GREG JENNETT:
The Assistant Treasurer, Kelly O’Dwyer, has also been joined in the tax conversation, she’s been speaking to political correspondent Greg Jennett.
MINISTER O’DWYER:
I think today unfortunately was a big and lost opportunity for a broader national debate about what we need to do to unshackle our economy. How we can grow our economy and how we can create jobs. Today I think was a really good opportunity for the Leader of the Opposition to outline his plan and his ideas to bring forward a broader discussion around whether or not we have the tax mix right. Today unfortunately though he squibbed that debate, he recycled a few of the old ideas that he has announced in the past and unfortunately it just betrays a lack of ambition for our nation.
JENNETT:
He did float some suggestions, not necessarily committing to them, but looking perhaps at fringe benefits tax, at capital gains, and the way some people might game the system to use Mr Shorten’s words with concessions and deductions. Are they also things that the Government would be looking at because, to use a Government term, all things are on the table?
MINISTER O’DWYER:
It is true to say that all things are on the table because we need to have a mature, rational and sensible discussion about how we get the tax mix right. The Government though wants to be very clear that we are not simply talking about increasing taxes to chase ever increased spending. I think what we heard from the Leader of the Opposition today is that they are very keen on increasing taxes. But I think this betrays the fact that in growing our economy we can grow our revenue. That is the best way to get the revenue side right but we also have to control our expenditure as well. The discussions that we are having with the Australian people, with the State Treasurers, with all of those people who are interested in the prosperity of our Australian country, and their children, and their grandchildren, the discussion that we are having with them is how do we get that mix right so that the opportunities are there for all.
JENNETT:
A lot of people are starting to wonder how long that conversation will take and when it will have some real form about it, is that likely to be or can it be before the May Budget because once something is policy it has to be costed out through the Budget process itself doesn’t it?
MINISTER O’DWYER:
Well certainly the Australian people will be left in no doubt what our policies are around taxation before the next election but we are not going to simply rush to failure as I think the Treasurer has quite nicely put it. We are going to work through all of the options to make sure that we get the policies right. We have had 25 years of uninterrupted economic growth in this country, we want to create the right economic settings to make sure that we get the next 25 years right as well because the truth is, Greg, prosperity is not predestined. We need to make the economic settings right so that those people who want to start a small business are encouraged to do so, that they are not disincentivised through for instance the taxation system.
JENNETT:
You have spoken about revenue, how – what sort of problem exists on revenue right now? Is it lagging behind expectations?
MINISTER O’DWYER:
One of the greatest problems that we face at the moment is that personal and company income taxes are the vast bulk of the revenue that the Government receives. We are the only country outside of Denmark in the OECD that has such a heavy reliance on personal income taxes as our revenue base. Now what that means for the Australian people is that the Australian people who are the average income earner are going to be within the next year or so in the second highest tax bracket in this country. Now we say to the Australian people is that really right and is that really fair?
JENNETT:
In the short term the Government has to give a mid-year statement. Are any of these problems that you are talking about, bracket creep I suppose is something to be addressed later, but are any of these starting to drag on the figures in the Budget at the moment, such that we might see further deterioration at the end of the year?
MINISTER O’DWYER:
Well as kind as your invitation is to pre-empt the MYEFO that is going to be handed down in December I will leave that to the Treasurer to make that update for you, Greg.
JENNETT:
Alright but on the GST again and Budget repair which is an objective, it is a money in, money out situation that we are talking while ever the states get whatever GST revenue they might get 10 per cent, 15 per cent, 30 per cent. How does that repair the Commonwealth’s Budget if we enlarge the GST and all that money goes to the States?
MINISTER O’DWYER:
We have certainly made no decision in relation to the GST and as you quite rightly point out the GST, every single dollar that the Commonwealth receives actually goes to the States. But the States also have their own revenue bases as well, they have their own taxes. It is about $85 billion worth and in this broader conversation about the tax mix we need to ensure that we are not just looking at the Commonwealth taxes but also the state taxes as well, which is why work is being done with the Commonwealth Treasurer and the State Treasurer’s to come back and say is the mix right? Is it going to encourage our economy to grow and to prosper, are we unshackling the innovative potential of our small business men and women of individuals, of companies? Are we getting that mix right, and if not what do we need to do to change it?
JENNETT:
And your politicians view of the public mood – how accepting just anecdotally do you think Australians are around the idea of a bigger GST?
MINISTER O’DWYER:
I think Australians would say if that is all that is on the table, if you are simply talking about an increase to the GST I think most Australians would say that they are not a fan of that idea but I think if you are to say that we are having a broader discussion about changing the tax mix and talking about personal income tax cuts, talking about company tax cuts, talking about how these things all fit together, then I think you will find that the Australian people are very intelligent people, they can happily have that discussion, that mature and rational discussion about what is going to unshackle the potential of our great nation.
JENNETT:
Well it is well and truly underway that conversation and I dare say that we will have a few more of them. Kelly O’Dwyer, thank you.
MINISTER O’DWYER:
Thanks Greg.