Canberra is abuzz with speculation about Treasurer Jim Chalmers’ future after five interest rate hikes in a year, controversial tax changes, a slumping property market and stubbornly high inflation.
Prime Minister Anthony Albanese is also feeling the heat with Labor’s primary vote slipping under 30 per cent in a majority of the published polls, as the prolonged cost of living crisis bites voters.
For this week’s episode of The Issue podcast, 7NEWS has talked to the boss of Australia’s largest business group – the Australian Chamber of Commerce and Industry (ACCI).
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ACCI CEO Andrew McKellar has a close working relationship with the prime minister and treasurer.
McKellar’s text messages with Albanese helped secure a delay to the Australian Tax Office’s credit card ban.
ACCI CEO Andrew McKellar speaks with 7NEWS. Credit: 7NEWS
Nevertheless, he says he’s not going to “pull his punches” as business owners suffer from deteriorating mental health due to the state of the economy.
McKellar didn’t give a decisive answer when asked if Jim Chalmers was the best person for the role of treasurer moving forward.
“Oh, look, that’s not up to me, but obviously, look, yes, we have a positive relationship and engagement with him, with the Prime Minister, with other senior ministers,” McKellar told The Issue.
“They make the decisions, not business, but business has to be there contributing with the good ideas.
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“We don’t pull our punches when we disagree with government. We make that very clear and there are areas of policy difference.”
Points of difference
Taxes and industrial relations policy are at the top of the list of issues that McKellar is pursuing with the Government.
ACCI is supportive of Independent MP Allegra Spender’s proposed changes to the Capital Gains Tax (CGT).
The Wentworth MP has proposed a flat, across-the-board, 40 per cent CGT discount for all “active assets,” including businesses, shares, and employee stock options.
The plan would still apply the government’s inflation-based CGT discount to “passive assets” such as investment properties.
McKellar says: “It’s targeted and focused on active business assets, and that’s something we really would urge the government to have a look at.”
Inflation and productivity challenge
The business lobby, that represents small and big businesses, also wants the Albanese Government to cut its spending levels to relieve pressure on entrepreneurs and households.
Currently federal government spending as a share of GDP is 26.9 per cent. McKellar says it should go to 25 per cent or lower.
That would mean a cut in real terms of nearly $140 billion over four years.
“That really needs to be down at a lower level,” McKellar said.
“We can’t tax our way to prosperity. Honestly, whilst there were changes in the most recent budget, that was far from comprehensive tax reform that’s required for the Australian economy.”
He says Labor could improve productivity by cutting red tape and encouraging businesses to use technology like artificial intelligence.
What the government is doing
The Prime Minister and his Expenditure Review Committee (ERC) are looking at where to make spending cuts in the upcoming mid-year budget update (MYEFO).
It’s expected that subsidies for home batteries and electric vehicles may be scaled back, with the savings possibly above $1 billion.
The government has subsidised the installation of more than 600,000 batteries since July 2025.
Mckellar says spending levels need to be cut. Credit: 7NEWS
Environment Minister Murray Watt says voters should expect to see a lot of speculation between now and the release of MYEFO in December.
“I am not going to comment on any of those suggestions,” Watt said.
“Discussions are still underway… about what we will do.
“It has been very clear from the Treasurer, Finance Minister and others that we will take the opportunity to find further savings across government.”
You can catch more of The Issue on Listnr or watch full episodes on our YouTube channel.
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