Grattan Friday: Reform Basket Needs Much Washing
As Jim Chalmers was navigating his economic reform roundtable, his colleague Mark Butler on Wednesday took a dive from the 10-metre board into the pool of budget repair.
The announcement by Butler, Minister for the National Disability Insurance Scheme (NDIS), that the government will try to curb its cost growth to 4-6% annually is ambitious in policy terms and robust politically.
Butler is carrying forward the work of his predecessor Bill Shorten in Labor’s first term. Shorten’s reforms aimed to contain the cost increase to 8% annually, from about 22% a few years ago. It is now around 10%.
The Butler reforms propose, after a transition, to have children with developmental delays and mild autism treated in other ways, rather than accessing the NDIS.
The latest reform is good sense and financially necessary. As Butler said, “Most Australians would be alarmed to know that one out of every ten six-year-olds are in the NDIS, including 16% of six-year-old boys”.
In budget terms, even 8% growth would have been unsustainable.
So far, the blowback has been very limited (although Victorian Premier Jacinta Allan complained about not being forewarned). The government also has political cover: the opposition, always criticising Labor for spending too much, would be hypocritical to fight this push for savings.
As with all reform, the test will be delivery. Butler’s changes are partly a rebadging of Shorten’s (although going much further) in that they rely on the states to play a much bigger role in providing services. Earlier efforts ran into roadblocks from the states.
Butler’s announcement was strategically timed, coming the day before the roundtable’s session on budget sustainability. Butler has declined to give an estimate of the multi billions the shakeup would save the budget over the medium term, but we are talking big money.
The roundtable, ending late Thursday, has given the government a set of numerous measures to do relatively soon and a sort of “permission” to progress others later.
Most significant is what came out on taxation. Summing up after the meeting, Chalmers said there was appetite for tax reform on three fronts. These were:
The participants wanted to play their part with the government in these areas. But there will be no comprehensive, independent tax inquiry.
One can see this as Chalmers obtaining backing for advancing tax priorities the government wants to pursue but did not seek a mandate for at the election.
This was clever wrangling. Roundtable participants, especially those representing business and labour, were sharply divided on the specifics of tax changes that they favoured. But Chalmers has managed to have them assemble under these three very large tax umbrellas. This can help kick-start a substantial agenda on tax that can, if the government (specifically, the prime minister) wants, be much wider than seemed likely immediately after the election.
As expected, the roundtable gave backing for a plethora of moves to simplify or cull regulation, and make it easier and faster to get things done. Ministers will oversee the actual work. Chalmers flagged the government was looking for a series of “quick wins”. These included accelerating the passage of the Environment Protection and Biodiversity Conservation (EPBC) legislation, working through a backlog of environmental and other approvals, reducing complexity in the National Construction Code and much else.
The meeting gave strong support to a new road user charge, but the detail is still some time off.
On artificial intelligence, the discussion brought participants – who spanned a spectrum between tight and light regulation – “a bit closer together”, but not into the same place. The government will decide, after further work, “whether we can meet out objectives with existing legislation or whether it requires one overarching bill”.
Chalmers emerged from the roundtable high on positivity. “I finished those three days more optimistic about the progress that we can make together than I was at the start.”
Holding the meeting in private, but with participants able to talk publicly about what went on behind closed doors, was a good combination. Participants didn’t feel muzzled, but performative behaviour was minimised (though shadow treasurer Ted O’Brien did arc up in a clash with Chalmers at one point).
Chalmers’ chairmanship was praised by those in the room. While the treasurer personally knew most if not all the participants, it was an occasion for these movers and shakers to get more insight into his views and operating style.
When the elephant stamps are being given out for roundtable performers, one should go to Danielle Wood, chair of the Productivity Commission. Wood oversaw the multiple reports the commission put out on diverse topics ahead of the meeting, and her Monday National Press Club speech was an engaging scene-setter.
Wood, appointed by Chalmers and previously head of the Grattan Institute think tank, has become noted for her streak of independence as well as her formidable policy brain.
So what has this week told us about reform under the Albanese government?
The NDIS plan shows that a big parliamentary win can inject a degree of political bravery. If the government had been re-elected with a tiny margin or in minority, would it have re-tackled the NDIS? And would it have done so in such a manner, without rounds of talks before the announcement?
In contrast to the approach on the NDIS, Chalmers has used his roundtable to present a masterclass in inclusive incrementalism.
For weeks, he and ministers have been listening and talking. No-go ideas have been kicked or pushed away. Advances the government wants to make have been encouraged.
The opposition will say Chalmers hasn’t been talking about the right things. The reform purists will say the big issues remain untackled. But, by necessity, and not least because he has a cautious prime minister, Chalmers takes the progress he can get and dresses it up as a narrative in the most positive terms he can.
As one wag put it, the roundtable didn’t produce “a big shiny box” but “a laundry basket of things”. Those things have to be washed and ironed in the days, months and budgets ahead, and the basket refilled as the opportunities come.
Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.