Canberra 7 February 2016. Malcolm Turnbull told The Insiders on ABC TV this morning that his government is discussing options for tax reform and has made no decision on changes to the rate of the GST.
On the program, Mr. Turnbull told Barry Cassidy, that any change to the tax system operating in Australia will have to be fair and drive jobs and growth.
The Turnbull government is discussing options for reform and has allowed the debate to continue in spite of a political campaign by Labor to seek to benefit in the polls from fear about a tax increase and increases to food prices. The government encouraged discussions that have enabled his government to make a carefully considered analysis that is "evidence based".
Mr Turnbull said that an increase in the rate of GST would, by itself, be a negative to growth. He went on to say "We pay more than enough tax"
Mr Turnbull said " I remain to be persuaded that some tax mix changes would deliver a benefit."
Not many years ago, Wayne Swan and Penny Wong misled the population with claims that they had the budget under control and that they would deliver a surplus before the ( then ) next election. Clearly, that was incorrect and now Bill Shorten is conducting a deliberate scare campaign to derive a political benefit from essential discussions about ways to fix the huge income versus expenditure issues that Labor incompetence or irresponsibility created.
It would seem that Labor and Shorten, as the front man, are seeking to return to government by scaring the population. There seems to be a cycle where Labor stuffs up the economy and the coalition is left with no choice but to make unpopular changes. Labor then seeks to return to power on the back of the ill will that they ferment when their mistakes require unpopular corrective action.
Governments change on a small percentage of votes. At an election if an extra 3% of the population vote for a Labor ( or their running mates, the Greens ) because they fear a tax on food, a Labor government could return this year. That is why Shorten went on a lettuce blitz during the holiday period. It made headlines that caused some people to think that their food will cost more because of Malcolm Turnbull.
Today, Malcolm Turnbull reiterated that his aim is to seek ways to structure the tax system so that it delivers "fairness". He mentioned the damage being caused to Australian families by bracket creep. Which is causing PAYE workers to pay more personal income tax than they should because their income has gone up in line with inflation but the tax scales have not been adjusted.
Australia expects Malcolm Turnbull and his government to make changes that will drive growth and jobs. A double dissolution is a constitutional option to bring both houses of parliament together after a general election to discuss changes to tax, the rule of law in the construction industry, and oversight of union governance.
The author is the editor of Business Daily
TRANSCRIPT
7 February 2016
Interview with Barrie Cassidy, Insiders, ABC TV
BARRIE CASSIDY:
Prime Minister, welcome to the program.
PRIME MINISTER:
That was very good advice, wasn't it?
BARRIE CASSIDY:
It was. And look, in a sense, she captures a mood, because when you were elected there was this sense of relief after the run that we've had, and I think people want you to succeed. And when she said, "I hope you don't mess up", she might've been saying...
PRIME MINISTER:
That's not what she said actually, but anyway...
BARRIE CASSIDY:
But she might've been thinking that an increase in the GST would be precisely that.
PRIME MINISTER:
Well, I'm not sure what she was thinking about the GST. We didn't discuss that. But the issue with any changes to the tax system, particularly a really big one like increasing the GST is that you have to be satisfied that it is actually going to deliver an improvement in GDP growth. In other words, it's got to drive jobs and growth. And unless you can be satisfied that it's going to do that, and that it's going to be fair, of course, which is equally important, then you wouldn't do it. So, what we have been doing – and I saw the introductory segment a moment ago – what we have been doing, as you can see is looking at this and a number of other tax reform changes or tax changes very, very carefully. They're very complex and they deserve careful discussion and it's good that, by not shutting it down, as previous governments have done, in a panic, we've allowed a debate to continue. There've been a lot of contributions – there's been differences of opinion in the Liberal Party, differences of opinion in the Labor Party, differences of opinion in the economic commentariat – and all of that has enabled us to make a very careful and considered analysis of it. Obviously with Treasury doing the analysis with some outside assistance and we are coming to a conclusion. But it will be evidence based. It's not going to be a political decision. Whatever policies we take as part of our tax reform package, Barrie, will be ones that we are satisfied will deliver the growth and jobs outcome that we want.
