Sky – AM Agenda
E&OE.
KIERAN GILBERT:
There has been described as a bit of unrest in the Liberal Party, a bit of a revolt on the tax issue. Is this healthy debate or is it all getting a bit messy?
ALAN TUDGE:
I think it is natural that many of the backbench are discussing this issue and hopefully reflecting the views of some of their constituents. Obviously people remember the last time we had a big GST discussion and how things went there.
At the end of the day, we haven’t made any decision, as you know. We are having this public discussion; we are having this discussion internally, to reform our tax system with one central goal and that is to boost economic growth and boost the number of jobs in the community.
That is our ambition and that is the only lens which we are looking at tax reform through.
KIERAN GILBERT:
It sounds like you are softening the language a bit on GST right now – the Treasurer, the Prime Minister…
ALAN TUDGE:
It is still very much on the table – a potential GST increase, but with offsets on income tax or company tax so that overall there is no net tax increase. We are the Liberal Party, we don’t want to increase net taxes.
What we do want to do is look at the tax system to see if we can adjust and change the taxes so that we can get a more efficient economy which does lead to more jobs and therefore more economic wealth.
KIERAN GILBERT:
This is a robust debate within the Liberal Party. Isn’t this good that they are having a discussion? You have got Scott Morrison with his panel of tax advisers providing briefings to the back bench. Isn’t this healthy for policy development?
NICK CHAMPION:
I think what we have seen with this government, more than 100 days in since they replaced the Prime Minister, the Treasurer, Industry Minister, majority of the National Security Committee of Cabinet; we have had one policy since then – the Industry and Innovation Statement.
But we have got a Defence White Paper on hold; we’ve had policy inaction largely everywhere else – the Abbott settings are still there. The big thing that were going to do, the GST, they take it to the backbench.
The first whiff of grapeshot goes past the ear and they are all back in the trench, buglers sounding the retreat. This is a government that is just not coherent in its internal dynamic and that is because they have replaced a Prime Minister, a Treasurer and everybody else.
What we will see now, we will see reports in the papers, leaks of the key lines, we will see leaks of what people said, we will see leaks of meetings, we will see people playing policy games on what are very serious matters that affect my constituents most of all and I’ve made my views clear on the GST, but…
KIERAN GILBERT:
But if they are back in the trench and the bugle is sounding, wouldn’t you welcome that on this?
NICK CHAMPION:
Well, what they are doing…
KIERAN GILBERT:
Well you wouldn’t because then you would lose political mileage.
NICK CHAMPION:
It is a temporary retreat Kieran. They have been going on about a 15 per cent GST since I joined the Labor Party in 1992. I don’t think there is going to be any debate they’ll be back. This is a tax that when they introduced it at 10 per cent, they said they’d never ever raise it.
Now they are talking 15 per cent and if they get their way…
KIERAN GILBERT:
Your Premier, your Labor Premier wants it. He is the one arguing probably as strong as anyone.
NICK CHAMPION:
He is having to deal with cuts to a hospital sector. But the thing about the acute sector of our hospitals, is if you just pour money in there, you are not going to – it is putting a band-aid on what is a very serious problem.
We have to deal with chronic disease before it gets into the hospital setting which is the expensive setting. All of the cuts…
ALAN TUDGE:
The question for Nick though, is why does the Federal Labor Party… why are you so scared about having this debate about tax reform? Because Jay Weatherill is open to having a debate. Other Labor leaders are open to having debate and a discussion about whether or not we can change our tax mix.
But the Federal Labor Party, led by Bill Shorten has just got its head in the sand; does not want to change it one bit. I think it is a mature way to go about governing the country is to put out a discussion paper as we did. Then, have an open and frank debate and say that we are looking at these options and what do you think? What are the economic impacts of them and what are the social impacts of them?
KIERAN GILBERT:
I will get to Nick on that, I will get his response to that in just a moment. In terms of your view on this debate, is there enough to be done without touching the consumption tax?
Can you get enough done, make it a growth friendly system as you talk about to reduce the burden on individuals to invest, save and work or whatever the…
ALAN TUDGE:
Work, save and invest.
KIERAN GILBERT:
That’s it. Can you do that without touching the big consumption tax?
ALAN TUDGE:
There are many leavers which are available to government in relation to the tax system. We are looking at all of them. Inevitably, you pull one leaver, you need to adjust another. That is the complexity of it.
That is what we are trying to work methodically through and look at this and examine what the economic consequences are. As I said, at the end of the day, we have just got a single goal here and that is to boost economic growth and boost jobs.
We are not doing it, as the Prime Minister said, to win an economics prize. We are doing it with that single goal in mind and consequently we are looking across the board. We are open about that. We are open about having the debate and I think it is a very healthy debate to have.
KIERAN GILBERT:
The challenge federally is that some of the big ticket reforms necessary in this country are at the state level, so it is how you try to prompt the states to undertake that reform.
