Federal politics live: UK and Australia to sign new AUKUS ‘treaty’, Butler calls stalled Gaza ceasefire talks ‘distressing’

Former Treasury Secretary Ken Henry says Australia’s tax system punishes the young and is not fit for today’s “increasingly dangerous times”.

He’d told a productivity roundtable, convened by independent MP Allegra Spender in Canberra, that urgent tax reform is needed and will require co-operation between the commonwealth, states and territories.

In his opening remarks, Dr Henry described intergenerational inequity as “increasingly egregious”, declaring the current system poses a threat to social cohesion.

“The threat to the social compact posed by increasingly egregious intergenerational inequity makes an even stronger case now. If you wanted a tax system to punish the young, this is some of what you might do:

1. Tax labour income much more heavily than anything else; ensure that the personal income tax scale has sufficient progressivity to generate increases in average income tax rates over time, through fiscal drag, even when real pre-tax incomes are falling;

2. Apply very low rates of tax to consumption, economic rents, land and other forms of wealth;

3. Tax the capital incomes of older people (those who have savings) more favourably than the capital incomes of younger people (those who should be accumulating savings);

4. Impose punishingly high stamp duties on real estate transactions;

5. Tax capital gains more favourably than income derived from capital that supports productivity growth.

This is a reasonable description of the Australian tax system,” he says.

Independent MP Allegra Spender says that young people are being adversely impacted by an unfair tax system.

In her opening remarks to a productivity roundtable she’s convened in Canberra, Spender argues that shaking up the tax system could have environmental benefits, help equalise the generational wealth divide and rev up the Australian economy.

She says it’s bracket creep rather than interest rate hikes that are compounding cost of living pressures.

“It was startling to me to see in the RBA notes it is in fact bracket creep – not interest payments that have been the most significant hit to household budgets since the pandemic,” she said.

Jim Chalmers has welcomed independent MP Allegra Spender’s efforts to hold an economic and tax roundtable in Canberra today.

The Wentworth MP is bringing together experts to discuss tax reform and how to respond to Australia’s economic challenges.

Chalmers says he thinks it’s “terrific” Spender is bringing people together.

“I think it’s a really good thing that Allegra is bringing those experts together in Canberra today, as I understand it,” he says.

“I will obviously listen to and respect the views put forward around that table today.”

The treasurer says a two-state solution is the best pathway out of the cycle of violence between Israel and Palestine.

Asked about the French government’s decision to break away from many Western nations and recognise a Palestinian state, Jim Chalmers says that’s a matter for France.

“Australia’s position is very clear. We’ve called for an immediate end to the war in Gaza,” he says.

Jim Chalmers says a decision to write off almost $1 million in interest and penalties owed by one of former prime minister Paul Keating’s companies in 2015 was made “a few treasurers ago”.

Four Corners revealed the Australian Tax Office reversed a decision to bill Keating’s company.

Chalmers says the decision was made a decade ago under the former Coalition government and it was not something he was involved in.

“The ATO takes these decisions independently. That’s how the system works. And treasurers of both political persuasions don’t make commentary on the tax affairs of individuals or individual companies,” he says.

The treasurer says the decisions taken by boards and managers are relevant to the challenge of increasing Australia’s sluggish productivity growth.

ACTU secretary Sally McManus told ABC News Breakfast this morning that the decisions of managers have the potential the affect productivity in the workplace.

She says workers are often left feeling burnt out, partly because their managers are not involving them in decision making.

Asked what he thinks of McManus’s comments, Jim Chalmers says he believes the actions of boards and managers are relevant to the productivity challenge.

“When it comes to decisions taken by managers and by boards and by others, obviously that has implications for productivity,” he says.

“I think it would be unusual in the extreme, if the ACTU representing Australian workers, weren’t able to make that view public.”

Treasurer Jim Chalmers has stepped up to speak about the economy and productivity in Brisbane.

Chalmers says he’s pleased to see a number of stakeholders discuss what priorities they’d like addressed at an upcoming productivity roundtable in August.

The treasurer has previously signalled that the roundtable could also examine tax reform, among other issues.

Unions and businesses have put forward what reforms they’d like to see made ahead of next month’s meeting in Canberra.

He says the federal government is keen to use the opportunity to tease out solutions to the country’s economic challenges.

“This is our best effort to seek common ground around these big, persistent structural challenges, in our economy,” Chalmers says.

“We think it’s a good thing that that conversation that people are engaged in is robust. We think it’s a good thing that people are being blunt and upfront about their views.”

Foreign Minister Penny Wong says the Australian government is “deeply concerned” about conflict on the Thai-Cambodian border.