BARRIE CASSIDY:
And it’s true, there's no modelling that you have in front of you at the moment that shows that an increase in the GST would in fact give you that significant boost in productivity and growth that you want?
PRIME MINISTER:
Well, an increase to the GST by itself would obviously be a negative to growth. The question is: what do you do with the proceeds? Now, on the Labor side, at least from the Premier of South Australia, Jay Wetherill, he has said we should raise the GST, take the $30 billion or most of it, and spend it on health and education and Jay Wetherill has got out there and said taxation is good, we should be taxing more, we should be paying more tax. Well, we disagree with him on that. We think we're already paying more than enough tax and we want tax as a percentage of GDP to come down. So we disagree with the South Australian Labor Premier on that.
The other argument that's been put for the GST is to say: increase the GST, raise $30 billion-odd, and then deploy as much of that as you don't need for compensation to people on low incomes, people on welfare and so forth, deploy that to reduce personal income tax. So you've got the negative of the GST increase versus the positive of cutting personal income tax. And weighing that up and all of its complexity and determining whether, out of that you get any substantial net growth, that is the matter of careful analysis and that's what I've been looking at. So it's not a question of politics here. At this stage, I remain to be convinced or be persuaded that a tax mix switch of that kind would actually give us the economic benefit that you'd want in order to do such a big thing.
BARRIE CASSIDY:
That's the point. If you remain to be persuaded how on earth would you go and convince anybody else of this, so why don't you just drop it now?
PRIME MINISTER:
Barrie, we are following a very careful due process. I'm running a Cabinet Government, and the Cabinet – the Expenditure Review Committee of Cabinet and the Cabinet considers all these things and we make decisions collectively and all I've sought to do, is to ensure that the media and the public, of course, understand that we're not getting ahead of ourselves. I think people were drawing the inference that perhaps because of Bill Shorten's scare campaign through the green grocery aisles of Australia that we had actually made a decision to change the GST – and we had not. We were, as I've said, I've been very consistent about this, we've been considering it. The objectives of this or any other tax change have got to be fairness, no increase in net taxes, we don't want to increase the total tax take, and of course, it's got to deliver a strong growth and jobs outcome otherwise it isn't worth the trouble and expense of making the change.
BARRIE CASSIDY:
And it's had a good run, the debate has been going on for some time now. I presume when Cabinet does finally get together, that will be the end of it?
PRIME MINISTER:
Well, the Cabinet will make a decision. The timing of that is a matter for Cabinet. But you know, just remember, I'm the Prime Minister of Australia, I'm not the President. I'm the first among equals and we are running a Cabinet Government. We go through these things carefully, we talk about them in that committee, that is the Cabinet. And that's how in the Westminster system we have in Australia, Prime Ministers and their colleagues make decisions.
BARRIE CASSIDY:
Laurie Oakes wrote at the weekend that adventurous Treasurers combined with a more politically cautious Prime Minister is not a bad combination. Is that what's going on here that Scott Morrison was a bit more adventurous than the politically cautious Prime Minister?
PRIME MINISTER:
I don't want to run a commentary on Scott or myself. My assessment of the GST increase proposal is purely policy based. I'm looking at the economic – let me give you another example what have I'm talking about. There are tax reform changes, particularly at the state level, which every economist will tell you would give you a very significant lift to GDP. For example, if you were to replace stamp duty on property transactions, and replace it with a land tax, a general land tax, there isn't a tax economist or theorist in the country that wouldn't tell you that would be a good move, because taxes on transactions like sales of property obviously inhibit trade, they slow down economic activity. Everyone understands that. So that would get a policy tick. Political difficulty, however, is very, very high, possibly 11 out of 10, which is why nobody other than in the ACT has attempted it. You have got to first decide: is this policy is going to give you the economic outcome you want? Then you have to assess the practical politics. With the GST income tax swap proposal, it has not yet passed that first test and that's what the analysis is being undertaken. So we have not made a decision on that yet, and it does pose a lot of complexity, particularly in the area of compensation.
