our economy’s precious resources.
No more giveaways. No more gravy trains. No more government-funded boondoggles.
No more creating entire industries that serve as a constituency for their own preservation—to the detriment of the greater good.
Australians can no longer afford such indulgences. It is time to get serious.
Let me give you an example of what I mean.
This one simple, practical example embodies everything that’s wrong with economic policy under the Albanese Government.
It’s inefficient, complex and opaque. It’s unfair and regressive. It encourages gaming and subsidises big business. And it has cost the taxpayer billions—a cost that has blown out wildly compared to the forecast.
A bit like Willy Wonka’s chocolate factory, this one is a Jim Chalmers special—a real Candy Man treat.
If you’re in the market for an electric vehicle under a leasing arrangement, and you go to the Tesla website to find out how much it costs to lease, say, a Model Y, Tesla will ask you what your income is.
At first, this seems strange—what does your income have to do with the price you pay for a car?
Well, everything, it turns out.
If you’re a nurse earning $90,000 a year, a Tesla Model Y will cost you $687 a month.
But if you’re a lawyer earning $200,000 a year, that very same Tesla Model Y will only cost you $552 a month—that’s $135 a month less than the nurse will pay.
It’s weird enough that the same car costs different amounts to different people.
But what’s worse is that it is substantially cheaper for the higher-income earner. Relative to the nurse, the lawyer gets a discount of more than $8,000 over the life of the lease.
How can this be?
Under the electric vehicle policy Labor took to the 2022 election, you can deduct the cost of an EV from your salary and avoid Fringe Benefits Tax.
In effect, that means taxpayers are covering 47% of the cost of an EV for those in the top tax bracket—and 32% of the cost for those in the bracket most taxpayers are in.
The first thing to note is that this represents a colossal subsidy—in fact, it’s hard to think of a more generous EV subsidy anywhere in the world.
The taxpayer is picking up half the cost of an EV for those on the highest incomes.
For a small economy that imports EVs like Australia, this has no impact on the global car fleet—if anything, it simply lines the balance sheets of the large global carmakers who can raise their local prices to capture the subsidy.
It’s obviously regressive. But it’s also unfair. It is a subsidy available only to those in the know, savvy enough to game the system, those receiving the best financial advice, and earning a salary against which they can deduct the cost of an EV.
The Productivity Commission has called for the subsidy to end, noting it implies a cost of carbon abatement of up to $20,000 per tonne. You heard that right: $20,000.
An extraordinary cost relative to the carbon price cap under the government’s safeguard mechanism of $75 per tonne.
Labor initially promised the Australian people this policy would cost the budget just $55 million last year. The true cost? $560 million a year—a blowout of more than 10 times.
This is the epitome of dumb climate policy under this Labor Government. They are green fanatics prepared to slash emissions at any cost: at any cost to the Australian economy; to Australians’ living standards; to Australian taxpayers and to future generations who will have to pay back the national debt.
It’s also the epitome of tax policy under Jim Chalmers. This is how he designed it. This is how he wanted it to work. This is the way he likes it.
And this is also why the Coalition has always opposed this terrible policy.
No doubt it is popular among those benefiting from it. I get that.
But it ought to be deeply unpopular among the millions who are paying for it.
As Liberals, we don’t stand for vested interests. We stand for Middle Australia; for the forgotten people.
The people who work hard to save so they can buy that second-hand car.
Under Labor, they’re the ones paying for this policy.
If elected in three years’ time, we will return the forgotten people to their rightful place at the centre of government policy.
Three markers for the Economic Reform roundtable
As I noted earlier, our process of developing policy has already begun, and we will take the time to get it right.
In contrast, the Albanese Government, now in their fourth year in power, has no economic plan and so their only solution to our nation’s challenges is to issue golden tickets to a hand-picked group to sit around the cabinet table in Canberra.
From recent media reports, it looks like the roundtable has been engineered to rubber stamp a doubling down on Labor’s failed tax and spend strategy.
Let me be crystal clear: the Coalition will be no such rubber stamp. And we reject any suggestion Labor has a mandate to hike taxes.
The Treasurer has demanded that proposals brought to the roundtable be at least budget neutral but preferably budget positive.
That is a bit rich from a Treasurer who has utterly failed to uphold this standard himself. Now he wants the Australian people to pay for his own lack of fiscal discipline.
While the Treasurer has been busy raising expectations that he is finally ready to tackle our nation’s big economic challenges, his Prime Minister has been even busier trying to reel him in.
It’s clear these two just aren’t up to the task. Hawke and Keating, they are not.
The Treasurer even issued me a golden ticket, and I will be sure to go along. I will witness the wonders of what the Candy Man has in store.
I am counting the days. Only four more sleeps. Yippee!
But, seriously, my loyalty lies not with the 25 handpicked participants who will be inside that room, but rather with the 27 million everyday Australians outside of it.
They may be forgotten to the Labor Party but not to the Liberal Party or to the Coalition. Because they are our people.
When I am considering the proposals put forward, I will apply three simple principles.
First, you don’t raise living standards by raising taxes.
Second, you don’t raise living standards by raising the cost of doing business.
And third, you don’t raise living standards by raising the burden on the next generation.
You may think these are self-evident truths that are impossible to argue with.
Yet, the messages we are already hearing from government, as well as those in the union movement, strongly conflict with them.
Soon, Labor’s roundtable will be long forgotten, and the Candy Man will continue on his spending spree.
But the Coalition is looking well beyond Labor’s privileged talkfest.
Over time, we will formulate a values-led, future-focused and economically driven agenda to ensure the Australia we bequeath to the next generation is not poor but prosperous, not weak but strong, and not dependent but fiercely independent.
Australians deserve nothing less