Armed clashes broke out on Thursday, which included gunfire exchanges, shelling and rocket fire, over a contested section of border area that each country claims as its own.

You can read more about why this has happened here.

In a post on X, Wong has urged both parties to de-escalate and resolve border issues peacefully.

The government has updated its travel advice for the area.

The reaction to Australia’s decision to lift biosecurity restrictions on US beef imports into Australia is continuing.

Health Minister Mark Butler has popped up on Channel Seven’s political panel with Liberal Senator Jane Hume, where he has been quizzed about the lifting of those biosecurity controls.

The import controls were one of the key grievances that led the Trump administration to impose tariffs on Australia.

Butler says Australia’s decision was not a trade decision and that the process to allow US beef into Australia had been ongoing for years.

“The American systems were assessed by our independent officials over the last several months and found to be up to scratch, up to the sort of arrangements that we have with our strict biosecurity laws,” Burler says.

Jane Hume has jumped in to add her say. She says the timing of the decision is suspicious.

Hume says a review into the decision is “not unreasonable”.

“What is it that Australia is gaining out of this decision? Is it because we want to secure that tariff exemption with Donald Trump? If that’s the case be explicit about it,” she says.

Mark Butler says a decision by Australia’s largest private hospital operator to close most of its psychology clinics is not due to a lack of clinicians.

In a staff meeting earlier this month, Ramsay Health Care revealed it would shut 17 of its 20 psychology clinics across the country by September.

Butler says he wasn’t aware of the decision before it was revealed by the ABC yesterday.

“More and more people are conducting their psychology sessions online rather than face-to-face and that understandably is placing some real financial pressure on traditional brick and mortar models,” he says.

“Ramsey and some others as well are moving to quite different models of care — that’s what’s going to happen with these 17 clinics.

“They’ll still be available to support all of the patients, as I understand it, who have been receiving care from those clinics.”

Health Minister Mark Butler says it’s distressing and disappointing that the United States and Israel have pulled back from Gaza ceasefire talks.

Overnight, the US and Israeli governments said their delegations left negotiations in Qatar, blaming the militant group Hamas for the lack of progress.

Speaking to ABC News Breakfast, Butler says the terrible humanitarian position for the people of Gaza is unsustainable.

“The suffering has to end, the hostages have to be returned, innocent civilians in Gaza have to stop being subject to the conditions that they’re subject to right now,” he says.

“The parties have to get back to the table and end this conflict.”

Earlier this week, Australia was among 28 countries which signed a joint statement calling for an immediate end to the war in Gaza.

News that Australia is removing its barriers on American beef imports has been welcomed here in Washington.

“For decades, Australia imposed unjustified barriers on US beef, effectively barring US market access,” US Trade Representative Jamieson Greer says.

“Yesterday’s decision by Australia marks a major milestone in lowering trade barriers and securing market access for US farmers and ranchers. President Trump is taking decisive action to confront unfair trading practices, and Australia’s decision to unlock market access for US beef is a direct result of his leadership.”

That last sentence contradicts the government’s official line: it’s been denying the decision has anything to do with Donald Trump. 

Trump specifically called out Australia’s beef restrictions when he announced his “liberation day” tariffs earlier this year. “They’re wonderful people and wonderful everything, but they ban American beef,” he said at the time.

But the comment from his trade representative gives no indication the beef backdown could save Australia from Trump’s 10 per cent tariff.

Sally McManus says she doesn’t necessarily agree that Australians would be better off with greater productivity.

The ACTU secretary has told ABC News Breakfast greater productivity doesn’t always translate to greater take home pay for workers.

“It’s not like companies have got automatic direct debits set up to their workforce, and if productivity goes up workers automatically get it,” McManus says.

“You can’t just assume just because productivity goes up, living standards are going go up for ordinary people. It’s a much more complex issue.”

Australian Council of Trade Unions Secretary Sally McManus says she will be calling to diversify Australia’s economy at the treasurer’s productivity roundtable in August.

McManus has told ABC News Breakfast that Australia’s economy is dominated by two industries — mining and banking.

The ACTU secretary says diversifying the economy in the face of the transition to renewable energy is “really important”.

She says she will also be calling for industries to invest in upskilling workers.

“If you see working people as something you look after and you invest in, you get better productivity because you’ve got a better skilled workforce as well,” McManus says.

We’ve got some more detail on the AUKMIN talks in Sydney today — the United Kingdom has just announced the two countries will sign a new “treaty” to cement the AUKUS pact and boost cooperation between the two countries on shipbuilding and submarine construction.

This new agreement was first flagged last year when the Defence Minister Richard Marles visited the United Kingdom, but both countries seem to have bedded it down quite rapidly.

