Ever since I escaped academia to be a financial media commentator/educator and later a wealth advisor, I’ve always tried to be balanced, but gee, Jim Chalmers has made it hard for me to look like an unbiased referee on government economic policy plays. And today’s no different, with Jim being ‘hailed’ as the biggest taxing treasurer in Australian history!
The AFR’s respected Phillip Coorey says the Treasurer is only a tax-take away from beating the Howard Government’s record on high taxation, but one thing you have to remember is that John Howard and his Treasurer created a budget surplus, while Jim’s Treasury team has forecasted deficits for at least a decade.
According to Coorey, the latest tax stats say, “for the 12 months to June 30 [they] show tax receipts as a proportion of GDP jumped from the 23.6 per cent forecast in the May budget, to land at 24.1 per cent.” He added: “This surpasses the self-imposed ceiling of 23.9 per cent set by former Coalition finance minister Mathias Cormann, a cap Labor never adopted and nudges the 24.2 per cent mark reached in 2004 and 2006, at the height of the mining boom.”
And that’s an important point, because taxes are collected from people and businesses and when there is a mining boom, the likes of BHP pay a lot of tax on their profits.
Drilling down into the latest budget numbers we discover:
- Last financial year’s deficit of $22.3 billion was $6 billion lower than predicted at the May budget.
- Extra tax on super came in at $1.9 billion, which was at the expense of normal Australians preparing for retirement.
- $2.3 billion came from you and me as normal taxpayers.
- Businesses paid an extra $700 million.
- But smokers got a good deal as the excise was down by $200 million but they can thank the black marketeers for frustrating government tax collection!
Of course, Jim as the champion of wage earners told Coorey that the increase in taxes collected from individuals was not PAYG tax levied on wages.
“The higher receipts are really a function of two things: investor returns being higher than anticipated in the budget, and better superannuation outcomes,” the Treasurer said. “The superannuation funds have done a good job hedging all of this uncertainty.”
Does Jim come from planet Pluto? Normal Australians, yep, wage earners, are in super and every bit of extra tax that is paid potentially could be better returns for the super fund. And guess what, a whole lot of young people invest in shares, bitcoin and property to try to build wealth to one day get a deposit for a home, because they do miss out on 12% of their potential pay because Labor thinks that’s the take needed to build a big super amount when they retire.
Of course, higher taxes are needed because, as Jim pointed out, lower economic growth hasn’t helped, which meant more government spending was required.
And this is a really important point that I hope someone who advises Jim can explain to him, as he seems to not understand how important it is to encourage those who actually make economic growth happen. These people are wage-paying, risk-taking and capital-borrowing small businesses, entrepreneurs and investors, who he has targeted as fodder that can be terrorised by a government brilliant at election-winning politics.
A friend of ours who proudly voted Labor is looking at a succession of policies from the Federal and NSW governments and says she won’t do it again, as she thinks her success has made her a victim of “class warfare”.
Jim actually looked at policies of the Coalition when they were in government and said, “by their own logic, inflation would be higher and interest rates would be higher if their policies were put in place.”
What the f**k! Seriously, how dumb does he think we all are? Sure, those not trained to understand economics might say he sounds right, but he’s leaving out the possibility that the Coalition might have been better at stimulating great investment from aspirational business owners and been better at boosting productivity.
On my TV show last night, the very smart chief economist at HSBC explained why our low productivity is largely behind our high inflation and high interest rates. Yep, there are other causes, but better productivity would’ve helped lower inflation and saved us from a few rate rises.
Our economic problems of high deficits, inflation and interest rates haven’t been helped by Jim’s failure to understand how you get the private sector to spend and take risks, so he has done the spending, and that’s at the core of his and our big economic problem.
Coorey revealed that Westpac senior economist Pat Bustamante agreed the budget could be in surplus if not for the Albanese government’s run on spending.
“[The deficit] confirms that tax as a share of the economy is close to a historical high. Without spending pressures, the government would be running significant surpluses, in line with the outcomes recorded under the Howard government,” he said. “Importantly, given that the tax measures in the May budget increase tax receipts, the government is signalling that bigger government is here to stay.”
Coorey also pointed to another respected independent economist Chris Richardson, who warned that “the government had painted itself into a corner with elevated spending, a bind set to worsen as interest payments on cheap pandemic-era debt begins to soar.” The only choices would be to tax more or let the deficit worsen, he said.
Unfortunately, Jim might be listening to the wrong people like a former colleague, Wayne Swan, who was trying to pressure the RBA to cut interest rates in September 2024. He said the RBA was “punching itself in the face over high interest rates.” Of course, the RBA cut rates three times in 2025 but learnt it had punched itself in the brain with these cuts as they had to reverse them this year and now have had to raise rates four times!
Jim, you have to change the crowd you hang around with and listen to, and fast!
