DAVID LIPSON:
Thanks very much for your time this morning, Treasurer. You have seen this modelling from David Gillespie the Nationals MP. What do you make of it?
TREASURER:
Well, I thank David for making a constructive contribution to the discussion that we are having about how we make the tax system better. He has done a lot of work, he has done a lot of consultation, he has worked this up with the Parliamentary Budget Office and it forms part of the submission to the White Paper process. There is a lot of detailed modelling there which I suppose sets out one option that sits right at, I think, the very end of the spectrum in terms of what potentially can be done there and that is a position that he has put forward. It is his position, I should stress, it is not the Government's position or even the Nationals position but it represents an option I suppose. There are issues in there particularly in terms of the treatment of health and education and I note that originally when the GST was introduced there were very practical reasons why health and education were not included in the GST base and those practical issues remain as challenging as they were back then. That said, David has put forward a view, he is part of this constructive, positive discussion we are having about the tax system and I welcome his contribution.
LIPSON:
$65 billion additional revenue in a year is pretty tempting I imagine for a Treasurer who is looking for money but could the Australian economy sustain such an increase particularly at times where confidence has been somewhat shaky in the past few months?
TREASURER:
What David's model does is it explains that when you go, if you were to go down that path then there needs to be compensation delivered through the payment system, there needs to be other very large scale income tax reform. Next year, if you are on the average wage you will be on the second highest tax bracket - now I wouldn't describe that as a tax system that is backing people who are out there working and saving and investing in our economy. What we want is an economy that is growing, an economy that is supporting jobs and it needs a tax system that backs that up and I think that David's paper really does highlight many of the weaknesses in our current tax system. The other point I make is that you have got to engage in this in collaboration with the states and territories. There is a myriad of state taxes and charges that will also need to be looked at as part of this process we are going through and at the next meeting of state Treasurers that is where the attention will be focussing.
LIPSON:
When it comes to the states, well, Labor federally has said it will not support an increase of four or five per cent - several state Labor Premiers as well. What would you expect their reaction to be considering that they would receive much of the revenue?
TREASURER:
Well, we are working collaboratively with them and that is of governments of both political persuasions. So, what you have got at the moment is you have got a Commonwealth Government working collaboratively and constructively with the state governments on both side of politics and what you have got is Bill Shorten out there on the edges just shouting at the clouds, not being part of any sort of real discussion. He is giving everyone something to fear and everyone someone to blame and giving no one anything to believe in. I think that is a commentary largely on where he has positioned himself outside of this debate. I don't think that is a constructive approach to take. David Gillespie has taken a constructive approach, I think the states are taking a constructive approach because we want a tax system that actually works better for Australians. That is what we want and that is what we are seeking to achieve.
LIPSON:
So, we can assume though, I suppose, to go to the bottom line here, that the Government is now very much looking toward increasing the GST take either through raising the rate, increasing the base or both?
TREASURER:
Well, you can assume that the Government is working closely with the states and territories to achieve a better tax system, that is what you can assume and that is the stage we are at. We are looking at a whole range of options; state taxes, federal taxes. The Prime Minister and I have made it clear that when it comes to superannuation we have opened that up for consideration, we have set up some clear principles on that, it has to be about ensuring that when people reach retirement age they can be independent and when Bill Shorten and Chris Bowen look at superannuation all they can see is a tax cash cow. What I see in superannuation is a mechanism to make sure that people can be independent in their retirement particularly those who may have had disrupted work patterns over their lives because they may have had children, they may have had to care for a loved one, they may have been in training and education and earning a low income at one point but able to earn more later in life. They are the sorts of things that we are working on; a better superannuation system, a better tax system - what Bill Shorten wants to do is just raise taxes to chase higher and higher levels of spending.
LIPSON:
I noticed earlier you mentioned health and education as being areas where there is still a good argument for exemptions from the GST. What about some of the other areas like fresh food for example? Is there still a case to exempt that?
TREASURER:
Well, we are not getting into the features of this at the moment because we are still working at the first principles level with the states and territories. The options that they have asked us to look at relate to broadening the base and the rate and things like this. We have also asked to look at what the options are at a state and territory level in terms of what can be done with their taxes and charges. So, whatever position we are able to collectively come to it is important the Australian people know that we have worked through all the options carefully and in a considered way and tried to look at what is the best way to achieve the goal and that is to back people who are making a contribution in our economy and ensuring that we can provide the services that those who need them can rely on.
LIPSON:
Just a few weeks ago you suggested that the Government doesn't have, or Australia doesn't have a revenue problem it has just got a spending problem. So, why is there this push then to look at ways to get a different make up of tax? You have suggested that you don't want to increase the tax take in total but why is all of this necessary?
TREASURER:
You have a revenue problem if you think that your tax system is not taking enough tax out of people's pockets. Now, I don't think we have that sort of problem. I think revenue is in line with historical averages, it is spending that is higher than historical averages and that is why I make the point about priorities. You don't go raising taxes because you can't control your expenditure. What you do is you have a tax system that encourages growth in the economy which will see income raised and which will see the ability of Government receipts to increase. That is how you deal with any issues on revenue. You don't deal with them by slugging people harder with taxes which is what the Opposition wants to do. What we are focussed on is consolidating our expenditure and ensuring that we have got a tax system that will grow our economy which will in turn lift revenue. You have a revenue problem if you think people aren't being taxed hard enough and we certainly don't think that but it would seem that Bill Shorten and Chris Bowen think we should be taxing people far more harshly.
LIPSON:
Just on another issue, the option of opening up retail hours 24 hours a day is something reports today suggest that you are looking at - can you just explain that for us?
TREASURER:
Yeah, sure, they're ultimately matters for state governments, people may remember the Hilmer reforms of 15, 20 years ago where there was a process whereby the states were engaged in what is called microeconomic reforms were able to get rewarded for doing those sorts of things. Now, the Harper Review which came out a while ago we have discussed that with the states again since I have become Treasurer and we are looking at ways to try and reboot that process where states are able to get about reforms that they would like to implement. Now, if states want to do something about their retail trading hours that is entirely a matter for them, it is not for the Commonwealth to tell them to do that or not. They can set their own priorities. Now, we are in a situation where there will be no favourable improvement in commodity prices to restore a Budget or do anything like that. The way we will make our way forward to restore our Budget and to grow our economy is by doing the hard yards of improving what we draw out of our economy and how we realise the productivity gains that are there. Going micro, if you like, when it comes to economic policy will be an important part of the Government's plan to support growth and jobs in our economy. The states and territories are critically part of that process and that is why I am engaged with them on that and I have been very encouraged by their response.
LIPSON:
Treasurer Scott Morrison in Sydney. Thank you very much for your time this morning.
TREASURER:
Thanks David.