WEDNESDAY, 9 DECEMBER 2015
SUBJECT/S: Government options to raise the GST.
MARIUS BENSON: Andrew Leigh, there are lots of kites on economic policy flying in Canberra today. None of them are Government policy so this is a fairly theoretical basis for any comment, but the Government has said it won't rule things out at the moment. There are options reportedly including a 15 per cent GST.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Marius, today Australia's premiers are considering an options paper prepared by the Treasury at the request of Malcolm Turnbull and Scott Morrison. One of those options includes raising the GST to 15 per cent, and expanding it to include all food and all drinks as well as to water and sewerage bills. The total impact of that on Australian households would be $4,500 every single year. This, from a party that ran a scare campaign on a carbon price, seems pretty rich to me.
BENSON: But it's only an option. Isn't that the way you should conduct reasonable negotiations – put everything on the table, including the things that you don't agree with yourself, just so you can clarify the lines of debate?
LEIGH: Well if the Turnbull Government doesn't want to go ahead with this, they shouldn't be preparing options papers on it for consideration by the states and territories. The fact is, Marius, we know that smart tax reform involves looking at those taxes that have the biggest drag on economic activity. We know from all the sensible economic analysis which has been done that this involves first looking at taxes such as insurance taxes and stamp duties. Yet they don't even seem to be in the mix. What's in the mix is a huge hit to low and middle income households in Australia, which would make inequality worse at a time when it is as high as it's been in three-quarters of a century.
BENSON: But you don't really know what is in the mix for the Government; nobody knows. We just know what's in some headlines from leaked areas of policy.
LEIGH: We know that there are four GST options which have been prepared by the federal Treasury, and they all involve significant impacts on low and middle income households. Our concern is both with the effectiveness and the equity of the GST. We're concerned that it's not a particularly efficient tax – it is no more efficient than the income tax; and we're concerned that its impact for those at the bottom is much worse than the impact of other tax changes. For example, I was in Melbourne yesterday at a cafe in Blackburn and the owners were deeply concerned about the impact on their business if pensioners were to be slugged with a 15 per cent GST but not properly compensated.
BENSON: But it's such a theoretical discussion because the Government is quite likely to say: ok, we won't touch the GST
LEIGH: Well they ought to be doing that immediately, Marius.
BENSON: That's not the nature of debate. Shouldn't you weigh up possibilities and assess them and allow discussion with peers and the public?
LEIGH: I would encourage the Government to weigh up this policy, have the reasonable discussions that Bill Shorten, Chris Bowen and the rest of the Labor team have had, and then come to the carefully-considered decision that this isn't the right call for Australia at the moment. We know raising the GST will hurt those at the bottom. We also know the income has been spent many times over: you've got premiers who want to put all the money into health and education, you've got others who want to use it for a company tax cut, and then you've got Scott Morrison saying that the tax take won't rise. That is perhaps the most concerning of all, Marius, because if you don't raise the tax take that means you give nothing to pensioners.
BENSON: Does that mean Labor wants the tax take to rise?
LEIGH: There's no magic number for the tax take. We believe it ought to be set at the right figure to provide the services that Australians demand.
BENSON: But do you have a view on whether it should be higher or lower than the current take?
LEIGH: I certainly believe that we have to make revenue and expenditure meet. There's about a 1.5 per cent gap between those two at the moment and the plans we've got on the table include some changes to taxes – on multinational taxation and superannuation tax breaks and cigarette excise – but then also reductions in spending. We don't believe that the Government's $1,000 Baby Bonus is a good idea, and we don't believe their slush fund for polluters is a good idea. We believe that the policies we've put on the table are a much fairer way of allowing spending and revenue to match up in the future.
BENSON: On the GST, one bit of advice to the Government comes today from Peter Costello, the former Treasurer who introduced the GST originally. He's saying: don't do it, don't do the 15 per cent, don't increase the GST because it will swamp everything else before the election. Do you think it's quite likely the Government will simply walk away from any change to the GST?
LEIGH: I certainly hope that's the case. Peter Costello's comments would be based on the fact that he would remember he and John Howard, on behalf of the Liberal Party, promised when they introduced the GST that it wouldn't rise. They'd be aware that the conversations we're having now are effectively a broken promise by the Liberal Party, who said: it'll be a 10 per cent GST and we won't touch it after that.
BENSON: Andrew Leigh, I'll leave it there. Thank you very much.
LEIGH: Thank you, Marius.
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