FAIRFAX ‘BREAKING POLITICS’
WEDNESDAY, 29 OCTOBER 2014
SUBJECT/S: Tony Abbott’s broken promise on the GST; Tony Abbott’s broken promise on the Petrol Tax; Nauru
CHRIS HAMMER: We’re joined now in the studio by Liberal Senator Scott Ryan from Victoria and Michelle Rowland, Labor MP from Greenway. Good morning to you both. Scott Ryan, the Prime Minister’s request of this mature debate about Tax Reform, Federalism, whatever; just set up very briefly if you can, what’s the need for that, for people out there in the electorates, why is this happening? What’s happening with the Government’s finances that this necessary now?
SENATOR SCOTT RYAN: Well last night the Prime Minister outlined a couple of things. Firstly that over the last three decades Australia had quite a strong record of economic reform; he rightly gave credit to the era of Hawke-Keating and of Howard-Costello and pointed out that during the era of Hawke-Keating virtually all of the economic reform measures were supported by the Opposition, often led by John Howard. He also pointed out, and I think everyone would agree, that as well as reform being an ongoing challenge, the world’s changing, our region is changing and we constantly have to make sure that we are at our most competitive. He also pointed out that no one would agree that our Federation works perfectly, no one would agree that our tax system could not be better and what he did was, he outlined the need for Australia to start having serious discussions around these topics so that we can continue the strong economic growth that we’ve had since the early 1990’s.
HAMMER: So does ‘serious consideration’ by definition include consideration of changes to the GST.
RYAN: Well look, there’s an obsession on the second floor of this building that every time someone talks about how we can improve our tax system that those are the three letters everyone runs too. But the point that the Prime Minister’s made clear is because that is a tax that is collected by the Commonwealth, but entirely for the States and Territories’ benefit, that that discussion can only happen if all of the States and Territories lead it and participate in it. But he’s invited that conversation to start and that’s the only way it will happen. But there’s a bigger issue here and that is –
HAMMER: So the Federal Government isn’t pushing any changes to the GST, it’s leaving it open to the States?
RYAN: No, well it’s effectively a tax collected for the States to provide everything from firefighters to police to schools and public hospitals, and so since the day it was introduced it has always been protected by that piece of legislation that says it can only be changed if all the States and Territories agree. Now there’s an election in Australia every year in one of the States or Territories and he’s asked the leaders of the States and Territories that do represent different parties and invited them to participate in this discussion. But it’s a bigger discussion about tax reform and it’s a bigger discussion about our Federation to say, ‘how can we improve the way the country works?’ because the six years under Rudd and Gillard weren’t years of reform in this area, they were years of major spending. And we’ve now got an economy that is slowing, because of the red tape and the burden put on it by the last previous Government and we’ve got a situation where the Budget is in serious trouble that needs to be made more sustainable.
HAMMER: Okay Michelle Rowland, how will changing a tax that is totally beneficial to the States affect in any way the Federal Budget bottom line.
MICHELLE ROWLAND, SHADOW MINISTER FOR CITIZENSHIP AND MULTICULTURALISM: Look, the first thing to note is that the nature of the GST is that it is a regressive tax, it’s a consumption tax. So the lesser the disposable income you have, the greater you actually need to spend in order to stay afloat. You don’t have other options unlike people at the higher end of the scale, so I think that at a starting point it’s important to understand the nature of the GST as a regressive tax. The second point is, and it’s been made rather clearly up front, is that for this Prime Minister to say that he wants a mature debate on these issues is actually quite incredulous. I mean this is a man who was the most divisive, obstructionist Opposition leader that this country has seen in the modern age. But even if I put that to one side Chris, I actually approach these issues from having a local government background, looking at it from a local government perspective as well.
We need to remember that when we have the COAG table, we have the States there, we have the Federal Government, but local government is also represented. So a three tiered government system in Australia, I think sometimes people forget, and I think unfortunately local government ends up being at the tail end of some of the worst cost shifting and this has been empirically documented. Local government comes out worst off every time. What I really take issue with is that some of the changes that have been made, the cuts that have been made in this Budget in particular, and the way it has impacts on service delivery at the local level. You can look at the local level for local councils, rate payers, $1 billion just in Federal Assistance Grants that has been cut in this Budget. Then you look at the State delivery, cuts in health and education which the States then need to pick up. So I can understand why the reaction broadly from State Premiers has been so hostile to this notion of having this ‘mature’ debate when on one hand the Prime Minister is calling for it, and on the other he’s making cuts which make it harder for them to do their jobs.
HAMMER: So you essentially are accusing the Government of twisting the arms of the States into supporting the change to the GST through these cuts.
ROWLAND: Oh I have no doubt that’s what it is, I mean this is a guise for saying to the States ‘you need to get on board otherwise there’s more to come’.
HAMMER: Scott Ryan?
