Chris Smith:
Now, senior fellow and chief economist with the Institute of Public Affairs, Adam Creighton, is on the line right now.
Good day, Adam.
Adam Creighton:
Good morning, Chris.
Chris Smith:
Not everyone agrees with you, but then they love going personal when they don’t agree with you.
Adam Creighton:
Yes, that’s… Well, yes, that’s not good. I’ve certainly experienced that myself a lot over the years.
Chris Smith:
I’ve always up for a fight on issues. I’m always up for an argument over the pros and cons of policy, political philosophies and stuff like that, anytime whatsoever. But some people don’t want to have those arguments because I think they know they’re going to lose.
Adam Creighton:
Yes. And when they get personal, it generally means they’ve lost the argument then.
Chris Smith:
Yeah. Now, the gulf between the Prime Minister and the New South Wales Premier on tax, it’s such a nasty tax regime that emerged from the budget. I guess, Minns had to do that, didn’t he?
Adam Creighton:
Yeah. Look, I think he did. And good on the New South Wales Premier for saying that. I can imagine there would’ve been a few furious text messages flying back and forth after being said that at Labour Party headquarters because it was very embarrassing for the government. And I didn’t realise that Anthony Albanese and Chris Minns were not so close, but it’s true. The points Minns makes is the top rate of tax cuts in are at an extraordinarily low level in Australia. And it’s a very high rate, almost half. And just like the Premier said, “People are working effectively for half of the week for the government.” And New South Wales is a high-income state, so the average incomes there are higher than other states. So, it’s particularly punishing for New South Wales, and Sydney in particular.
Chris Smith:
When it comes to being taxed, are Australians one of the highest taxed nations in the world? I keep hearing that. What’s the truth?
Adam Creighton:
Look, there are some small European nations that are more highly taxed, but we are heading very rapidly in that direction. And we are much more highly taxed than we were, say, 20 years ago. And in terms of income tax, the Australian government relies on that for taxation revenue, basically more than any other government does. So, it’s an extremely high share of the federal government’s revenue.
And the reason they like it is because of bracket creep, basically. Because every year, the taxes is silently increased without passing any law or without asking anyone. And so over time, you end up with a huge revenue stream, and it just gets completely out of hand.
Chris Smith:
I found that former Prime Minister Paul Keating’s contribution to this debate very interesting. And I also found the headline misleading in the Australian Financial Review.
Adam Creighton:
Yes.
Chris Smith:
It says, “Oh, he backs the CGT tax.” Well, that’s not the whole story. The whole story is he’s all for the reduction in the discount attached to capital gains tax, but has also made the point in the interview done with the AFR that we’re all overtaxed when it comes to our income. So, what he’s basically saying is it’s okay to do what you’ve done with the CGT if you start reducing our income tax rates.
Adam Creighton:
Yeah. Look, that’s exactly right. And I completely agree with Paul Keating there. There’s nothing, in theory, wrong with the new tax structure, I think that the government’s introduced. I mean, it’s better to tax real gains rather than tax inflation, which is what we do now. And Keating points out the 50% discount’s very arbitrary and it’s not ideal. No other country does it that way. But the more important point he makes is that the overall tax rates that are applying, are far too high. And he said before, I think many times, 39% should be the absolute maximum tax rate anyone pays. And it’s currently 47, which is far, far higher.
So, I think he makes some good points, and I agree it is a little bit misleading, but he’s… I mean, he’s been very critical, I think, subtly of this labour government. Because he wrote last week, on the anniversary, of his banana republic comments, that he cut spending by about six percentage points of GDP as treasurer in the ’80s. But of course, that’s certainly not happening now. It’s actually much higher than it was then. And so, I think that was another valid criticism.
Chris Smith:
Yeah, very much so. And interesting, Bill Kelty is on the same track, and we discussed that last week on the programme.
Adam Creighton:
Yes.
Chris Smith:
He wants 39% as well. And I guess Labour, the politicians who are in power within Labour now, don’t buy the idea that when you incentivize people to therefore earn more, take home more, that it creates productivity, it creates jobs, it feeds into GDP. It actually kicks the economy forward.
