The treasurer has flagged tweaks to tax arrangements for gas producers as one possible option to repair the stretched federal budget.
Presented with a “menu of options” from The Grattan Institute to cut spending and raise more revenue, Jim Chalmers said the government was already considering some of its suggestions.
Pruning back stage-three tax cuts, raising the GST and cutting wasteful spending on major defence projects were among the suite of options floated by the think tank but Dr Chalmers singled out possible reforms of the petroleum resource rent tax as one area of interest.
Treasury is reviewing the tax on the profits of fossil fuel extractors and working through options to improve how the tax applies to gas producers, he said.
The institute’s pre-budget report recommended changing the method for pricing gas in the tax arrangements, which would deliver as much as $4 billion annually.
On super tax concessions, another reform area floated by the think tank, the government has committed to “modest but meaningful” changes to super tax breaks to target returns on balances of more than $3 million.
Dr Chalmers said there were some things “we won’t be coming at”, including changes to the Family Tax Benefit Part B supplement.
The institute said while the benefit – designed to help parents who were not in paid work because they were caring for children – was important to support single parents the case to pay it to single-income couple families was weaker.
Scrapping the benefit could save $1.3 billion a year and remove barriers to workforce participation for a second earner in a couple.
Meanwhile, shadow treasurer Angus Taylor urged the government to rule out changes to Western Australia’s GST treatment, as suggested in the Grattan report.
“It is critical he does not break this promise,” Mr Taylor said.
Under the GST deal, legislated by the former coalition government in 2018, WA receives at least 70 cents for every dollar it contributes.
The arrangement costs the budget much more than originally anticipated, due to a surge in mining royalties, Grattan said.
Dr Chalmers agreed with the Grattan report’s overall message that the budget had structural issues.
“Even as the budget gets a bit better in the near-term because of high commodity prices and low unemployment, we’ve got structural challenges that come from the cost of servicing that $1 trillion in Liberal debt, combined with the NDIS and aged care and health care and national security,” he said.
Dr Chalmers faces the challenging task of providing cost-of-living relief, without fuelling inflation or adding to government debt, when he hands down the budget for 2023/24 on May 9.
Maeve Bannister and Poppy Johnston
(Australian Associated Press)