SUBJECT/S: Mal Brough; The GST.

DAVID SPEERS: As we saw in Parliament this afternoon Labor spent much of their time, most of their time, going after the Government over the GST. But towards the end they turned their attention to Mal Brough, Special Minister of State. With me now is the Manager of Opposition Business and the Shadow Finance Minister, Tony Burke. Thank you for your time.

I just want to start with Mal Brough before we talk tax. How far can Labor go with this line of questioning given the Peter Slipper - James Ashby issues were before his time as a minister? You’re only meant to ask about his ministerial duties in Question Time.

TONY BURKE, SHADOW FINANCE MINISTER AND MANAGER OF OPPOSITION BUSINESS: In terms of the parliamentary procedure of it, for today’s Question Time, not very far. All you could actually ask him was: as a matter of government policy or as a matter of principle, is this conduct allowed? Now, something very unusual happened in the first answer Mal Brough gave where, in his first answer, he referred to reports in the papers today and a statement he’s put out. 

We’re also allowed to ask questions about anything they give in their answers. So, whereas at the beginning of Question Time today we couldn’t ask about any of the detail of the James Ashby events of some time ago now, as of today, through his first answer, he’s brought them all within Standing Orders. Anything that’s in those reports today, anything that’s in the statement he’s put out, by him including that in his first answer that is all now a completely valid line of questioning as far as the Standing Orders are concerned.

SPEERS: So we can expect Labor, presumably for the rest of this week, to start digging into the nitty-gritty of this whole affair some years ago?

BURKE: I think as a result of those questions being available there’s a line of enquiry you can reasonably expect us to go down. It won’t be the focus of what we do, it wasn’t the focus of what we did today. But certainly there are some pretty grave questions that have arisen and as a result of those answers today, like the first answer, a whole lot of it is now valid within the Standing Orders. That wasn’t the case a couple of hours ago.

SPEERS: Let me turn to what was the main focus today, questions once again about the GST. Now, can you just clear up for me, what is the principle objection to putting up, not that the Government’s agreed to anything yet, but putting up the GST and compensating low and middle income earners?

BURKE: Ok, in the first instance the GST, no matter which way you cut it, is a regressive tax. Other forms of taxation you can target the people you want to pay and that’s where you get the additional Government revenue. With a GST it disproportionately, and even the Prime Minister concedes this, it disproportionately hits people who spend a higher proportion of their income on consumption.

SPEERS: Which is why you compensate them, which is what he keeps saying.

BURKE: Here’s the catch with compensation – he’ll give the examples of what John Howard did, Scott Morrison has even given examples of what happened when we priced carbon. If you look at what happened when John Howard brought in the GST originally, they abolished the wholesale sales tax at the same time. In terms of the inflationary impact of that 10 per cent, it was nowhere near the full ten. It was a fraction of it because the wholesale sales tax was being removed at the same time.

SPEERS: What about the carbon tax then? You mentioned that. That came in, it was regressive and it hit the poor, and you compensated.

BURKE: Two things on that. First of all, on the compensation part of it, we took a million people out of the tax system. The tax free threshold used to be $6000 and we shifted it up to $18,200. We created a situation where someone working part-time in retail for example effectively gets taken out of the tax system completely. Now that being done once…

SPEERS: Bracket creep catches them back up again, that’s how the tax system works.

BURKE: But if you’re working 18 hours a week, or something in that order in retail at the moment you’re effectively paying no tax. That’s where you’re at with the tax brackets. What I’m saying is for people outside of the payment system – if you’re within the payment system, yes there are ways of doing it, but you’ve always got the problem that the compensation can tend to be temporary whereas the GST rises become permanent…

SPEERS: But wouldn’t that also be the same if you brought back an emissions trading scheme? The cost of living impact, which there would be some, would be passed on, would hit regressively those on lower incomes.

BURKE: A couple of things here. First of all, on the issue of can you do the compensation. You’ve got two things happening: for people outside the payment system it is harder now to provide that sort of compensation through shifting the tax scales. Scott Morrison has made the claim they would have no net increase in the tax take. Now if you do that…

SPEERS: Tax burden, to be clear.

BURKE: Tax burden. But if you do that how are you going to provide the revenue to be able to make the payments to people within the payment system, and if you’re within the payment system right now, the Government is cutting your payments.

SPEERS: But are you really worried about increasing the overall tax take or tax burden? Labor’s policies would do that as well?

BURKE: What I’m saying is: Scott Morrison has said that won’t happen. I’m applying that lens to how do you then find the revenue to be able to deal with the payments system.

SPEERS: That clearly isn’t a concern for you though because Labor’s plans to put up taxes on superannuation and multinationals that increases the overall tax take.

BURKE: Yes it does.

SPEERS: So that’s not an issue for you?

BURKE: We’re always conscious of the total tax take. But in terms of are we willing to have measures where there would be some areas where there’s an increase in tax? Yeah we are.

SPEERS: But that does push the overall tax take…

BURKE: Yeah that’s why I’ve framed it purely within an expectation that Scott Morrison has put on, which I don’t see how that’s deliverable if you’re going to properly compensate people. At the same time, the measures you might use for people who are within the payment system, right now he’s taking payments from them.

SPEERS: Let me ask you about bracket creep. Do you see it as a problem at the moment? Does Labor have any plan to do anything about it?

BURKE: At the moment the problem has been their only plan was to rely on bracket creep, and that is a genuine problem if that’s all you’re relying on. We also need to acknowledge at the moment we have very low wage growth figures. It’s in the order of I think 2.3 per cent.

SPEERS: So it’s not a problem?

BURKE: Well at the stage where you have very low wage growth, where it’s in the order of about 2.3 per cent, in the private sector I think it’s about 2.1 per cent. So it is obviously less of a problem when you’ve got low wage growth than it is when you have…

SPEERS: So Labor won’t be offering relief - it’s not a priority?

BURKE: I’m not going to announce our tax on your program today. The priority is always – always to be – if you require extra revenue then you need to do two things: One, you need to look at where there is wasteful expenditure, and that’s why we announced we would cut their Emission Reduction Fund. It’s a significant amount of money. The capacity to cut it keeps reducing every time they keep wasting the money because the money they’ve contracted is gone. Every time they have a round and they come out with new ways of paying polluters, the capacity to save through that is diminished. But that’s a massive example of Government waste that should be cut.

You need to look at the expenditure side and you need to look at the revenue side. You see when we talk about doing something on high income superannuation tax concessions, no one says ‘but where will the compensation package be?’ because you’re targeting exactly where people have the greatest capacity to pay. As we move towards a situation where the burden of those tax concessions will get to be a bigger line item than the Age Pension itself, we’ve got to act on this.

SPEERS: A long way to go on this debate I’m sure.

Tony Burke, Shadow Finance Minister, thanks for joining us this afternoon.

BURKE: Talk to you again.