Global body urges treasurer to spend less, reform taxes
An influential global body has welcomed Labour’s move to reduce pension tax concessions and rein in spending but wants further reform as long-term pressures weigh on the budget.
The message from the Organization for Economic Co-operation and Development comes as Treasurer Jim Chalmers advances reforms at a 2025 productivity roundtable ahead of the May budget.
The organization, headquartered in Paris, praised the government’s efforts so far to take on the reform mandate, citing work aimed at increasing competitiveness and the energy transition.
Dr Chalmers said the report was a strong support for Labour’s economic management and reform agenda.
“The report describes our new mandatory reporting merger regime as a ‘major step forward’ that will bring Australia ‘in line with OECD best practice’ and describes the government’s revitalized National Competition Policy as a positive step towards increasing competition,” the Finance Minister said in a statement. he said.
“More homes, cleaner and cheaper energy and progress on addressing Australia’s long-standing productivity problem feature prominently in this report, and the report also highlights these as big features of Labour’s economic plan.”
But the OECD’s latest Australian economic survey, published Thursday morning AEDT, said further reforms were needed “to boost productivity growth, improve housing affordability and facilitate the energy transition”.
“Although Australia has a relatively light government debt burden, long-term pressures need to be addressed,” the report said.
Labour’s move to reduce tax breaks for wealthy pensioners was a good start, but further changes are needed, such as reducing the concessional pension contribution cap from $30,000 a year.
“This would help the pension system return to its original purpose of providing adequate retirement income rather than providing preferential tax arrangements for wealth accumulation,” the report said.
Australia’s aging population will drive up health and care costs, with the budget forecast to fall into a $36.8 billion deficit this financial year, the OECD has said.
Spending growth in the NDIS needs to be limited more effectively, it said.
On the other side of the notebook is the report, Dr. He warned that unless Chalmers’ proposed road user charge was taken in line, the government’s revenue base would be affected as the switch to electric vehicles eroded fuel duty.
The OECD, led by former coalition finance minister Mathias Cormann, also highlighted Australia’s high housing costs.
To mitigate price rises, he recommended switching from stamp duty on property purchases in favor of land taxes and reducing tax concessions on homes such as negative gearing and capital gains relief.
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