A former head of Treasury has slammed the Abbott government and the Labor opposition for entrenching Australia in a "non-debate" about budget fairness on one hand and ruling out much-needed tax reforms on the other.
Dr Martin Parkinson, who was replaced as Treasury secretary in January, says Australia's prosperity is more at risk than both sides of politics realise.
Dr Parkinson told a conference at the Australian National University on Monday there was too much spare productive capacity in the economy, as well as a serious lack of demand from consumers.
He said Treasury was projecting economic growth to pick up from 2.5 per cent to 3.5 per cent by 2017-18, due largely to a pick-up in demand, but there was a real chance that would not happen.
Serious reforms had to be made to improve the health of the budget and to boost economic growth, but neither side of politics seemed to realise how serious the problem was, he said.
He criticised both sides for taking serious reform proposals off the table for political reasons, and singled out Labor's recent attempt to reject the Abbott government's changes to the pension assets test, which passed the Senate with support from the Greens last week, as an example of the poor politics doing Australia harm.
"We find ourselves in a position where everything is seen through a prism of fairness, where the notion of fairness is vague," Dr Parkinson said.
"We need to have a much more mature debate, and I hope we can get there, because if we don't then we may well have quite a different set of circumstances."
"Once you get into this debate where you see everything through the prism of fairness, what is your default? ... [Does it mean] I can never take a dollar away from anyone? So if I want to take away the generosity of tax concessions for the high end in superannuation but if that's now unfair then I can never do anything?" he asked.
Labor senator Penny Wong, who was in the conference room, said no one was saying that you ought not to have reforms which hurt any particular group.
But the welfare system in Australia was already one of the tightest, so if the government wanted to make budget savings then it should not start by trying to make savings from aged pensioners, she said.
Dr Parkinson then said Australia needed to have a "richer discussion" about its budgetary and economic problems.
The Abbott government has ruled out making changes to superannuation tax concessions and negative gearing, although Labor has suggested there is some room for change in those areas.
Dr Parkinson said Australians needed to be debating a whole series of measures that have been ruled off limits.
"Nothing can be taken off the table, that's the problem," he said.
