Stephen Jones: This is an edited transcript of a talk to clients of PritchittBland Communications on 27 January 2022.
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The pandemic has exposed some of the weaknesses within Australian society, whether in our labour market, the problems with insecure work, the over reliance in some sectors on workers from other countries, short-term workers, our supply chain fragility, or the lack of depth within our manufacturing capacity. The pandemic has also shone a spotlight on some of the social and economic strengths of Australia and the resilience of the Australian people. We've grown to honour and respect our healthcare system underpinned by Medicare in the public health system, run by our states.
One of the underlying strengths within our economy is that over my lifetime, we've transformed Australia from an economy that was in significant part driven by manufacturing to one that is now overwhelmingly in the services-based economy.
Where is Stephen Jones today, aspiring Minister for Financial Services?
Too many ATO employees on temporary contracts: Labor
Too many Australian Taxation Office employees are working on temporary contracts or labour-hire arrangements, limiting efforts to cut the black economy and corporate tax avoidance, Assistant Treasurer Stephen Jonessays.
Praising the ATO as a world-leading revenue agency, Mr Jones revealed that Taxation Commissioner Chris Jordan was briefing the Albanese government on plans to better fund operations, including the successful black economy taskforce.
Assistant Treasurer Stephen Jones with his copy of Unemployment: A Problem of Industry by W.H. Beveridge, first published in 1909. Rhett Wyman
He said improved IT systems and permanent funding for public servants were among the priorities for the new government, a week after he was sworn in as part of Labor’s economic team.
“They’ve got some challenges and some legitimate concerns,” Mr Jones told The Australian Financial Review.
“Too many staff are on labour hire or contract work for ongoing activities, so we need to work through those issues. But as far as a tax and revenue generating agency, they are first class.
All the issues that we’ve got to deal with are not because they’re not working hard and doing a good job, it’s because they need the tools to do it.”
Data from the AusTender reporting system shows the ATO entered into consulting and labour-hire contracts worth more than $270 million since July 1 last year.
Roughly $85 million of those contracts, almost one-third, were specified as being for “labour hire” or similar services.
Labor wants to save $3 billion in labour-hire and external contracting, including by moving outsourced employment into permanent roles. The Morrison government entered into labour-hire and contracting deals worth almost $2.7 billion since last July, in addition to $1.3 billion in contracts signed with the big four firms and Accenture.
Black economy crackdowns have secured significant revenue for the government.
The program raised $736.2 million in additional tax liabilities in the 2020-21 financial year, as well as an estimated $534.7 million in cash collections.
Over the three years to June 2021, the taskforce raised an additional $2.6 billion from new and enhanced enforcement strategies and led improvements to federal government procurement and reporting systems.
The black economy taskforce estimates that the illegal activity is worth as much as 3 per cent of GDP, costing the Australian economy up to $50 billion a year.
“We perform better than a lot of others in terms of our capacity to get revenue out of notoriously difficult areas, to obtain lawfully owed revenues,” Mr Jones said.
Labor plans to move quickly to cut down on multinational tax avoidance.
The new government expects to raise $1.89 billion over the forward
estimates period by limiting debt-related deductions by multinationals at 30 per cent of profits, while maintaining the arm’s length test and the worldwide gearing ratio.
It will also limit the ability of multinationals to abuse Australia’s tax treaties when holding intellectual property in tax havens and introduce new transparency measures for government contracts.
Andrew Leigh, the assistant minister for competition, charities and Treasury, told the Australian Progress Leadership 2022 summit on Tuesday that the politicisation of government grants under the Coalition had weakened Australia’s political system.
Dr Leigh said research showed people looked to the behaviour of their peers when considering compliance with tax laws.
“In part it comes down to what people think others are doing. In countries in which there’s a notion that other people are ripping off the system, there’s a greater tendency to rip off the system yourself,” he said.
“That whole project that Anthony Albanese has talked about of raising trust in government is also one which I think is important for us on the progressive side of politics.”
This is part one in a series on Treasurer Dr Jim Chalmers.
Dr Jim Chalmers is Australia’s 41st Treasurer. The Queenslander is the first Labor treasurer since Chris Bowen left office in 2013, and the burden on him is great. He must guard Australia’s economy through a period of extremes -- he must fight extreme high inflation, protect and extend the nation's low unemployment rate and navigate expected rises in interest rates.
But thanks to the sparse and spartan Labor election platform we know little of Dr Chalmer’s plans or intentions. There will be a jobs summit and an October budget, yes, but what will be in them? Who is Dr Chalmers? What are his ideals? Is he the man for the hour or will he fall flat?
To answer these questions and find the essence of the man, I have scoured the record in a series of articles that will comb his publications and history. The first two pieces go back to 2013 and explore Chalmers through the lens of his first book: Glory Daze: How a World-beating Nation Got So Down on Itself. It is the story of his time in Wayne Swan’s office during the global financial crisis (GFC).
