Paul Keating, the former Labor Prime Minister, commented that the government should control spending, emphasizing major expenses such as the NDIS. Keating also expressed his view that the highest marginal personal tax rate in Australia, currently at 45 percent, is too high, describing anything over 39 percent as “confiscatory.” He stated that when the top rate rises above 39 percent, this confiscatory nature discourages people from making a dollar and undertaking innovative economic endeavors. Keating also proposed that the personal income tax scales should be indexed to maintain incentives and hold governments accountable, highlighting that fiscal drag is detrimental.
This viewpoint is supported by outgoing Tax Commissioner Chris Jordan, who compared Australia to New Zealand, where the top personal rate is at 33 percent. Jordan also pointed out the tax-related differences between the two countries. Keating argued that the GST, later introduced by John Howard and Peter Costello, did not alter behavior in the restorative manner his major tax reforms had promoted. As treasurer in 1985, Keating played a significant role in having the Labor government legislate changes such as capital gains tax, fringe benefits tax, and dividend imputations. Furthermore, under his influence, the company tax rate was reduced from 49 to 39 percent, and the top personal income tax rate from 60 to 47 percent. Subsequently, in 2006, the highest income tax bracket was adjusted to 45 percent.
Keating expressed support for a federal resources rent tax in light of surging commodity prices being paid to iron ore exporters. He also asserted that apart from personal income tax, the government could explore other revenue sources. Additionally, Keating emphasized the importance of spending discipline, pointing to the lack of prioritization in current government spending. He specifically mentioned the NDIS and its unsustainable cost. Keating warned about the impending repercussions, asserting, “the pain’s got to come somewhere.”