KIERAN GILBERT:
The ongoing debate about the GST and tax reform has not hurt the Coalition, it is up a point in the latest Newspoll. Joining me is the Treasurer Scott Morrison. That must be encouraging for you, the numbers still very strong eight weeks after Mr Turnbull became Prime Minister.
TREASURER:
I think people are responding to the positive tone of Australian politics. I think people are responding to the very open way that the Prime Minister and the Government is going out there and dealing directly with people; interested in their views, engaging with them but also addressing our big challenges and our biggest challenge is to grow the economy. So, whether it is on innovation, the Free Trade Agreement which passed the Senate last night and congratulations to Andrew Robb and the whole team on that tremendous effort or whether it is in balancing the Budget or in particular looking at a better tax system which rewards and supports people who are out there working and saving and investing. That is all about growth – we are focussed on growth and jobs.
GILBERT:
So, in terms of the aim of the discussion, the tax debate, what is it specifically – can you tell us? Is it about reducing the debt, is it about incentives, greater growth, as you referred to, or is it about money further boosting the states’ resources in terms of health and education?
TREASURER:
Well, that is the key question. The reason we are having a discussion about the tax system is because we want to grow the economy. You don’t need to increase the GST to balance the Budget. That is not what any discussion on the tax system is about. The tax system changes which can be very broad, and we are looking at all of the options, we have not put forward any proposal either to increase the GST or change the GST or do anything like that. We have listened to a range of options which are out there and have been put to us. But the OECD said last night in the report they released overnight that if you change your tax system you can grow your economy. So, the only reason we are talking about this is because we want to grow our economy, maintain living standards, see unemployment fall and lift real wages. That is why you change your tax system. We have got to look at the things that are holding our economy back and our tax system is holding our economy back.
GILBERT:
And from that flows the ability to pay off the debt and deficit. Because one of the criticisms from some in this debate thus far has been the lack of clarity as to exactly what you want to achieve there?
TREASURER:
Well, there may be a bit of a lack of hearing on the part of some commentators. We have been very clear, we want to do this to grow the jobs and to grow the economy. Now, you balance the Budget by controlling expenditure. I have made that very clear from the minute I came into the job and was criticised for it, for saying that we needed to focus on expenditure not revenue. Revenue will rise with a growing economy. How do you grow the economy? Well, you have good Free Trade Agreements, you have a new look on innovation policy, you have a $50 billion national infrastructure plan and you have a better tax system. So, the reason we are having a discussion about tax is because we want to grow the economy.
GILBERT:
There is a suggestion that Christopher Pyne told Coalition MPs yesterday that you won’t be taking a GST package to the election. What was that about?
TREASURER:
Well, Christopher has already denied those reports.
GILBERT:
It did seem odd given where the debate is at generally on this.
TREASURER:
Well, Christopher Pyne denied those reports.
GILBERT:
Alright, fair enough.
TREASURER:
He’s already cleared that up.
GILBERT:
Would you do anything that would see the tax take increase as part of the reform taken to the next election?
TREASURER:
There is a difference between the tax take and the tax burden. We don’t want to see the tax burden on Australians increase – that is our objective. The process of tax changes and working with the states and territories is all about people bringing their objectives to the table. Now, our objectives are clear; we don’t want to increase the tax burden, we are not interested in doing this from the point of view of raising extra revenue to deal with a Budget problem – we are interested in having a better tax system that removes the impediments to growth. Now, the states…
GILBERT:
What is the difference between the tax take and tax burden?
TREASURER:
Well, the tax take, tax receipts revenue can rise in relation to growth in the economy. So, you can see revenue rise. That doesn’t mean there is an increase in the tax burden, that just means that you have got a stronger economy.
GILBERT:
As a percentage of an individual’s wage for example?
