HOST:
Yesterday in a televised interview, the Shadow Treasurer, Joe Hockey refused to rule out a GST hike under a Coalition government. Assistant Treasurer David Bradbury joins us on the line, good morning David.
BRADBURY:
Good morning Grant, good to be with you.
HOST:
I'm right about that aren't I? The Coalition did say that it set in stone that it would never ever increase from 10 per cent?
BRADBURY:
Well that's right, and they certainly had put forward to the Australian people a mechanism that they said would protect them from any future increases, and that was to suggest that you would require the support of the states in order to make any changes into the future.
HOST:
Having said all that of course there's no stopping the Labor Party from increasing because no such promise was made by you, but having said that you're not interested in increasing it.
BRADBURY:
We have made it very clear that we have no plans and will not support an increase in the rate of the GST or an expansion of its base. When we talk about an expansion of the base of the base of the GST, we're talking about extending it to things like fresh food, extending it to health and education services which are currently exempt and we think exempt for good reason.
HOST:
There's no doubt about that. There are arguments that it would be easier if it was right across the board but you've got to look at each product on a case-by-case basis, particularly food which is something that is the staple diet of a lot of people.
BRADBURY:
And particularly given the system is now in place; I can understand people making the case around simplicity when the system was being introduced but any change to the GST at this point in time would create all sorts of bureaucracy for small businesses and businesses right around the country trying to come to terms with any of those changes, so I think there's not really a compelling argument on the simplicity front, that's for sure.
HOST:
Ten per cent is simplicity, believe it or not. Look, my wife and I were talking about this last night and I said, ‘Wouldn't it be terrible if they increased it to 12.5 per cent? Imagine the nightmare.' She said, ‘I'd be leaving you, I'm not going to do the BAS anymore'. And just on that, I reckon I work for the taxation department as a tax collector. Don't you reckon I should send the bill for that? Don't you reckon it should be tax deductible that you do your BAS?
BRADBURY:
Well this has been a long and much-argued point that businesses around the country have often made.
HOST:
Maybe I'll send the bill to Peter Costello.
BRADBURY:
You could send it, I'm not sure you'll have much luck.
HOST:
Now, just on the GST itself, it does appear that most OECD countries have a GST.
BRADBURY:
There is certainly widespread support across the OECD for consumption taxes or value-added taxes and even more broadly. What's not in question here is whether or not the current arrangements continue to be in place, no one's proposing to repeal the GST, but what we have seen from Mr Hockey in the last couple of weeks, on three occasions he's been given the opportunity to rule out any future increases in the GST and he's chosen not to do that.
HOST:
Well you can glean from that that the plan is to increase the GST? You can't think of anything else can you?
BRADBURY:
If that wasn't the plan, he can rule it out very quickly and the fact that he's failed to do that on three occasions means that he is hoping to leave open the door and he's out there saying that the states should now be out there making the case for a change. Well if he's not supporting a change there's no need for the states to be making any case, he can simply say that's not what he intends to do. So I think that the point is that if Mr Hockey shares the view of the government, and that is that there should be no increase in the GST, all he has to do is come out and say that. If he doesn't say that, I think the Australian people should be very suspicious of his motives.
HOST:
Is ten per cent about what other countries have?
BRADBURY:
Look it does vary, in many cases it's lower, in some cases it's higher. The base is of course is different in different countries.
HOST:
New Zealand did increase it at one stage, am I right in saying that?
BRADBURY:
That is correct, yes. That was a difficult decision they took and ultimately that was a matter that they had to convince the New Zealand people of. I guess the point that I would make is there are a lot of people out there saying we should increase the GST and then we can deliver income tax cuts to people. I think they should look very carefully at whether or not that is what would happen, given that the GST is now an income source for the states.
HOST:
So in other words the states would be the ones championing the fact that we should increase it but having said that they've all got to vote on it, don't they?
BRADBURY:
They don't necessarily have to vote on it but they have to express their support, there is an Intergovernmental Agreement in place. They clearly have a vested interest here, this is a great tax for the states, the GST, because they don't have to collect it and all the money goes to them so I can understand why the states would be out there arguing for an increase to the GST.
HOST:
Oh, well I can send that bill not to Peter Costello but to Barry O'Farrell then.
BRADBURY:
I think you'll have even less luck there.
HOST:
Good luck. So at this stage, categorically, no increase from the Labor Party?
BRADBURY:
Not from the Government, no, absolutely not.
HOST:
Okay, good to talk to you David.
BRADBURY:
Good to talk to you Grant.