Australia faces a budget challenge to properly fund essential services and safety nets and respond to climate change today and into the future.  

We must ensure that public expenditure can meet community needs in a context of rising poverty and inequality, an ageing population,  unmet need in disability services and social housing, and an economic shift from production of goods to services including community services. 

The fairest way to fund these services and supports is to raise public revenue through taxes levied according to people’s ability to pay. Yet Australia is relatively low taxing and low spending: we raise the ninth-lowest level of tax and our public expenditures are the sixth-lowest in the OECD.  

It is no surprise then, that people have to survive on income support payments of $56 a day people with low and modest incomes can’t afford to house themselves, people face some of the highest out of pocket health costs in the world and crisis services continue to turn away people that need assistance. .  

Universal health, education and community services are part of the social compact between people in Australia and their governments. They should not be undermined or compromised. If we do not lift public revenue, we risk either austerity policies that would drive up unemployment and harm those already struggling on the lowest incomes, or sharp increases in user charges for essential services. 

The next government should guarantee essential services and safety nets and ensure that they can raise the revenue needed to provide them in a cost-effective way. Arbitrary restrictions on the size of government or caps on tax revenues should be rejected outright. Efforts to curtail ‘wasteful’ or poorly targeted spending should focus in the first instance on tax concessions (tax breaks and shelters) which are often shielded from public view and budget scrutiny.   

The next government should commit to an open, inclusive tax reform process to ensure it can raise the revenue needed to meet the community’s needs. Reforms should improve fairness and promote growth in productivity, jobs and incomes.  

These objectives of tax reform are not at odds: they can both be achieved by ensuring that individuals and businesses that can afford to pay do so, by more effectively taxing the use of land and other natural resources and ensuring the tax system supports and does not impede the transition to a clean energy economy.