SANDY ALOISI:
State Treasurers are in Sydney today for a meeting with Federal Treasurer Scott Morrison. A gathering that will be dominated by tax issues, particularly the GST. The Government has been considering tax change options including proposals to increase the GST to 15% and apply it to areas now exempt, like fresh food and education.
For a Government view on today's meeting, Marius Benson is speaking to Alex Hawke, the Assistant Minister to the Treasurer.
MARIUS BENSON:
Alex Hawke, this meeting today between State and Federal Treasurers is part of a continuing process on tax reform. Do you expect anything specific out of this? There's no decision hanging on it, is there?
ALEX HAWKE:
Well look, today I think it's important that the Commonwealth and the States get the objectives set and I think the Treasurer's seeking to understand from the States what are the objectives they want in the tax reform process. And it's a good opportunity for the States to come forward and say, we're not just interested in increasing the rate of tax through the GST but we're interested in the whole tax reform mix.
MARIUS BENSON:
And the Treasurers and the Premiers of some of the States have made it clear that in fact more revenue is needed. The Federal Government is talking about not increasing the tax take, but Mike Baird in your own home State of NSW, for example, says that we need an increase in revenue to deal with demands like health.
ALEX HAWKE:
And that's why it's important today that the discussion is not just about increasing the whole tax burden on people, and the Commonwealth has made it clear from the beginning we're not interested in just increasing endlessly the rate of taxation to fund greater and greater spending from the States. You have to have a conversation about how can you spend more efficiently, how can the Commonwealth and States do things differently between them so that you have more services for less money, how can competition drive better performance from State Governments' outcomes. So I think you'll see all of these conversations being had today. And obviously if you're serious about tax reform you want to discuss all of these things, and you want to discuss how the tax system interacts with how Government functions. And I think that's the role of COAG and that's what will be discussed today.
MARIUS BENSON:
The GST has been the most eye-catching part of the tax debate. Can I just clarify, the Government's position is now that everything's still on the table, up to and including putting the GST up to 15% and applying it across the board.
ALEX HAWKE:
The PM and the Treasurer have made it clear for some time now that everything is on the table, we've come to this discussion, this negotiation at COAG in good faith, the States have driven the process, largely, in the discussion on tax reform, they're the ones that have requested the GST to be modelled by the Commonwealth Government, they're the ones that have requested the Medicare levy to be modelled, and we welcome all those discussions about all of these options.
The Government's also got a process through its White Paper which will go on over the summer as to how do we look at unshackling things like income tax and company tax, and from the Commonwealth's perspective, if you don't discuss the total tax mix, all of these things, how do we take the burden off average income earners who will now end up in the second highest tax bracket, for instance. How do we deal with our non-competitive rates of company tax, which are some of the highest in the world and in our region, certainly. How do we give relief there? And all of these discussions have to be held through our White Paper process. It's a serious process and I think that the fact that the Government is considering all options shows that it is very serious about getting that mix right.
MARIUS BENSON:
One of the proposals you mentioned there, the medicare levy, increasing the medicare levy is seen by some as a very efficient means of gathering tax revenue. But the Government has pretty much dismissed that, hasn't it?
ALEX HAWKE:
It hasn't dismissed that option, all options are being discussed, but you'll see on the table there some of the revenue that is raised through some of the models released yesterday, and of course some options raise more revenue, some options raise less revenue, and you've got to look at the total tax mix and what you can afford, so if your changes, in terms of the revenue side aren't funding the necessary reductions, well you've got to look at those options.
MARIUS BENSON:
Alex Hawke, just on another topic, Tony Abbott is speaking in Singapore – has been speaking in Singapore on Islam, speaking to the effect that not all cultures are equal. The Ambassador, the Indonesian Ambassador in Australia says that his remarks have been unhelpful. Do you believe that Tony Abbott's being unhelpful?
ALEX HAWKE:
Look I think he's trying like everyone to grapple with a solution to how do we deal with IS and the threat that confronts us in terms of domestic terrorism and extremists within our own society. Obviously it's most helpful if everyone in Government and in Parliament works together on that process, there isn't any ego in this process, there isn't any need for people to one-up each other. I think it's essential, especially in a country like Australia, that the Opposition, the Government, the Security Services, the Public, we all have a discussion together and work on this process. And rigorously defending our own values of tolerance, openness and freedom – individual freedom – having a strong economy, all of these things that make us a great place to live, I don't think it is a problem.
MARIUS BENSON:
Alex Hawke, thank you very much.
ALEX HAWKE:
Thank you very much.