Jim Chalmers says he is “pretty relaxed” after his department accidentally released details of the advice he received after the election, which includes doubts about Labor’s housing target and advice to pursue tax reform.
The treasurer confirmed the headings — which were given to the ABC in response to a Freedom of Information request — were “sent in error” by a Treasury official, but said the contents were consistent with his own public comments.
The headings revealed the department’s view that the ambition to build 1.2 million homes in five years would fail and that tax hikes and spending cuts were both needed if the budget was to be made sustainable.
“The priorities which are being reported today are … the sorts of things that I have mentioned before,” he told reporters on Monday.
“We have already made it really clear that we will need to do more to meet our housing targets … We have made it clear that we need to build on the progress we have made in repairing the budget so that we can make the budget even more sustainable.”
Mr Chalmers said the government had not been considering further changes to superannuation tax on top of its proposal to increase the tax on earnings, including unrealised gains, which the Treasury advice appeared to suggest he could “build on”.
Chalmers concedes housing target not on track
He also maintained the housing target could be met, and that the heading suggesting that it “will not be met” was only a “partial” reflection of Treasury’s view, even as he accepted the target was not on track.
“The point that Treasury is making, the point that I understand and accept, is that the government will need to do better and do more to meet that target,” he said.
Treasury advises Labor to consider higher taxes and a new housing target
“Under current trajectories, we would fall short, but that doesn’t mean that between now and over the course of the next four years we can’t work … to build more homes,” he said, adding Housing Minister Clare O’Neil was “working out what we need to do differently and better” to meet the target.
“I think it would be strange if a government like ours saw the obvious challenges in housing and decided anything other than to try to be ambitious … I find it strange that people want to limit our ambition.”
The treasurer said it would be “strange if Treasury wasn’t” modelling worst-case scenarios for the global economy, after document headings revealed the department had studied the consequences of a potential US dollar crash and loss of the US Federal Reserve’s independence.
“I welcome and I encourage the Treasury to think about best- and worst-case scenarios … It gives you a better chance to work through them if they eventuate,” he said.
“I’m grateful for the work that they do because it helps me think through various scenarios, even if we think that the chances of that happening are remote.”
Coalition and Greens seize on details
The opposition has seized on the advice, which Shadow Treasurer Ted O’Brien said was evidence of the government “hiding the truth”.
“Treasury is telling Labor what the Coalition has been saying all along — they have a spending problem, they lack fiscal discipline, and they are preparing to slug Australians with higher taxes,” he said in a statement.
“Whether it’s housing, tax or the budget, Labor is failing to come clean.”
Fearless and free, the Treasury isn’t holding back — and that’s good for everyone
The briefing was prepared during the election period, when caretaker conventions apply, limiting the government’s ability to direct the public service.
Known as an “incoming government brief”, alternative versions are prepared for Labor and the Coalition, with only the winner’s brief ever given, and with no oversight from either party about its contents, which reflect the department’s view of their platforms.
The release of the losing brief under Freedom of Information laws has been precluded by previous court cases. The winning brief is often released upon request in heavily redacted form, as was the case in this instance.
Greens housing spokesperson Barbara Pocock said the Treasury advice on the housing target represented “the cornerstone of [Labor’s] election commitment crumbling before the first sitting of the new parliament”.
“Labor’s hot air around housing is proving to be more bluster than content … Even if they could build 1.2 million new homes, under the present tax arrangements they are likely to go to wealthy property investors who can leverage their tax advantages to push first home buyers out of the market,” she said.
Budget economist Chris Richardson told the ABC it was “magnificent” to gain an insight into Treasury’s “truth-telling” to government, but that “none of this is a surprise”.
“But equally none of it is as familiar to Australians as it should be,” he said on social media.
“Far better that these issues are raised and discussed. If we’re to get a better nation, we need a better conversation.”