The full details and implications of the new agreement aren’t yet entirely clear, but the UK government seems to be signalling Australia will make fresh investments in its industrial base to help deliver the next generation AUKUS nuclear powered submarine.

The UK government release talks up the economic benefits for Britain from the deal, saying the agreement will help deliver “up to £20 billion to the UK in exports over the next 25 years” and “create over 7,000 new jobs in UK”.

But the clearest signal here is to the Trump administration which is currently reviewing the AUKUS arrangement to ensure it fits with the President’s “America First” agenda.

The United Kingdom is making it clear that its commitment to AUKUS remains unwavering, with UK Defence Secreaty John Healey saying the “historic” treaty “confirms our AUKUS commitment for the next half century.”

“Through the treaty, we are supporting high-skilled, well-paid jobs for tens of thousands of people in both the UK and Australia,” he says.

Wentworth MP Allegra Spender says she’s asked the Treasurer Jim Chalmers to consider tweaks to the government superannuation taxation changes.

Labor wants to increase the tax rate on super balances over $3 million, which is likely to pass parliament with the support of the Greens in the Senate.

Spender says she’s asked Chalmers to consider giving people longer periods of time to pay tax on their super if they have liquid assets to sell.

However, she concedes it will likely pass through parliament without any major changes.

“There are ways he could make this tax change better or alternatively there are other reforms in super that could have broader support,” Spender says.

Independent MP Allegra Spender is holding a tax reform roundtable at Parliament House today, bringing together tax experts and economists from around the country.

It will take a look at Australia’s key economic challenges, including the country’s sluggish productivity.

It comes ahead of the Treasurer Jim Chalmers’ roundtable in August which will also look at how to address stubborn productivity growth.

Speaking to ABC Radio National Breakfast, Spender says the goal of her roundtable is to continue a broader push for tax reform and bringing the community on board.

“I do want people to be able to get informed to hear the real issues and the experts, and then be able to make up their own mind and build some … force around this as well,” Spender says.

“I think we do have an opportunity in this time of parliament and into the next election to potentially make the sort of significant reforms that can set up our community for the next decades to come,” she says.

Asked how an economic roundtable run by the representative for one of Australia’s most wealthy electorates will help struggling Australians, Spender says her forum will be made up of experts with a wide range of views.

Pressure is mounting among US Republicans for action against developed countries over pharmaceutical pricing.

While not specifically naming Australia, 18 Republican senators have written to the Trump administration’s trade representative and commerce secretary, arguing some developed nations have benefited from American innovation for too long, while suppressing the price of medicines.

They’ve called on the administration to appoint a chief negotiator to address the problem.

The US has long complained about Australia’s pharmaceutical benefits scheme, which both sides of politics in Australia have vowed to protect.

US President Donald Trump has threatened hefty pharmaceutical tariffs, which could hurt Australian companies exporting products to the United States.

There will be a fairly high profile meeting in Sydney today, with the Foreign Minister Penny Wong and the Defence Minister Richard Marles hosting their UK counterparts David Lammy and John Healey for annual talks at Admiralty House by the harbour.

The AUKMIN discussions will range over a host of different topics, but there’s likely to be a fairly sharp focus on defence and security issues this year.

The four ministers are expected to announce a new treaty focussed on shipbuilding and defence cooperation between the two countries, which are both trying to rapidly build up their industrial and military capabilities in an increasingly uncertain and perilous world.

We don’t have full details on this yet, but should have more information soon.

And while both Australia and the United Kingdom insist the Trump Administration’s review of the AUKUS pact is perfectly routine, the ministers are also very likely to have a detailed discussion about how they can ensure the technology sharing arrangement doesn’t fall victim to the US president’s “America First” agenda.

The United Kingdom will also want to use this meeting to highlight that its aircraft carrier the ‘Prince of Wales’ (along with a multinational strike group) has now arrived in Darwin to take part in Exercise Talisman Sabre.

It’s the first time the United Kingdom has sent an aircraft carrier to Australia in more than two decades, and the British government is calling it a clear demonstration of its “commitment to a free and open Indo-Pacific”.

Put crudely, the UK is signalling to China (and others) that it’s still willing to deploy military force to this part of the world, despite the demands imposed by Russia’s invasion of Ukraine.

Hi everyone! Welcome to another day of our federal politics live blog. It’s great to have you here!

I’m Josh Boscaini joining you live from Parliament House on a very chilly Canberra morning (yes, it’s minus 0.2 degrees Celsius here).

The first sitting week of the year may have concluded but there’s still plenty around in the land of politics to keep us busy. Let’s get straight into it!

Loading