Ms SPENDER (Wentworth) (11:11): I would like to question the government today about two critical areas of economic reform—principles for tax reform and fiscal rules. I believe these are interrelated and absolutely critical to sustainable budget management.

First is tax reform. I was very heartened to hear the Treasurer acknowledge the need for the tax system to better help young people build prosperous lives, to drive productivity and investment in our businesses, and to be on a sustainable footing. I acknowledge his openness to taking on a tax reform agenda. This is hard to do. I believe there is an opportunity to work towards challenging but necessary economic reforms that set Australia up for the coming decades. I've been championing tax reform and productivity reform since I got to parliament, and it is heartening to see the government back this approach. I believe that if we fail to act on significant economic reform, we will stagnate—we will lock in stagnating living standards.

I want to question the government on its frame for tax reform. Specifically, I ask the government and the Treasurer whether the government will commit to a revenue-neutral approach to tax reform where the reform—at a minimum—does not seek to increase the overall tax burden on Australians over the short-to-medium term. I believe that model is absolutely critical to successful tax reform in this country, and the reasons for adopting that model are various. Firstly, and very importantly, the Australian people do not support higher taxes on average. This is borne out in survey after survey. They are suspicious of tax reform that they feel is just increasing money to the government rather than to them. Secondly, the current federal tax take is relatively high in historical terms. Thirdly, the history of significant Australian tax reform, particularly the Hawke-Keating reforms and the Howard-Costello reforms, adopted this model of, at most, revenue neutrality and, at best, reducing the tax burden on the country. We should learn from their examples. Finally, because the opposition have also acknowledged publicly that they are open to tax reform that does not increase overall tax burden in the country, this means there is a rare opportunity to get the reform through the parliament—I should hope!

The second area I would like to question the government on is fiscal rules. This pre-election budget passed an important milestone; government spending reached 27 per cent of GDP, the highest point since 1986, outside the COVID-19 pandemic emergency measures. There have been real cost-of-living pressures that the government have sought to address in recent times, and I acknowledge that. However, the growth in government spending has been far too high over the last three years. In fact, nominal expenditure rose more than eight per cent last financial year, and this is unsustainable. Global economic agencies, including IMF and OECD are calling on governments around the world—including Australia—to adopt clearer fiscal rules to avoid further burdening future generations with debt and further worsening our intergenerational compact.

The government may well and have historically often pointed to the back-to-back surpluses they've delivered and the significantly improved budget outcomes for the financial year 2024-25 as evidence of their prudent fiscal management. However, in all three years, there has been a structural budget deficit, and at the same time the government has committed to significant off-budget spending that has run into the tens of billions of dollars.

There are going to be further demographic shifts in Australia which are going to put really significant extra burdens on the Australian government's budget. These are likely to be the shift to an older population and Defence requirements. These shifts are real, and they are growing. It makes it even more important right now to better control government spending. I do acknowledge the work that the government has done, in the case of aged care, with the opposition and the House more broadly, and also on the NDIS, acknowledging that there is a problem here in the sustainability of budget spending. But this is not enough.

To drive spending restraints, we need fiscal rules and a proper commitment to a charter of budget honesty. I acknowledge that governments of all stripes have been riding roughshod over the Charter of Budget Honesty over the last 15 years or so. So my second question to the Treasurer and to the government is: will this government commit to implementing key fiscal rules, including spending growth that is less than GDP growth over the cycle, and return to its obligations under the Charter of Budget Honesty?