The top Treasury official has defended Australia’s company tax rate as appropriate and supportive of a sustainable federal budget.

Treasury secretary and Reserve Bank board member Steven Kennedy said he was “quite comfortable” with corporate tax settings, which followed remarks by Minister for Industry Ed Husic.

At the The Australian Financial Review AI Summit last week, Mr Husic suggested corporate tax reform, investment allowances or other incentives should be considered in the context of boosting investment in technology such as robotics and automation.

Dr Kennedy said the Australia’s tax system was “not unusual or not particularly uncompetitive” compared to global standards and strong business investment in the country suggested settings were not too restrictive.

“There’s a long debate in Australia that we rely too heavily on income taxes, and particularly company tax, and people would encourage various governments to, for example, increase the consumption tax GST, or change the tax mix in some other way,” he said on Monday.

“Such conversations should be had and can be had over a long period of time, but I don’t see anything fundamentally unsustainable about the Australian tax system.”

Dr Kennedy said the focus should be on reducing inefficiencies in the tax system and “taxing in an appropriate level to meet our to meet our spending obligations”.

Given pressures on the budget, he said corporate tax levels were “appropriate”.

“I’m quite comfortable with where Australia’s company tax rate is,” he said.

In Australia, large companies are subject to a federal tax rate of 30 per cent on their taxable income and small or medium business companies firms a 25 per cent rate.

Finance Minister Katy Gallagher said Australia’s company tax rate was internationally competitive and the government had taken steps to incentivise investment in the budget.

“In particular, through the transition to net zero and our production tax credits,” she said during the hearing.

Dr Kennedy also remarked on barriers holding back home-building.

The limited supply of new dwellings as the population grows is making houses unaffordable for households to find a property to buy or rent.

In an opening statement, Dr Kennedy said the pandemic was in part responsible for sluggish construction.

Supply chain bottlenecks and the inflated cost of materials and financing stemming from the COVID-19 outbreak were compounding existing structural issues in the housing market that were “complex and had built up over time”.

“They involve all levels of government, as well as industry and community housing suppliers,” Dr Kennedy said in a an opening statement.

A lack of essential infrastructure in greenfield sites was flagged as a barrier, as well as labour shortages and low productivity performance in the sector.

This post was originally published on Michael West.