KIERAN GILBERT:
Just going to our top story now and the GST carve up, the biggest overhaul to the goods and services tax in several years. With me is the Treasurer, Scott Morrison. Thanks for your time, you're going to be topping up basically the GST pool to the extent of about $9 billion over 10 years, is it the reality these days that you have to buy reform to get everyone onboard?
TREASURER:
Well, some would put it that way. At the end of the day when you make a change like this you need to take everybody with you and that includes ensuring that Australians can have the guarantee about the essential services they rely on; their schools, their hospitals, their police, these things. That's what this package does, it makes an important change to the system, the system is broken. You know it's broken when you get one state like Western Australia who's getting, under the model, less than 30 cents per person for their share from the GST, they're actually getting less in actual dollar terms in Western Australia than the Northern Territory or Tasmania. Now, that just doesn't add up, that has to be fixed and that's what we've done here with a long term plan. So there are no sudden changes, so the system can change over time and everyone is left in a better off position.
GILBERT:
What do you say to the critics who would argue that this does not reward states that have a go, states that have a crack, and it rewards the poorer performing states and doesn't encourage them to develop?
TREASURER:
Well, I make two points: first of all it takes us into a better position on that front, currently the formula actually penalises even more than what we're now proposing. I mean what it basically says to Western Australia is the current formula, the minute you put the shovel in the ground you get penalised because the more you draw out of the ground the worse their GST outcome is. Now, what that means is with states that are no longer in that position, WA can go and exploit their resources as can all the other states. We think that's a good thing because the GST formula has never been able to deal with this issue of bringing things out of the ground. So, we think that's a good thing. The second thing I'd say is this, Australia's a fair country, we've had this system for 100 years where the smaller states are supported by the stronger states. Those who want the more extreme options here are basically saying let's make the small states poor and maybe they'll work it out and make a bit more money. But I don't think that's the way to go and I think it's a bit offensive to those smaller states. They've been dealt different hands to other States, we're one country and one country working together and that's what this plan delivers.
GILBERT:
And you feel that this will free up some of the states to, well they've been sitting on resources, certainly Victoria's accused of that in terms of its gas deposits. Do you feel that this will see encouragement for the States to…
TREASURER:
Well, I think it does remove an impediment, I mean to say that they weren't doing it because of GST, well I'd be surprised if that were the case. I think they've got other reasons for doing it. What I do know is that the more you keep your gas in the ground, the more it pushes up electricity prices. So it's always been our view that we should be realising all of these resources. It is important states manage the money well, I mean there's extra resources here for schools, hospitals, essential infrastructure. They need to deploy this well but that's ultimately what their own voters have to keep them accountable for.
GILBERT:
So, it doesn't reward mediocrity though, the whole plan?
TREASURER:
No, it's a fair go principle, and it's not a new principle. We just thought that the way it was being applied under the old formula had got unfair and so it had to be fixed.
GILBERT:
What do you say to those who would argue that the WA Government squandered the boom? It had a once in a generation mining boom, you know, you're right in terms of getting the 30 cents in the dollar of GST revenue, but they had a huge amount come into the coffers. Did they squander that?
TREASURER:
I'll leave that to the historians to judge. What I know as Treasurer, what my job is, is I've got a system here where the mining and minerals boom in Western Australia basically made the whole GST formula go bung. It was no-one's fault, it was not the fault of those who set it up, it's just the formula was not built to cope with something like that happening. Now, it's my job to make sure that doesn't happen again and what this new change will do is make sure that states can't fall below 75 cents in the longer term. Now that's fair enough it means that bigger states are still subsidising smaller states but not unreasonably as has happened because of the way the formula was working.
GILBERT:
Do you need all the States and Territories to sign up, or can the Commonwealth go it alone if you have one or two states not?
TREASURER:
Well, the Commonwealth can go it alone, but I don't think that's the right way to go forward. The model I'm working to is over the next six months, by the end of the year, I would like to get the agreement of all the States and Territories about going forward on this basis. The Commonwealth is stepping up to fix the problem and put additional resources in for schools and hospitals to ensure that every state is better off but at the same time we're wanting the States and Territories to accept the new way forward. We've still got a lot of work to do with them and getting under the numbers and making sure that everybody is happy with that. So, I think everybody will work constructively on that. So, we're not asking for anyone to agree this week, I think it's a good way to start the conversation but the bottom line rule is we need to change the formula so it's fairer but we also need to ensure that all states are left better off.
GILBERT:
You talk about the need to increase the pie, why not increase the pie further and go back to a look at the rate itself of the good and services tax?
TREASURER:
Well, we've had that discussion and we have no plans for doing that.
GILBERT:
Is it inevitable that it will have to happen at some point, it's the most efficient tax isn't it?
TREASURER:
My job at the moment is we're getting taxes down. We've reduced personal income tax, we're reducing business taxes, we're getting taxes down. It's Bill Shorten who wants to put taxes up as everyone knows, he's going to reverse personal income tax cuts and importantly, as he said last week, he might have done a back flip but it was more like a belly flop cause he fell flat on his face. Because at the end of the day, he is not allowing all businesses including the smallest businesses in the country to have their tax rate reduced to 25 per cent. Every single business in the country will pay higher taxes under Labor including the corner shop and the home based business baking muffins.
GILBERT:
Treasurer, thanks I appreciate your time.
TREASURER:
Thanks a lot Kieran.