BARRIE CASSIDY:
And if you do take it off the table, what's left? Surely you want to do something about bracket creep, given that the average income earner is about to move into the second highest bracket?
PRIME MINISTER:
Yes, that's true and that is the – well, obviously we don't have the good fortune - it wasn't luck, it was due to hard work, but we don't have the good circumstances of John Howard and Peter Costello of having surpluses so we can say the government can give some back of those surpluses to taxpayers. We're running a deficit, so we've got to find money for tax cuts from savings in expenditure and we have a number of savings as you know that we have not yet been able to get through the Senate. The Labor Party opposes – the Labor Party, having created the mess, denies the means of cleaning it up through their opposition in the Senate. Or you find other areas of tax, and plenty that have been talked about, some corporate concessions, superannuation, there's a whole range of areas, where people have argued and made cases that you could make a change here, recover some money for the revenue here, and then apply it to, for example, mitigating bracket creep in the personal income tax scales. So we're looking at all of these areas. This is a very thorough evidence-based examination, and Barrie, I'm not going to pretend that at the end of that process you've got to make some practical political decisions. You know, you can have the best idea, best policy in the world but if you can't persuade people to accept it, then it's not going to fly.
BARRIE CASSIDY:
Yeah.
PRIME MINISTER:
And we have not yet come to the final landing on the policy outcome and nor should we, because it is very complex and Australians expect me and my Government to go through this very carefully.
BARRIE CASSIDY:
And one you didn't mention is negative gearing, but I assume that's still on the table, you might do something around negative gearing?
PRIME MINISTER:
Barrie, everything is being looked at. I don't want to be taking anything off the table.
BARRIE CASSIDY:
Now, you did say on Friday in Adelaide that, in terms of tax reform, that the white paper will effectively be rolled into the budget, effectively a white paper there and you've also promised to set out these reforms before the election. The logic of that is there will definitely be a May budget, and the extension of that is there won't be a double dissolution election?
PRIME MINISTER:
Well, you should assume that there will be a May budget, and my assumption is that the election will be in the usual time, you know, August, September, October. But it is open to us to go to a double dissolution – not as a tactical measure, if we go to a double dissolution it will be an order to use the deadlock-breaking provision of the constitution, because the Senate has blocked important elements of legislation, most notably, the reforms to trade union governance, the Registered Organisations Bill, and in all likelihood, so it would seem, the restoration of law in the construction sector by reinstating the Australian Building and Construction Commission.
Now, political commentators write about double dissolutions as though they're threats and they're tactics. The constitution has a mechanism, Section 57, which says that if the Senate and the House can't agree, a Bill is knocked back by the Senate twice in three month, you can dissolve both Houses of Parliament and then after the election they come together in a joint sitting and vote again on the Bills. Because the House is twice as big as the Senate, that means that unless your win was wafer-thin, whoever won the election would carry the day in the joint sitting. That's the only reason we would go to a double dissolution and it isn't a threat, it isn't politics, it is simply using a means to resolve a deadlock in a manner that's been set out in the constitution.
BARRIE CASSIDY:
Right. Now, in the High Court decision on asylum seekers and offshore detention, you won the legal argument there, but what the moral argument, to return particularly the children that were born in Australia, so they're not being returned, they'd be sent to detention for the first time and the argument that that would expose so many people to considerable trauma?
PRIME MINISTER:
Well, this is a big – a very big issue, Barrie. Let me just say this: managing the security of Australia's borders is one of the most challenging problems, issues that the Australian Government faces. We know that without a strong line on border security, without that, without our policies, we know what happened. Kevin Rudd conducted an experiment. He abandoned the policies of the Howard era, which we have re-established. He abandoned them...
BARRIE CASSIDY:
He introduced offshore detention.