TREASURER:
Exactly, we don’t want to see individual Australians burdened more with tax – I would like to see them less burdened with tax. The fact that we have got people on the average wage going into the second highest tax bracket is an impediment to them. It is actually holding our economy back. What we want to do in the tax system is take those things away that are holding Australians back. But that is also true at the state and territory level. Around $85 billion a year is collected by the states and territories; taxes on insurance, taxes on all sorts of things, over $20 billion in payroll tax, $16 billion-odd in stamp duties. Now, they have a raft of taxes that they have and just like we are looking at what is the best way for our tax system to work equally that has to be done with the states and territories. At our next meeting of state treasurers what I have put fairly and squarely in the middle of the agenda is, well, ok we have had a look at federal taxes, now let’s look at the state and territory taxes and how those can work better.
GILBERT:
Do you like the idea that Chris Richardson from Access Economics has promoted? This 15 per cent reduction on the tax paid by an individual when they put superannuation money, invest in their superannuation, 15 per cent on that person’s marginal tax rate as opposed to the flat 15 per cent tax at the moment. That would generate, I think it was $6 billion a year in terms of revenue and it would probably be a bit fairer wouldn’t it?
TREASURER:
Well, that is about right what it would raise and the Government is open to all of these ideas. As I have said, we are not ruling things in or out. If you do that, which is what the Opposition is trying to do, they’re treating the Australian people with contempt and I think one of the things we have seen, and particularly in the poll result today, is Australians are sophisticated, Australians don’t need this whole thing to be dumbed down. They are quite aware that there is a global volatility in the global economy and that our economy is going through a transition. Mining investment has gone from 8 per cent to 3 per cent. That is a stunning fall in mining investment. We have also seen the terms of trade come off by a third, we have seen commodity prices fall by around a similar number. Yet, our economy is growing. We are growing 2.3 per cent in year average growth last year; more than twice what it was in Canada, more than what the average growth in the OECD has and despite the changes to the OECD forecasts overnight they are still forecasting growth to increase for Australia in the years ahead, unemployment to fall and exports to go up. It’s all good news.
GILBERT:
The Prime Minister this week, a couple of quick questions to finish, he is heading off to the summit season – G20, APEC and so on over the next week or so. You said when you became Treasurer you want to focus on the domestic issues. When do you see yourself engaging in that broader debate? Obviously, as you point out with the China Free Trade Agreement our stocks rest largely in terms of investment and trade.
TREASURER:
I’ll be in China early next year. I will be in Shanghai engaging first and foremost with the region. The focus on the domestic side of things has been necessary. Up until Christmas we have got MYEFO, we have got the issues we are dealing with around tax system changes, there is the competition policy – this is another area that is holding us back and our economy back. The Harper Report made it clear there is a raft of areas at the state and territory level that could help our economy grow through micro-reforms, by engaging with the states on that process. That is why I have linked the discussion about tax system changes with Harper because it is about growing the economy.
GILBERT:
My last question to you is, relating to next year’s Budget and I guess it is not in a specific sense because obviously that would be ridiculous but in a general sort of election year sense, people have been saying, oh they might not want to go to a Budget but, you as Treasurer, you would think would be itching to deliver a Budget. I guess the question is will that provide the template for the election bid, I guess. You can argue, beyond the forward estimates this is the impact of the tax plan. Is that something you are thinking about?
TREASURER:
I think the Prime Minister has already outlined his plan for us to go full term and that means a Budget in May and that is what I am heavily focussed on. What it is about is growing the economy – growth and jobs. The substance behind that…
GILBERT:
But would you want the tax plan fully detailed by then so you can say this is the impact for year two, year three, year four?
TREASURER:
I would hope that next year, once we have gone through this listening, consultative, collaborative phase and don’t forget the states and territories are central to this. We are working with them so what comes out of that process will define the options, I think, that are available to us. It is not just about what is happening at the commonwealth level. It is about the federation and how we make the federation work better. So, we will work towards a Budget and to be able to bring forward what is able to be delivered.
GILBERT:
Alright, Mr Morrison, I appreciate your time. Thank you.
TREASURER:
Thanks a lot, Kieran, it’s good to have you back.