Labor tosses up reform options as inflation storm looms
As the Chancellor of the Exchequer prepares for worsening inflation data, the government is considering a wider range of reform options than ever in the run-up to the budget.
Jim Chalmers has expanded on recent comments framing next May’s budget as his most ambitious yet, saying he was confident he would achieve “something meaningful” with the help of business at a Business Council dinner on Tuesday.
The government’s effective spending review committee, which includes Finance Minister Katy Gallagher and is responsible for deciding what is and is not in the federal budget, met for hours on Tuesday and will meet again on Wednesday.
“We are absolutely working full steam at the moment on a wider range of options than usual,” Dr Chalmers said.
The Treasury is preparing a series of reforms consistent with the treasurer’s stated principles of improving intergenerational equality, encouraging investment and simplifying the tax system.
Reported options include cutting tax concessions for property investors, increasing the tax on gas windfalls and canceling the expensive tax break for electric vehicles.
Rather than making it a choice between resilience or reform, Dr Chalmers said the budget would be about both resilience and reform.
He said Australia was well prepared for the inflation and growth challenges posed by the war in the Middle East.
“But we’re going to get beaten.”
Inflation on an annual basis until January was already running at 3.8 percent and is expected to rise further from the Central Bank’s two to three percent target range as rising oil costs lead to second-order price increases across the economy.
ANZ Bank economist Adelaide Timbrell predicts inflation will peak at 4.9 per cent on an annualized basis in the second quarter of 2026, then fall to 2.6 per cent by the end of 2027.
“Going forward, we expect inflation to decline slightly due to the effects of lower real income growth and higher interest rates on demand,” he said.
The Australian Bureau of Statistics will release inflation data for February on Wednesday, which will give the final snapshot of the inflation picture before the outbreak of war.
Dr Chalmers signaled a significant efficiency package that would make it easier to reduce construction, investment and compliance costs, building on the government’s work since the economic reform roundtable in August 2025.
But opposition housing spokesman Andrew Bragg said Labor had done nothing to cut red tape and make it easier to build new homes.
In a separate speech to the Business Council, Opposition Leader Angus Taylor will put forward new analysis showing the average Australian will be $35,000 worse off in terms of lost national income over the next decade if current productivity forecasts are confirmed.
“That would be more than a decade of productivity lost under Labour,” he will say.
“There is a critical reason for Australia’s economic slowdown: the Albanian Government is shifting Australia from a free enterprise economy to a government-led economy.”
Mr Taylor will say much of the blame lies with the regulatory “quangos”, who have become repressive and whose powers have been seen to expand under Labor.
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