PRIME MINISTER:
No, he abandoned them – abandoned them – in his first incarnation as prime minister. And we had over 50,000 arrivals, over 1,000 deaths at sea. It was a disaster by any measure. When he came back for a short period as PM before the 2013 election, he established – he acknowledged that Labor's policies had failed. He acknowledged that they shouldn't have undone the Howard government policies. And he established the principle of offshore processing again at Manus Island and at Nauru. And that has been continued.
Now, unpicking that, we have to remember this: if we unpick that, and that results in the people smugglers exploiting it as a marketing opportunity – which they undoubtedly will – then we will see more people, more vulnerable people being exploited getting onto leaky boats trying to come to Australia.
BARRIE CASSIDY:
Sorry – even allowing for that, though, is there an opportunity to be selective in this case? Can you look at individual cases, like the 5-year-old, for example, who was raped – and do something there without unpicking the whole process?
PRIME MINISTER:
Ok, Barrie, what we are doing – and I will choose my words carefully because everything I say, everything I say is being looked at in the finest, most detailed way possible by the people smugglers who will look at any opportunity to get back into business. We've put them out of business. I want to say this: people who seek to come to Australia with people smugglers will not succeed. They will not settle in Australia. We are providing every incentive to the people on Nauru to go back to their country of origin. We're providing them with considerable incentives and assistance to do that. We're providing them with incentives to settle in other countries. But if we don't take a firm line here, we know what the consequence will be. This is not theoretical.
BARRIE CASSIDY:
But even taking care of just a few children who are born in Australia would unpick the whole policy?
PRIME MINISTER:
We are dealing with these issues, these very delicate, these anguished issues Barrie, with compassion and we're dealing with them on a case-by-case basis. But what I'm not going to do is give one skerrick of encouragement to those criminals, those people smugglers, who are preying on vulnerable people and seeking to take their money, put them on the high seas in boats where like as not, they will drown. Look, there are no policy options available in terms of border protection which is not tough which cannot be described as harsh, but the one thing we know, without any question, is that the approach that we took in the Howard-era worked. When it was unpicked, it was a colossal failure in humanitarian terms. And what we are doing now is working through the caseload we inherited from Labor. There were 2,000 children in detention when Rudd lost office. Now there's less than 100. We're working through that, but the critical thing is to maintain the security at the border.
BARRIE CASSIDY:
Ok. We're almost out of time, but an update now on the Australian couple who were kidnapped by an al-Qaeda-affiliated group in Burkina Faso. As we understand it now the wife – Jocelyn Elliott – has been released. Are you able to confirm that?
PRIME MINISTER:
Yes, that is true and we want to thank the government of Niger and the government of Burkina Faso, which of course is where the Elliott’s were living when they were kidnapped. We want to thank them for the work that they're doing, and we again – we prefer to say very little about this case publicly other than to say that we obviously continue to cooperate with those governments and we thank them for their efforts, and I can confirm that our Foreign Minister Julie Bishop, who's been closely on top of this situation, has been speaking with the Elliott’s family in Australia, spoke to Mrs Elliott just a little while ago.
BARRIE CASSIDY:
And her husband, what are the prospects there?
PRIME MINISTER:
Well, again, Barrie, I would rather not comment on that, because again we're dealing with a difficult diplomatic situation and the Burkina Faso government is working very well on it and we'll continue to stay in touch with them.
BARRIE CASSIDY:
And just finally, as I understand it today, you're having all MPs, from all sides of politics at The Lodge. What's that about?
PRIME MINISTER:
Well, it's a family day and there will be well over 300 people there including lots and lots of children. Some of them little ones, little toddlers, including our grandson Jack, and lots of other little boys and girls like him and then plenty of big ones. As you know, the Members of Parliament, the Members and the Senators are volunteers. Their families are conscripts and I think it's great to have everyone there from all parties for a family day at the beginning of the parliamentary year.
BARRIE CASSIDY:
Prime Minister, thanks for your time this morning
PRIME MINISTER:
Thank you.
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