Oftentimes in the making of a man, a short intense period matters more than other, much longer stretches. There is no doubt the six years Chalmers spent in the heart of government during the GFC, including three as chief of staff to then treasurer Swan, matter most to the treasurer he will be. They are more formative than the years before, such as when he worked in the bureaucracy and gained a PhD in politics at ANU; or the nine years since, when he won the fairly safe seat of Rankin on the suburban fringes of Brisbane and became a member of federal parliament.
The book gives us ideas about what he will focus on, how he will react, where he might be on the right track and, most importantly, where he may go wrong.
What he shows us
Glory Daze sets out to tell the story of how Wayne Swan saved Australia from the GFC. Chalmers’ key observation is this: despite the government saving the Australian people from economic oblivion, we weren’t happy and did not give credit to the policies that saved us. Hence the subtitle of the book, How a World-beating Nation Got So Down on Itself.
“What worried me most was that we had been a very successful government, achieving in the economic sphere what almost no other developed country on Earth could achieve and yet we were not lauded for it,” Chalmers writes.
His explanations for why revolve around the press.
“Hyperpartisan attacks by the opposition, shouted into the echo chamber of an increasingly skewed media landscape, make rational discussion of policy and the good that government can do practically impossible.”
I’d apparently repressed memories of the media environment of 2010-13, but his book brought them back vividly. The Labor government of Julia Gillard was hounded relentlessly, with the Murdoch press setting the tone and other media unable to prevent themselves from echoing it.
The legitimacy of the government was questioned in three key ways: 1) Gillard having rolled Kevin Rudd, and him lurking and leaking; 2) being a minority government; 3) Gillard being the first female prime minister. (Don’t forget that even the ABC ran a “comedy” series about a female PM, entitled At Home with Julia. Subterranean misogyny imbued almost every analysis of the government.) Tony Abbott was ascendant and the media landscape was vile.
That negativity shapes the book, written in the immediate aftermath of Rudd rolling Gillard in 2013. Chalmers is furious the government got no credit — and fair enough. He attempts to link the lack of credit given in the press to an inability to achieve further economic reform. Does he prove it, though? It is a plausible idea, certainly one that could help explain the failure of the mining tax. But it’s one that sits oddly with the successful introduction of a carbon tax by the Gillard government, and the numerous other achievements of her government.
The lack of credit apportioned to Labor by a furious press certainly helps explain electoral results. It is why Gillard was rolled in 2013 and is why Abbott won later that year, but the extent to which it explains a lack of policy triumph during the term is another question. “It’s amazing what you can achieve if you don’t mind who gets the credit,” goes the popular saying.
If the lack of credit in the press shapes the ability of a government to reform while on the benches — and I don’t think he proved that — then it should be a key issue to address for Chalmers and indeed the whole Albanese government. Chalmers identifies an incentive of the press in 2013 as amplifying “the least constructive contributions to the public conversation”. The question is: have those incentives changed, or has Labor learned how to work inside them?
Reading the press
Let’s consider the quote above, about how rational discussion of policy and the good government can do are practically impossible, and then recall the barren landscape of Labor’s policy agenda that delivered them such electoral success. We begin to suspect the grim truth is that Labor has learned, under Albanese, to work inside the incentives of the media landscape, rather than how to change those incentives.
If so, then the upcoming jobs summit will unleash a torrent of negativity, and the ideas raised will be examined in the popular press in a cursory and tabloid fashion. Objections from sectoral interests will get prominence in the serious press, some dumb thing or gaffe will obsess the tabloid press, Twitter will in turn be obsessed with the absurdly overwrought commentary of one or two right-wing talking heads, and almost nobody will talk about the ideas. The government will be derided for running an empty “gab-fest”.
The one hope for Chalmers is he was wrong about whether getting credit is vital to making change. And also wrong about the reasons Gillard’s government got such bad press. Maybe it’s not just Labor ideas the right-wing media can hate but minority governments and female PMs. If so, the jobs summit could be useful even amid a short, loud barrage of negative press and derision. Surely pursuing full employment is a goal that will be harder to hate than bringing in a tax on carbon or mining. At any rate, the policy process can go on for years — it lasts longer than the attention span of the haters.
And there are promising signs from the new treasurer that he knows the power of starting a slow process and sharing credit. In a speech in April he said the following: “We should be prepared to embark on new initiatives knowing we may not be around to take credit for their success … That’s the approach I want to take as Treasurer.”
It is unlikely there will be laudatory articles about how Albanese and Chalmers are the new Hawke and Keating, but there might still be policy traction if he negotiates with the new Senate. Chalmers could yet be able to change Australia from his position inside the treasurer’s office. He just might have to give up minding who gets the credit.