But in relation to the Labor, the federal Labor view, as Alan Tudge has said, you are not being constructive on the GST. That is the Liberal assertion. What about, you can respond to that, but the thing I am finding hard to grapple with, with Labor’s position here is on the tobacco tax.
You have got them on equity and the need not to slap low income earners, when it might be a health measure and that is fine. But for the moment, when people smoke, they can’t give up overnight, but some of them can. So it is a question between their smokes and their food.
You’re the ones who wanted to tax it.
NICK CHAMPION:
I guess, smokers are not just poor people. They are the people across the income strata.
KIERAN GILBERT:
It is the flattest of flat taxes.
ALAN TUDGE:
More poor people smoke, as you do know. You know the data in relation to who smokes.
NICK CHAMPION:
You asked me a question.
ALAN TUDGE:
You know the data in relation to who smokes.
NICK CHAMPION:
It is not solely that way. You should just let me answer and not interrupt. But what this is all about is two things.
There is a revenue aspect to it, no one is denying that but there is also a change in behaviours and what we are seeing is, Australia has the lowest smoking rates in the world. We have young people now who, it is really not culturally acceptable to smoke anymore.
We know less and less smokers and we know that has important public policy and health benefits which flow onto our hospitals, which flow onto people’s lives and they are more productive. They are less likely to be hospitalised, less likely to be in acute settings.
That is exactly the sort of health reform that we need and exactly the sorts of approaches that we need in these areas. If you want to lower health costs…
KIERAN GILBERT:
What about a broader constructive discussion?
NICK CHAMPION:
Here’s the thing, we have got more policy out there than the Government does. We have policy on superannuation tax initiatives, they can pick that up tomorrow – they could have passed that last year.
They have a policy on multinational tax. We have policies out there and isn’t it an irony that you have got an opposition with more costed policy out there than this Government.
ALAN TUDGE:
Come on Nick, now you went too far. Costed policies? Seriously? Show us the costings Nick. Just on one policy. Just one! Show us the costings on it.
NICK CHAMPION:
This is a Government without any internal cohesion in it. It has got two Prime Ministers, it’s got two Treasurers.
KIERAN GILBERT:
Okay, let’s move on. I want to ask Alan Tudge about the super thing because you mentioned that Labor’s is targeted and it is on those to expand the group that pay a 30 per cent tax on super contributions and on earnings as well.
Why is the Government so opposed to the idea of taxing earnings on super? People with millions of dollars in their nest eggs, whereas those who are putting money into their super, you want to tax.
Many of these individuals, if you look at the table in the Australian today, you are talking about people earning the average wage or less that you want to increase the tax on their contributions, yet you are not willing to touch the earnings of multi-millionaires.
ALAN TUDGE:
I think that is an incorrect assertion that you are saying there. Again, we haven’t made decisions yet in relation to what we might do on superannuation. It is one of those elements…
KIERAN GILBERT:
…it is still taxing of earnings…
ALAN TUDGE:
We are open to – we have said very publically – we are looking at the superannuation system as part of our tax review. It is an important part.
But what we are not going to do is what Labor did and just announce – out of the blue – additional taxes on super, despite saying they wouldn’t touch the superannuation system. We are going through a proper system here. We have got a process in place; we have got a paper out. We want to consult with the sector and work out what the best approach is.
I think we need to be careful about changing the rules mid-way through so that people who have made contributions towards superannuation….that the rules aren’t changed mid-way through on the basis that they invested with those rules in place.
KIERAN GILBERT:
But that is fair enough, but if people are earning hundreds of thousands of dollars in interest on their super nest eggs, how can you justify not touching that when you have people who are trying to build nest eggs and yet you are going to slap them.
ALAN TUDGE:
Again, Kieran, we haven’t made any decision yet; that is a very important point. We are having this discussion and the story in the Australian Newspaper today…
KIERAN GILBERT:
Is your Government open to looking at taxing hundreds of thousands of dollars in revenue – interest – on top of nest eggs, which is the interest that people…
ALAN TUDGE:
You would have heard us say this the entire time, we have not ruled anything out in relation to the tax system and that we are going through a proper process here. I think it is a very healthy process to have this discussion with the broader Australian community.
We are consulting with the superannuation sector and at some stage we will narrow down those options and inform the Australian people and take that to an election.
KIERAN GILBERT:
Okay. Just quickly…
NICK CHAMPION:
Kieran, this Government in its first budget raised taxes for low income earners on their superannuation; had no problem with doing it – acting in that respect. But with high income earners, oh we’ve got to debate it, oh we’ve got to look at it, oh we are just having a fiddle with it.
There’s two different rules here. Low income earners, you can whack the tax on them, high income earners, oh well we have to look at it.
KIERAN GILBERT:
Nick Champion, Alan Tudge, thanks gentlemen. Have a good day.
ALAN TUDGE:
Thanks Kieran.