Editors 2025
This year marks fifty years since the Taxation Review Committee, chaired by Kenneth W. Asprey, published its landmark report on the Australian tax system. This Special Issue of the Journal of Australian Taxation recognises the profound importance and continuing relevance of the Asprey Review to tax reform and tax scholarship in Australia and abroad. The Asprey Review undertook a sweeping, critical analysis of the entire Commonwealth tax system on a scale and depth unmatched by any previous or subsequent Australian tax review. As Tilley puts it, the Asprey Review articulated a ‘blueprint for reform’ of the whole Australian tax system.
The background to the commissioning of the Asprey Review in the early 1970s was an environment of high inflation and increasing dissatisfaction with the tax system. The Asprey Committee itself noted the ‘urgency of a radical discussion’ on ‘tax reform.’ Salary and wage earners were subject to increasingly high personal tax rates whereas ‘tax avoidance and evasion flourished’ among ‘those who could manipulate the form of their income.’ In April 1972, Billy Sneddon, Treasurer in the McMahon government, announced the establishment of an expert body to conduct a comprehensive public inquiry into the tax system. The functions of the Committee of Inquiry were stated in broad terms—to inquire into the ‘structure and operation’ of the Commonwealth tax system and to formulate proposals for reform, either by way of ‘making changes’ to the existing system, ‘abolishing any existing form of taxation’ or ‘introducing new forms of taxation.’ These expansive terms of reference were subject to the requirement of a ‘need to ensure a flow of revenue sufficient to meet the revenue requirements of the Commonwealth.’ On 14 August 1972, the Honourable Mr Justice Kenneth W. Asprey, a Judge of Appeal of the New South Wales Supreme Court, was appointed as Chair of the Committee. The other members of the Committee named as contributing to the final report were Sir Peter Lloyd, Professor Ross W. Parsons, and Kenneth Wood. The Committee commenced its work prior to the 1972 federal election, advertising widely throughout Australia for submissions in October and November 1972. The Australian Labor Party led by Gough Whitlam, which had campaigned on a platform of major social reforms, including national healthcare, free tertiary education and the abolition of conscription, was elected to office in December 1972, and the Whitlam Government confirmed the continuation of the Committee’s work.
The Asprey Review engaged with its broad terms of reference by taking a principled, long- term approach to its analysis and policy recommendations. The Committee stated that it had eschewed the approach of suggesting amendments based on existing legislative provisions, and had instead set out to ‘first settle the broad outline of the kind of tax system it would like to see established.’ The Committee noted at the outset that its terms of reference prevented it from suggesting ‘any general set of measures’ that would ‘reduce total taxation below revenue needs,’ and that any recommendations that would reduce revenue in particular areas must be matched with proposals that increase revenue in other areas. Working within these parameters, the Committee outlined three guiding principles or criteria that informed its analysis and recommendations: fairness, which it stated was used interchangeably with equity; simplicity, which reflected a concern that tax measures should not be unduly complex;16 and the economic concept of efficiency, which meant that the tax system should not affect the attractiveness of different types of investment, work or business organisation. Reflecting its analytical approach, the Committee acknowledged that these criteria can conflict with each other, noting that the tax policymaker ‘repeatedly’ has to make ‘choices between simplicity and efficiency, or fairness and simplicity or fairness and efficiency.’
Analytical rigour is a standout feature of the Asprey Committee’s report. Tilley notes that the Committee’s analysis of the tax system is ‘strong across economic, legal and accounting concepts.’ The Committee’s report could credibly be viewed as a coherent and cogent articulation of the key elements that should define the Australian tax system. The report bears the hallmarks of a thesis, as reflected in its foundational chapter on the income tax base. Here the Committee draws on economic theory to endorse a broad concept of what might, in theory, constitute income for tax purposes. Citing Henry Simons’ 1938 work, Personal Income Taxation (which built on the earlier work of R.M. Haig), the Committee sets out various receipts captured by a comprehensive notion of taxable income, noting that it would extend, inter alia, to capital gains, bequests and gifts, lottery and gambling winnings, retirement benefits, lump sum compensation for physical injury, and non-money income. The Committee would rely strongly on this comprehensive concept of income in its analyses, most notably in its recommendation for the imposition of a capital gains tax.
The Asprey Review’s recommendations were largely unimplemented in the ten years following release of the report. However, it should be noted that the regime introduced in 1979 in Division 6AA of the Income Tax Assessment Act 1936, which imposes deterrent rates on income alienated to minors, was based in an Asprey recommendation. Most significantly, the impact of the Asprey Review is seen in the period 1985 to 2000, when major reforms to the Australian tax system were enacted that were based in Asprey proposals. Evans and Krever observe that ‘the Hawke Labor Government seized upon the opportunity to develop a comprehensive reform program that incorporated most of the recommendations of the earlier [Asprey] report,’ and Journal of Australian Taxation 2025 Vol 27 No.2 – Special Edition – Asprey Report – 50 years on note that the government’s Draft White Paper of 1985 ‘largely echoed the recommendations of the Asprey Committee a decade earlier.’ During the 1980s, the Hawke Government adopted the Asprey Review’s recommendations for a capital gains tax, a fringe benefits tax, dividend imputation, and a foreign tax credit system. The next major reform—the introduction of a valued added tax (the GST) by the Howard Coalition Government, which was announced in 1998 and commenced in 2000—also ‘drew upon the Asprey proposals.’ In evaluating the impact of the Asprey Review, Evans and Krever, writing in 2009, note that ‘its work stands out as the ultimately most successful of all Australian tax reviews.’ To the sameeffect, writing in 2020 (after a further Commonwealth tax review chaired by Dr Ken Henry), Tilley commented that ‘the Asprey Report stands as Australia’s most important and influential foundational tax review.’
In the first article of this special issue, Paul Tilley concludes that although the specific recommendations of the Asprey Review are no longer relevant, the Haig-Simons framework of the review could be used to inform contemporary tax reform. In the second article, Chris Evans, Richard Krever, and Peter Mellor refer to the wealth transfer tax envisaged by the Asprey Review as something that would be introduced in an ideal world. In recognising the limited prospects of wealth tax reforms, the authors suggest that a paring back of overly generous CGT concessions may represent a ‘best second-best’ reform alternative. In the third article, Adrian Sawyer provides a New Zealand perspective on the Asprey Review and compares and contrasts it with New Zealand’s McCaw Review. Sawyer refers to Asprey as Australia’s most successful review, acknowledging that its recommendations have led to significant tax reform, while noting that the uptake of some recommendations has been slow or limited. In the fourth article, Helen Hodgson adopts a gender lens in analysing the choice between the individual or family as the appropriate unit of taxation. In the fifth article, Thea Voogt critically analyses the Asprey Review’s recommendations on income tax provisions for primary producers and refers to a ‘considerable tension’ between tax policy and agricultural policy. In the sixth article, Kerrie Sadiq and Ashesha Weerasinghe argue that the Asprey Review’s approach to tax expenditures may represent both achievement—in recognising the fiscal and policy importance of tax expenditures— and missed opportunity—for failing to fully embrace Surrey’s tax expenditure framework. The authors recognise that tax expenditures were not recognised formally in Australia until the 1980s.
We are deeply grateful to Monash law graduate Oliver Dyson (KPMG Law) for his outstanding editorial assistance.
John McLaren, John Minas and Sonali Walpola
Editors 2025