Adam Creighton:
Yeah, that’s exactly right. And it’s not just the incentive effects to work more, but it basically reduces the huge tax avoidance industry that Australia has. It’s one of the biggest in the world, and it all revolves around getting around that top rate. That’s not productive economic activity, hiring lawyers and accountants to get around laws. That spending should be spent on productive investment, not doing that. So it really is very destructive, that top rate, and it drives a lot of the avoidance and behaviour that the government’s trying to stamp out. If it just reduced the top rate, there’d be a lot less incentive to, say, negatively gear or to use trusts or whatever. And the government just keeps trying to plug these strategies, but it just increases the overall tax burden greatly. And some people, some investors, certainly will move to other jurisdictions. There’s no doubt.
Chris Smith:
The ABC… I’ve got to say, the Australian newspaper did a great job today, rightly smashing the ABC on two fronts. Firstly, a shocking untruth they were told not to put to air over education funding.
Adam Creighton:
Yes, that’s a common one on the left. They always like to lie about this. And it’s because the state governments, obviously, overwhelmingly fund public schools. And then-
Chris Smith:
I should explain this. I should explain this now that I can. They had token lefty panellist Jane Caro on Behind the News, which is the old ABC Schools Show that’s played to all the kids at school. She said that more money was given to private schools than public schools, and that is palpably untrue. And the ABC was told prior to airing that how untrue it was.
Adam Creighton:
Yeah. Look, that is… Look, it is completely untrue. Of course, public schools get vastly more funding than private schools, and that’s also per student too. I mean, I’m just reading now. “Recurrent government funding for public schools is $24,900 a year per student. And for private schools, it’s about 14,000.” So, significantly lower. And that’s, of course, because families sending their kids to private schools contribute significantly themselves. And that’s, of course, over and above the taxation they pay. They don’t get a discount if you send your kids to private schools. So basically, in many ways, they’re paying twice. So, we should celebrate those families that do that because they significantly reduce the call on public funds. And Australia’s done very well, I would say. We’ve got some 30% or so students in private schools, and that means it’s a huge reduction in what the state would otherwise pay.
You look at the UK or the US, and barely 4% of kids go to private schools, whereas here it’s about 30. So, I think Australia’s done very well. And of course, it is patently false that the private schools get more money. Just totally ridiculous.
Chris Smith:
And still on the ABC, Jewish groups are furious with both ABC and SBS because they’re refusing to accept the definition of antisemitism. This woke left-wing base within anti, within the ABC, they still wield power, don’t they?
Adam Creighton:
Yeah. Look, they certainly do. I think public broadcast… Just as a general principle, I support free speech, even if it does upset people. But if you’re a public broadcaster, you’ve got to be particularly careful, I suppose. And I think they probably should have accepted this, especially given the climate of rising antisemitism and concern in that regard. With the definition that they don’t accept, there is one thing in there I kind of agree with them on. You can’t criticise Israel as much as, I think, some people should be able to if they feel they need to.
So look, it’s a vexed area. It’s complicated, lots of emotion. But look, I think as a public broadcaster, they probably should have accepted it.
Chris Smith:
I want to ask you one last question, getting back to what has created so many headlines from the budget last week. And Dennis Shanahan wrote today in the Australian that the Prime Minister has about 72 hours to wind some of this stuff back, and he obviously thinks that this could be fatal for the Albanese government. Will they roll some of it back as a token gesture? Do you think are they talking about that now?
Adam Creighton:
Yeah, I think they definitely will. I think they’ll roll back. They’ll do a concession, certainly, for startups, I think, almost for sure. But I think that will be it, though. I think they really nailed their colours to the mast on this, and I don’t think they can backtrack unless the Greens make it much worse and then the government uses that as an excuse not to pass it. So maybe, they’d be secretly hoping the Greens insist on crazy things in the Senate, and then that gives them a chance to say, “Okay, we can’t do it.”
Chris Smith:
That’s their out.
Adam Creighton:
That’s their out. So, it remains to be safe. The Greens have been a bit quiet over the past few days, so I don’t really know what they make of it all, but I have no doubt that they’ll try to make the tax rates even more punishing than they currently are.
Chris Smith:
Might be too complicated for them.
Adam Creighton:
So, that could be the government’s out.
Chris Smith:
Yeah, it could be. It might be too complicated for the Greens.
I’ll let you go, mate. Thank you very much. Enjoy the rest of your week.
Adam Creighton:
Thanks, Chris. You too.
Chris Smith:
Good on you. Columnist with The Australian newspaper, senior fellow with the Institute of Public Affairs, Adam Creighton.
This transcript of Adam Creighton talking on 2SM Mornings with Chris Smith from 21 May 2026 has been edited for clarity.
