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Transcripts
July 15, 2025
LAURA JAYES: Joining me live now is the Shadow Finance Minister, James Paterson. James, great to see you. What did you like in the CBA submission? Did anything stand out to you as unreasonable?
SENATOR JAMES PATERSON: Laura, I don't agree with everything in the CBA submission, but I want to be really careful not to be too negative about the contribution that Matt Comyn and the CBA are seeking to make to the public debate about tax reform and productivity reform in this country. Because I think it's a healthy thing and a good thing for business leaders to be out there advocating for what they see as the interests of their shareholders and within their areas of expertise, making contributions to the public debate. And I don't want to see a public debate in this country where anyone proposes an idea that's not in line with the political zeitgeist gets a ton of bricks thrown at them and discouraged from participating in public debate. So I think it's a good and healthy thing. I'm obviously not in favour of things like wealth taxes, which they propose, which I think could lead to a envy-based public policy and a strategy of pursuing confiscation of people who've done well, a war on aspiration in order to make up for ill-disciplined spending of the federal government. I don't think that's a pathway that would lead to prosperity or more productivity, but I welcome the constructive contribution that CBA is seeking to make.
LAURA JAYES: Yeah, Ok, so let's look at the environment which we find ourselves in. Labor has a huge majority in the Parliament. They've talked about wanting to undertake some kind of tax reform. This wasn't taken to the election. But I think with this kind of parliament, it's an opportunity. Not a parliament that you want, I acknowledge that. But with this kind of political capital. No matter what side is in power at the time, there is opportunity for that. What role is the Coalition going to play? Because, I mean, it was more than two decades ago, John Howard introduced the GST, getting rid of inefficient taxes. Isn't it time to revisit that and perhaps broaden the base, increase the rate of the GST? And start to reduce our reliance as a country on income taxes.
SENATOR JAMES PATERSON: Laura, I thought you made a really interesting observation at the start of your question which I want to briefly deal with on the question of mandates, because if you look at the Prime Minister and the Treasurer's National Press Club speeches shortly after the election, they describe the mandate that they have effectively as a floor rather than a ceiling. They have to do everything they promised that they would do, but they're not constrained in going much further than what they took to the election. Now, that's a very interesting way of framing a mandate. And certainly they have a big majority, but they have a big majority in part because of the things they took to the election and the things that they didn't take to the election. So if for example they're going back to their 2016 or 2019 election agendas and reviving things like negative gearing or capital gains tax or franking credits, things that they explicitly ruled out doing, then I think that would be a breach of their mandate and we would have to hold them to account for that as the Opposition. But the approach that we're taking to the productivity and tax round table that the Treasurer has initiated is that we're seeking to be constructive. And if the government proposes things, or if things come out of that process that we think are in the national interest, that we think will enhance productivity that we think will make our economy more productive and competitive and enhance people's living standards then we would support that. But we're not going to walk away from fundamental Liberal principles and we're certainly not going to be party to significant tax increases or applying blank cheques for tax increases that we don't think are warranted or justified.
LAURA JAYES: No, and no one would expect you to do that. No one would want you to do that, but it comes down to the tax mix as well. Maybe let's go back to first principles here, James. Do you agree that there is an over-reliance, and it is going to get worse, on income tax to fund everything that we want the government to fund? Would you see in principle an increase in the GST, a broadening of the base? If it were to see a lesser income tax or reduce that reliance on income taxes.
SENATOR JAMES PATERSON: I do think that we are excessively reliant on income taxes. I think that puts a heavy burden on young working-age people who are trying to build wealth for themselves and their families, and internationally, Australia is much more reliant on income taxes than most other similar developed economies, and I think that is a problem. Before I entertain the prospect of increasing other taxes in order to pay for a reduced income tax, I should say that that's obviously not the only way to fund a reduction in tax. Fiscal restraint or spending restraints are the other way to do it. Right now, as a proportion of the economy, the government is larger than it has ever been, other than in emergency times like war and pandemics. Otherwise, it's far above the long-term average, and that's because of policy choices that the Albanese government made in their first term to bake in new structural spending without any means of paying for it, either through tax or through savings measures. And I think it's very interesting that the Treasurer is using language that he expects people to bring ideas to this roundtable that are “budget-neutral or better.” And I think we're entitled to ask the question, better for whom? Better for him, or better for Australians, or better for taxpayers? I think by better, he means that delivers higher revenues to Canberra, but if that means a higher tax burden for Australians, then I don't think that's better for taxpayers, and I don't think that's better for our country.
LAURA JAYES: Look, I get why people would be concerned about wealth taxes in particular. But over the last decade, we've seen this enormous concentration of wealth. It's worse in America. After COVID, we saw the rich getting richer, the middle class and lower class really not moving in the same way as that upper tier. There is something structurally wrong there. So, don't we have to do something dramatically different? It might not be wealth taxes, but the concentration of wealth. I mean, that is something that really concerns me, not because it's the politics of envy, James, which I'm sure you agree on, just the concentration at these companies that require less people to work for them, but they're making enormous amounts of money because of social media, AI, whatever it is. Won't it get to a point where the wealth concentration is so skewed that? That redistributing that wealth is just going to be so difficult to do anyway, is that something that concerns you? I don't know what the answers are, but it's certainly looking like a problem that's getting worse.
SENATOR JAMES PATERSON: Laura, I am someone who is, as a Liberal, concerned about inequality, and in particular, wealth inequality. But if you look at the data, the greatest disparities of wealth are not within generations, but between generations. It's not between, for example, young people who are high-income or low-income earners. It's between older people who've benefited from a significant asset price boom over the last 30 years, and younger people who haven't benefited from that. And it is primarily, but not solely, through the housing market and the massive run-up in house prices that has happened in this country. And the inequality that occurs is that young people can't get into the housing market, and so they never have the opportunity to acquire and build wealth for themselves and their families, because the obstacles to getting in are so much higher than they were for any previous generation. That's why housing affordability and home ownership are at the heart of solving these intergenerational problems, and I don't think wealth taxes help solve that problem. I think of course lowering income taxes would be helpful but the most important thing we can do is make housing more affordable by significantly expanding supply and unfortunately from the leaked Treasury documents we know that this government is nowhere near achieving its housing targets which are not just ambitious but now delusional and I think that's a cruel hoax on young people.
LAURA JAYES: Yeah, it is ambitious, we need to have targets, but you're right, they're not even close to being met, these things aren't linear, of course, but yeah, it doesn't look good. James, great to talk to you, we'll have a longer conversation hopefully, which is required soon.
SENATOR JAMES PATERSON: I look forward to it. Thanks, Laura.
ENDS