Home » Former Labor minister calls for major tax shake-up

Former Labor minister calls for major tax shake-up

“So I really do think that if you want to achieve anything more fundamental, it needs to be across levels of government and take into account those spending responsibilities.”

Mr Bradbury will move back to Sydney after a decade as a top international tax policy official at the Organisation for Economic Co-operation and Development in Paris, where he is due to finish in June.

As the OECD’s deputy director of tax policy and administration, Mr Bradbury has been centrally involved in negotiating with governments the base erosion and profit-shifting measures for multinationals, the 15 per cent global minimum corporate tax and the yet-to-be-resolved taxation of digital giants and the 100 largest companies around the world.

Mr Bradbury, assistant treasurer under prime ministers Julia Gillard and Kevin Rudd, said tax reform was politically “really hard” and it was easy for commentators to demand reform from the “cheap seats”, citing the example of it taking Brazil 40 years to overhaul dozens of state-based consumption taxes.

“What’s crucial is that the hard yards are done in terms of mapping out what needs to occur,” he said in relation to Australia today.

“And then when those rare but really important windows of opportunity emerge. That’s when political leadership is required to ensure that reform is implemented.”

Growing reform calls

His comments follow local leaders including former Treasury boss Ken Henry, former Reserve Bank of Australia governor Philip Lowe and Commonwealth Bank of Australia chief executive Matt Comyn in the past few weeks calling for serious reforms to Australia’s tax system.

Ken Henry. Arsineh Houspian

Dr Henry said the intergenerational “social compact” was at risk from the rising tax burden on younger workers to pay for the cost of an ageing population, strong population growth, defence spending in response to the rise of China, climate change, and environmental destruction.

Despite building pressure, Treasurer Jim Chalmers has ruled out sweeping reforms, preferring to talk about “modest but meaningful” changes in “bite-sized chunks”.

Mr Bradbury said assessing the appropriate level of government spending should be done in conjunction with reviewing the tax and spending responsibilities of federal and state governments.

“You cannot have a serious tax reform, a fundamental tax reform in Australia, from the position that Australia is currently in without having that occur across levels of government,” he said.

He used the example of the resource super profits tax pursued by the Rudd government, being “hamstrung” by state mining royalties and requiring negotiation with Canberra.

State and territories including Victoria, NSW, Western Australia, South Australia and the ACT last week backed Dr Henry’s call to overhaul state and federal tax and spending responsibilities, including the GST distribution, which he said had delivered unfair gains to WA.

‘World has changed’ since Henry review

Mr Bradbury said the world had changed since the “excellent” tax review by Dr Henry 15 years ago, due to the net-zero carbon emissions transition, a global pandemic, disruptions to global supply chains, geopolitical fragmentation, subsidies and tax incentives for green energy under the US Inflation Reduction Act.

“So it strikes me that there are many, many important recommendations that could be lifted out of the Henry review that are sensible, but I think it’s a little bit too convenient, and perhaps too comfortable to say, ‘Well, all of the answers are there’,” he said.

“There’d be a pretty strong case for refreshing and reassessing some of those issues in the current environment.”

Mr Bradbury said his tenure at the OECD had exceeded expectations, including on the two-pillar rewrite of global corporate tax rules, which he described as preventing a costly race to the bottom.

Outstanding is pillar one, under which big tech and other multinationals will pay tax based on where they earn revenue. It will cover about $US200 billion ($308 billion) in corporate profits, yielding a tax revenue boost between $US13 billion and $US36 billion.

If the United States does not ratify the deal, it will not come into effect, making results of the 2024 president and congressional elections critical.

Mr Bradbury warned the window for international co-operation could be closing due to rising geopolitical tensions and fragmentation.

“We have a number of significant major conflicts occurring around the globe at the moment and that has a polarising impact. You’ve got a whole range of blocs developing around the world and even thinking about the G20.

“The G20 has found it more difficult in recent times to agree a communiqué, for example, which just demonstrates that, you know, it is a more complicated environment that we operate in.”

Future career plans

Taxation Commissioner Rob Heferen. Peter Rae

Mr Bradbury, 48, was a tax lawyer at corporate law firm Blake Dawson before entering politics and rising to assistant treasurer and minister for competition policy and consumer affairs.

He lost his western Sydney seat at the 2013 election, musing in the interview that the “good people of Penrith decided it was time for me to move to Paris”.

Mr Bradbury was recently shortlisted as a candidate to be tax commissioner to replace the retired Chris Jordan, but he was overlooked by Dr Chalmers for new commissioner Rob Heferen.

After a decade in Paris, he said he was moving back to Sydney to be closer to ageing parents and his four children, who will all be at university in Sydney after moving to Paris in primary school.

Mr Bradbury said he was weighing up staying involved in tax or shifting to other leadership roles that potentially cut across his “passion” for public policy.

“Having worked in and around tax really for the last 25 years, it would, at one level, make sense to stay engaged in tax,” he said.

“But I do also think that this is a moment in my career where I can reflect upon what’s next and maybe think about whether there are other opportunities beyond tax.”

“When I think about what I’ve been doing in my time at the OECD, this has been a diplomatic role, relying on negotiation skills and a leadership role where I’ve been managing large projects and managing large teams.”

“So, it’s a little bit of a blank sheet at the moment.”

Asked about a potential return to politics as an elected representative, Mr Bradbury ruled it out.

“I think that ship has sailed.”