http://dictionary.cambridge.org/grammar/british-grammar/it-s-time?q=It%E2%80%99s+time The usage of the past simple in it's time + subject + verb is common, correct, and Cambridge confirms it (but doesn't explain it). My best explanation is that it is an exhortation, a wish for a situation which is currently hypothetical. In that sense, it is similar to e.g. I wish we tried .... If we tried, ... English has a limited range of tenses and the past simple has come to be used to express a hypothetical, alternative present.

We can use the expression it’s time + subject + past verb form to refer to the present moment. So 'I think it's time we tried to get along with each other" is correct. However, "I think it's time we SHOULD HAVE tried to get along with each other" is not correct. Should have + past participle can mean something that would have been a good idea, but that you didn't do it so it doesn't really make sense in this structure since it doesn't reflect the present moment. I hope this makes sense.