RYAN: Well let’s talk about the actual facts in the Budget. In education, funding for education has had no cut as for the next 3 years it goes up by 8-9% a year and then it gets indexed by CPI, there is no cut. In hospitals, public hospitals and health funding, it is the same, it is a funding increase over just under 10% and then it gets indexed by CPI -
HAMMER: So why –
RYAN: There is no reduction what so ever in funding to health and education in the previous Budget, it is nothing by a Labor lie. There has been a reduction in the rate of growth, and when you have a budget deficit that we have inherited from Labor, it is foolhardy to keep promising unsustainable rates of growth with absolutely no plan to bring the Budget back into balance, Labor had no plan. They made promise after promise and all of the promises that Michelle and her Labor colleagues made are meaningless unless they have a plan to bring the Budget back into balance and they haven’t told us that.
HAMMER: Okay, the reintroduction of indexation on the fuel levy, Michelle Rowland Labor is highly critical of that, but will you continue to oppose it when it comes to the senate in a years’ time?
ROWLAND: We’ve made it very clear that this is a broken promise. When we went and replied to the Budget shortly after it was announced, months ago now, we made it very clear that there were some measures that we would look at, some we would support and some we wouldn’t. This was one of the ones we were very clear about not supporting. The reason for that is because it is a broken promise, it is a tax.
HAMMER: The question is that much of the interpretation of the Government’s move to reintroduce it by regulation is that it is going to make it very difficult or more difficult for Labor and the Greens to oppose it in a years’ time because it will mean cutting off an established revenue stream, it will involve reimbursing money to oil companies for their loss. So what is Labor’s position now?
ROWLAND: Well I can tell you, I mean I don’t have a crystal ball but I can tell you everything you described there, I think the voters find it quite perverse and you only had to see some of the vox pop last night, the revenue collected going back to the oil companies, no wonder the motoring groups are telling consumers to keep your receipts. The way it was done, the sneaky way it was done, particularly in light of the fact that this was an Opposition Leader who went to the last election and said we will address cost of living issues, a Treasurer who said that poor people don’t drive cars very much. I mean I represent an electorate where you have to have at least two cars in your family to survive. These are the people who are going to be disproportionately hit by this tax. So I can tell you the answer on that Chris that my approach and the Labor approach is from a values basis. This is bad for consumers. Talk about small businesses and red tape; this is going to add around $800 a year in compliance costs for over 6,000 petrol stations. We have a huge number of petrol stations in Western Sydney, you only have to look around because it reflects our reliance on cars. These are many franchisees and small businesses that are going to be hit by this as well.
HAMMER: Scott Ryan, can I ask you if you’d like to defend, not the measures and the financial need for the measures, but the way it’s been introduced because Labor has been accusing the Government of one of a broken promise by introducing a tax that wasn’t set out or the indexation that wasn’t set out before the election, and now the Government has bypassed the Senate and many voters will go ‘what have we got’ -
RYAN: It hasn’t bypassed the Senate at all, this is a longstanding part of Commonwealth Law and in fact the Labor Party used this when they implemented their dramatic tax increase that was allegedly for health purposes and alco-pops. This is a power granted –
HAMMER: Well you could of -
RYAN: Because of that tax increase and because it was hidden under the guise of an alleged health measure Labor wasn’t honest about the tax grab in that case, a dramatic increase in the price of some alcoholic drinks behind a health guise. What we have said on this is that this is less than half a cent a litre, the average household impact in the short term will be 30-40 cents –
HAMMER: And the long term will be tens of billions of dollars –
RYAN: It will be $2 billion over four years, so without denying the fact that household budgets are tight we think that maintain the real value of the excise and making sure that this rises in line with inflation, just like the other elements of what people buy and what people pay for do, is a reasonable way to help bring the Budget back into balance and fix the disaster we were left by Labor. Now the measure and the means we have used to introduce this are part of Commonwealth Law, it’s a power granted to the Government and in twelve months’ time Michelle and the Greens will have to answer and determine whether they want to provide refunds to the oil companies.
HAMMER: Is there a political problem I guess with the Government selling its message here, you got Michelle Rowland and Labor saying ‘look talk about GST there’s a regressive tax, the fuel excise it hits poor people in the Western Suburbs’ you’ve got Rupert Murdoch saying that there’s a problem with increasing inequality in our societies. Is it hard for the Government to sell its message and not be vulnerable to the accusation that it’s serving the needs and desires of the better off at the expense of the poor?
RYAN: Let’s be fair about this, I don’t think what you’ve just said there adds up from the point of view that Rupert Murdoch’s address was about the increase in quantitative easing and was actually critical of the approach that saw the price of assets rise at the expense of wage and salary earners. Rupert Murdoch’s speech that was recorded yesterday was quite critical of that and I think that’s quite a serious concern. I wish that as a member of the Liberal Party we didn’t constantly have to come into office and clean up Labor’s mess, you know I would love to be like the Labor Party and come in one day, unlike Jeff Kennett did, unlike John Howard did, and unlike Tony Abbott has, with massive budget deficits and having to make difficult decisions that balance a budget. Because Labor inherits money, they spend it, they make it worse, and we have to clean up the mess. These are difficult decisions, we do not deny that, but it is something we have to do in order to put the Budget back into balance and we think that while it does have an impact on household budgets, it is a small impact at less than half a cent a litre in the short term and that that is a reasonable way to help bring the Budget back into a sustainable situation.
