Tax reform in this country often feels like a never-ending cycle. Small adjustments here and there may be made, but just when it seems progress is being achieved, the same problems resurface bigger and more challenging than before. What seems to be missing is the resolve to take decisive action and complete the necessary reforms. 

Allegra Spender, the Federal Member for Wentworth, steps in. In November 2024, Spender, an independent member of the Teal Independents, released a Tax Green Paper. She is addressing the issue of tax reform directly, and this effort deserves recognition. Taking on tax reform is a significant challenge, particularly as an independent in today’s deeply divided political environment. 

Spender’s Green Paper is not a comprehensive policy plan. Its purpose is to encourage discussion and provide a framework for future action. Importantly, it focuses exclusively on the tax system, without addressing broader topics such as government spending or the transfer system. 

The main principle she advocates for is tax neutrality. Any proposed reforms should not lead to an increase in the total tax collected. However, she does express a preference for lowering the overall tax burden in Australia. 

The paper highlights several key challenges facing our nation. One of the most pressing issues is the growing wealth gap between generations. Younger Australians are finding it harder to buy homes due to rising living costs, student debt, and stagnant wages. Over the past 25 years, home prices have increased four times, while incomes have only doubled. As a result, home ownership has significantly declined over the last 40 years. 

Another challenge is productivity. Growth is slower than it has been in the past 60 years, and business investment is falling. Without improvements in innovation and efficiency, our standard of living is at risk. As a member of the Teal Independents, Spender also stresses the urgent need to address climate change, an area where tax policy could play an important role. 

So, what does tax have to do with all of this? Quite a lot, in fact. Spender argues that our current tax system disadvantages workers, especially younger ones, while favouring passive income and property investment. This deepens the generational divide and limits economic mobility. 

Her Green Paper outlines seven key priorities for reform: 

1. Lower income taxes to help Australians improve their financial situation. 
2. Adjust tax policies to promote home ownership. 
3. Encourage innovation and business investment to boost productivity. 
4. Stabilise the revenue base to address changes in demographics and consumption patterns. 
5. Use tax policy to support the transition to cleaner energy. 
6. Set up a Tax Reform Commission to address future challenges. 
7. Ensure that reforms are carefully implemented to minimise disruption. 

To achieve this, Spender calls for immediate action in the next parliamentary term. She supports a structured process for developing policies, strong community involvement, and the creation of an independent Tax Reform Commission. 

However, I remain sceptical due to history. Over the past 40 years, there have been numerous reviews, conferences, and debates on tax reform. Major changes have been rare such as the introduction of the GST in 2000 and often overshadowed by political disputes. The tax system has been used as a tool in election campaigns, turning complex proposals into simple slogans and fear-based messaging. 

Spender correctly points out that the community must actively participate in this discussion. However, tax is a complex issue, and many Australians feel ill-equipped to engage with it. An independent Tax Reform Commission could help address this gap, as long as it remains truly free from political influence. 

Nevertheless, I remain cautious. Political realities often focus on short-term gains rather than long-term solutions. Tax reform in Australia is still a politically sensitive issue, driven more by negotiation and compromise than by clear, strategic thinking. 

That being said, Spender’s efforts are commendable. Her Green Paper is a thoughtful and well-researched attempt to elevate the conversation. As she puts it, we face a choice: either confront our challenges directly or continue with the usual political tactics, allowing the problems to become even harder to solve. 

And so, the debate persists, with incremental changes continuing to be made.