Treasury secretary Martin Parkinson has taken a thinly veiled swipe at the federal opposition for using "vague notions of fairness" to block key budget measures, as he warned living standards will fall without serious structural change to the economy.
And Communications Minister Malcolm Turnbull has hinted that Treasurer Joe Hockey should have released the Commission of Audit report sooner, comparing the decision to hold it back to the Rudd government's ill-fated decision to sit on the Henry tax review for six months.
Mr Turnbull has also criticised the taxation system for being overly reliant on personal income tax and favouring older people over younger people.
Communications Minister Malcolm Turnbull: "Looking at Australia’s tax regime, you would say that it is too tough on people earning income..." Photo: Alex Ellinghausen
In an address to the ANU's Crawford School of Public Policy on Monday, Dr Parkinson said the Abbott government's first budget would likely hit the less well-off disproportionately because the government had set a "distinct philosophical direction" to cut spending, rather than raise taxes.
The nation's top economic official said that if Australians wanted to maintain their standard of living, major structural reform to the economy was needed in the next decade.
"We have got to do more just to stand still,'' he said.
Federal Treasury head Dr Martin Parkinson
"We would need to see productivity growth at almost three per cent, in other words double our long run average."That means reforms in labour markets, capital markets, product markets and the government sector."
In a coded reference to Labor's political attack on the inequity of the Abbott government's budget, Dr Parkinson said it was unremarkable to say economic reform needed to be underpinned by fairness.
But "it's quite another thing to exhort to vague notions of fairness to oppose any form of reform. If you do that, if you use such an argument to defend what is an unsustainable status quo, what you are doing is consigning Australia to a deteriorating future".
The Abbott government had set a cash revenue cap of 23.5 per cent of GDP and decided that government outlays were too high, he said.
That meant that "if you are going to act on the outlays side, the people who will be most impacted are those who will receive most of the benefits".
In a later session, Mr Turnbull said one of the great mistakes of the Rudd government was to hold back the release of the review of the tax system conducted by Dr Parkinson's predecessor, Ken Henry.
Mr Turnbull hinted he may hold a similar view about the Abbott government's decision to hold back the release of the Commission of Audit as he borrowed a line from the political TV drama House of Cards.
"You may very well say that, but I couldn't possibly comment,'' he said.
"The strategic review of the NBN ...that lingered on my desk for days, literally for days and then it was out. We got it out as quickly as possible.''
The government released the Commission of Audit report in early May - two weeks before the federal budget - despite it receiving the final report at the end of March.
Turning to the tax system, Mr Turnbull declined to directly address concerns that Australia's top marginal tax rate will rise to an effective 49 per cent on Tuesday."We are too reliant on personal income tax and we are in a competitive world,'' he said.
"Looking at Australia's tax regime, you would say that it is too tough on people earning income, i.e. the entrepreneurs, the people who are growing [the economy], younger people working hard ... it's too tough on them and it is incredibly concessional to older people who have made their money."
Mr Turnbull also flagged an overhaul of Australia's media laws, saying there is a strong argument media transactions should only be subject to competition law rather than specific cross-media ownership laws.
"I think it is quite clear that the media is more competitive now than at any point during our lifetimes," he said.
"Media regulation was based on the concept of having a number of platforms which were limited ... then came along this uber platform of the internet which has revolutionised, and in some cases destroyed, media businesses.
"Here is the proposition. Given the fact that this uber platform the internet is available to everybody and given the fact there is more competition and diversity than there has ever been - in our lifetimes at least and possibly ever - why should there be ownership and control provisions relating to the media other than those that are not industry specific? In other words, let the ACCC deal with it."