With just ‘three days to inform the next three budgets’, here’s how Chalmers’ roundtable kicked off

After weeks of build up, Treasurer Jim Chalmers has set out his objectives for the government’s three-day economic reform roundtable, which kicked off on Tuesday.

Most importantly, to make our economy more productive over time, because that’s the best way to lift living standards and make people better off. To make our nation more resilient in a more contested world. And thirdly, to build on the budget repair we’ve begun, to make it more sustainable.

Chalmers said the discussions would be informed by what he termed, possibly inspired by 1970s glam rockers The Sweet, a “boardroom blitz”. This included meetings with business leaders, union leaders, more than 40 ministerial roundtables, and almost 900 submissions from across the country.

Looking for concrete ideas

In his opening remarks on Tuesday, Chalmers emphasised the need for “concrete ideas” that did not add to the cost of the federal budget.

The closed-door roundtable brings together about 25 representatives of business, unions, superannuation and civil society, as well as current and former Treasury secretaries.

“Resilience” was the theme of the first day. Treasury explains that resilience helps the economy withstand disruption and shocks, whether that comes from trade, technology or climate impacts.

Reserve Bank Governor Michele Bullock in her opening remarks highlighted the international headwinds facing the domestic economy. Her speech has not been released. But we can get some idea of the Reserve Bank’s concerns from a recent speech by her deputy, Andrew Hauser:

the tectonic plates of the global economic system are once more in flux, as free trade is rolled back; geopolitical alliances shift; climate change accelerates; and productivity growth slows to a crawl in most developed countries.

There are certainly significant disruptions to test our resilience at the moment. In a briefing paper, Treasury noted the global economic outlook is very uncertain.

Treasury is too polite to attribute this uncertainty directly to the erratic policies of US President Trump. It does, however, refer to “new discriminatory trade policies” – and their source is President Trump.

The price of gold, a commodity whose price often rises at times of uncertainty, is near a record high.

Five economic challenges

Drawing on the 2023 Intergenerational Report, Treasury warns of five major forces reshaping Australia’s economy:

• global fragmentation. Australia would be particularly vulnerable if negotiations fail to lower the tariffs the US is currently threatening to impose on China, which would virtually halt its exports to the US. China would then have less demand for Australia’s coal and iron ore. China accounts for one-third of our exports.

• ageing population. This will increase government spending on health, aged care and pensions while lowering tax revenue.

• shifts in the economy. As the services sector becomes a larger proportion of the economy, productivity becomes harder to improve (and measure).

• rapid changes in technology. Adoption of artificial intelligence will improve productivity for some workers but displace others. If used well, it can make the community wealthier, increasing demand for jobs it cannot do.

• the transition to renewable energy. Decarbonisation of the economy will create new jobs while reducing the demand for others.

While productivity performance has been poor, in other ways Australia has handled recent economic challenges well.

Inflation has been returned to the 2–3% target range. Employment has been around its largest-ever share of the working age population. Unlike most wealthy countries, Australia’s economy has not contracted in any quarter since the COVID recession.

The second session today discussed the recognition of skills, including of migrants.

Australian Industry Group chief executive Innes Willox, who is attending the roundtable, commented:

People who have qualifications that are not recognised, be that migrants or people trying to transfer between states or even between occupations – big problem there. There’s agreement that we have to work through that pretty quickly to take advantage of people we have here.

Results may take time

The treasurer has called the roundtable “three days to inform the next three budgets”. So we need to be patient to see the results from it. The government may want to take some measures to the next election to secure a mandate before implementing them.

Where we may see some quicker action are areas where there may be bipartisan support, such as reducing regulations that delay construction of new homes. This would be consistent with the praise Chalmers has given to the recent book Abundance in which this is a prominent theme.