HAMMER: Michelle Rowland how do you respond to that? Labor can complain about the regressive nature of the GST or whatever, but the Government is trying to get the Budget back into balance or surplus, don’t they make a good case?
ROWLAND: The first point to make Chris is that the recently released NATSEM modelling clearly shows that this Budget is hitting people, who can afford it least, the hardest. My electorate for example and many of my counterpart electorates throughout Western Sydney are clearly some of the worst hit by this Budget, where a families are over $1,000 a year worst off. So I think we need to put that to rest because that is the evidence, they are the facts. My second point to make is that you know I hear comments about cleaning up Labor’s mess and so forth, this is a Government that has now been in for over a year, it brought down a Budget in May which it still cannot sell. The reason why it cannot sell it is because it fails even former Prime Minister John Howard’s test on equity, and also on actually achieving its aims. This is Government who came in and has actually doubled the deficit since coming into power and it wonders why it still can’t sell its Budget package. I think that just to give a bit of advice on this one, people are alive to the fact that this is a Budget that is still hurting them, they are alive to the fact that this Government said that they would be the adults in charge here. They don’t want any more excuses and to say and claim that this is a small impost on people, the reality is that it is going to hit people who can afford it less.
HAMMER: Okay just finally, asylum seekers offshore processing. We’ve had reports from Nauru that people who have been assessed through the system and found to be refugees and resettled on Nauru with small children have been beaten up by locals who have told them to get off the island and threatening to kill them. Michelle Rowland, what’s your reaction to these reports.
ROWLAND: This is extremely concerning and I think that the first point to make is that the arrangements that we have, in Nauru in this case, but also we have a resettlement arrangement with PNG, one that hasn’t quite come into being yet because people haven’t actually been settled in the way they have on Nauru. We need this to work, it’s important to note that when this resettlement arrangement came in we did see a dramatic impact on the number of people arriving by boat seeking asylum. I think the most important thing to note in this case is the fact that we need to make it work, we can’t have a Minister saying ‘not my problem anymore’ because part of these arrangements is resettlement. To simply say this is not our problem, to wash our hands and say ‘it’s up to you Government of Nauru’ is simply inviting these arrangements to fall over. It sets a bad precedent for Manus, it sets a bad precedent in Nauru itself of course, but I think we need to remember at the end of this, these are children. We cannot wash our hands of responsibility and I completely reject the Minister’s comments that ‘this is not my problem’.
HAMMER: Okay Scott Ryan, Michelle Rowland says that we need this to work, whether its resettlement in Nauru or Papua New Guinea or Cambodia or whatever. She makes the point then that the Minister’s office has said that these people have been accepted as refugees at Nauru so it’s the responsibility of the Nauru Government and in practical terms, the Australian Government does need to make these resettlement programs work.
RYAN: Unlike what Michelle just said there, this Minister and this Government has taken responsibility. The way we avoid all these problems is by stopping illegal arrivals and this is something this Government has managed to do. First and foremost we don’t have this problem and we wouldn’t have this problem if Labor didn’t open the doors and have tens of thousands of people arrived illegally. I’ve read the story and I’ve only read that on story I haven’t seen any other reporting on it or other circumstances. We do have to be careful, we cannot unilaterally intervene in the domestic affairs of another nation so you know internal domestic law order are a matter for another sovereign nation. But this Government has put an enormous amount of effort into improving the situation in Nauru and on Manus, a lot of circumstances and a lot of resources were left unfunded by the previous Government as they came up with their hap-hazard mechanisms in the dying days of Kevin Rudd’s second Prime Ministership. This Government and this Minister have taken responsibility and what the Minister was alluding to was that we can’t unilaterally in the domestic affairs of a sovereign nation.
HAMMER: But what will happen if these children got on a plane and came to Australia and claimed to be refugees because they were being persecuted in Nauru?
RYAN: Well I think to be fair let’s draw a distinction between the behaviour of some absolutely appalling and illegal behaviour as reported of some people in Nauru versus the actions of the State of Nauru. We have regrettable instances in Australia, you know we’ve had a few reported and we’ve even discussed here over the past few weeks where people have been harassed in the street because of their religious wear or their cultural wear. That doesn’t condemn the nation of Australia or the State in which it happens. I do think we need to draw a distinction between the behaviour of a group of people and equating that to the State or a Nation.
HAMMER: Okay Senator Scott Ryan, Michelle Rowland thank you so much for your time today.