SUBJECT/S: The passing of Alby Schultz; Abbott Government’s plan to increase the GST; Commonwealth-State distribution; Climate change; Renewable energy

SHADOW FINANCE MINISTER AND MANAGER OF OPPOSITION BUSINESS, TONY BURKE: First of all, I want to acknowledge the passing of Alby Schultz. Alby Schultz, as a member of the Liberal Party in the House of Representatives, is someone who you not might expect me to have had a very strong relationship of respect.

Alby, as a Liberal Member of Parliament, came to me very early on after I became Australia’s Agriculture Minister. I think he viewed the advent of the Labor Government as his first chance to be able to get his hands on agricultural policy, because I wasn’t a National Party Minister. Alby was a great voice for country Australia, worked very closely with me during those years and while he was on the other side of the aisle, he is somebody who I’ve always had the deepest level of respect for, not only in the way he handled himself fearlessly as a Member of Parliament, but also as one of those Australians who just had an extraordinary life; from an abattoir worker to a Member of the House of Representatives.

I want to pass on my condolences to Alby’s family. Alby Schultz will always be one of the greats to my way of thinking.

The reason I’ve called the media conference today is to be able to talk about the speech that has been leaked to the papers today from Joe Hockey. Joe Hockey has put forward two propositions. One, he wants the states to consider where they’re at on the GST, which obviously means broadening the base and increasing the rate. But secondly, he has flagged the principle that the states should raise enough money to match their spending. Now for more than forty years it's been the situation that the Commonwealth would assist the states on key areas of expenditure. This principle that the states would have to raise everything they spend can only mean one thing, and that is a massive hike in both the rate and base of the GST.

The last full financial year we've got figures for, the 2013-14 financial year, the amount of money transferred from the Commonwealth to the states fell just short of $100 billion. Half of that was GST money. To fully offset it, you would be talking about doubling the amount of revenue for the GST. To have any sort of impact on the principle Joe Hockey has put in that speech today, it can only be done by him putting pressure on the states to increase both the rate and base of the GST. That means Joe Hockey calling for a GST rate of much more than 10 per cent and it being added to fresh food, to health and to education services. There's no other way of making sense of the speech Joe Hockey's giving today.

Labor stands firm, as we always have, on the issue of the GST. An increase in the base of the GST or an increase in the rate can only be done in a way that would hurt the people who governments are meant to be there helping. It's a regressive tax. There's no way of increasing the revenue for it without hurting the people who can least afford it and Joe Hockey shouldn't be able to think he can get away with some sort of game with the states, which is ultimately aimed at a massive hike, a massive hike in the base and the rate of the GST.

JOURNALIST: Mr Burke, is there anything wrong with the Federal Government encouraging states to look at a more efficient tax systems?

BURKE: More efficient taxes within the states is part of the ordinary course of reform. Labor itself, Chris Bowen, has complimented some of the reforms the ACT Government for example, has made with respect to how they've been dealing with stamp duty and trying to change it to a more efficient form. Those sorts of issues are within the states’ domain, and when efficiency is being put in place there, that's a good thing. But let's not mistake unfairness for efficiency.

Joe Hockey can't get away with claiming that slugging people every time they go and buy fresh food is somehow about efficiency. That's just straight unfairness. That's unfair for people at the bottom end of the economic pile and for middle and lower income families. It's unfair to lower and middle-income families so he can provide tax benefits for people at the absolute extreme ends of the wealth scale. That's why it’s no surprise Joe Hockey's willing to have a public conversation about hitting people every time they buy their groceries, but he's not willing to have a conversation about Labor's plan to increase tax on multinational corporations or on people who have many, many millions of dollars in their superannuation; to start to pay some sort of tax on additional earnings there. Joe Hockey ruled that out as unfair, but he's got no sympathy for the people a couple of blocks away, who are shopping at Woolies to buy their groceries. He's willing to tax them, just not the people who can afford it.

JOURNALIST: Do you agree the GST is an effective tax?

BURKE: It's a regressive tax. There is no other way of dealing with the GST than acknowledging it's a regressive tax. That’s why Labor has opposed increasing the rate and base.

JOURNALIST: If the GST is so bad then why didn't Labor scrap it when in office?

BURKE: When you've got that system there through the whole economy and locked in through the whole economy, you're not in the position where when you come to government those eggs can be unscrambled and we said that during our time in Opposition. That had been Labor's position for a very long time.

JOURNALIST: Do you support a levy replacing stamp duty?

BURKE: Those are issues for state governments. But that example goes quite close to what I was referring to the ACT Government doing, in a staged way, and that's the sort of reform that can involve, if it's done the right way, an improvement in efficiency.

JOURNALIST: Can you tell us why should voters get behind your push for an emissions trading scheme?

BURKE: Bill Shorten made a speech last year. It's been reported today as though Labor's support for emissions trading is some brand-new revelation. Be in no doubt, Bill Shorten made the speech last year indicating support for emissions trading. It wasn't a secret speech, it was made on the floor of the Parliament. The conversation today has been as though it's some brand-new revelation that Labor believes there should be limits on pollution.

Tony Abbott's the person who made pollution unlimited and then launched schemes to pay polluters to pollute. He's wanting to rev this issue up today to try to distract from the ridiculous comments he's made in the last few days, where he's attacked solar energy and attacked wind turbines. Attacked solar and wind, attacked renewable energy and Tony Abbott's embarrassment from that clearly shows why he's behaved the way he has today.

The other thing we've seen in what Tony Abbott did today, he went back up and did the style of media conference up in the press gallery that he hasn't done since he was Leader of the Opposition and it just shows he's more happy being surrounded there as though he's Leader of the Opposition than he is in the Prime Minister's courtyard.

This is a man who would prefer to throw a punch than he is to lead the nation. Tony Abbott is not there to lead, he's there to throw punches. It's what he's more comfortable doing and it's one of the challenges we have in this country and one of the reasons why we currently are looked on with curiosity by the rest of the world as to why we're a nation where pollution is absolutely unlimited.

JOURNALIST: Mr Burke, are you concerned though what this seeming leak indicates there is a divide within the party, and should the person who is responsible for this leak be forced to resign?

BURKE: We're talking about a document that hadn't even made it to Shadow Cabinet. We're talking about an early iteration of a policy document and I think we shouldn't be getting too excited about that, particularly as the big revelation that's meant to be within it, was something delivered on the floor of the House of Representatives 12 months and one day ago.

JOURNALIST: On the issue of in tax reform, Chris Bowen in particular has been outspoken on the need for true tax reform, about a bipartisan approach to major issues. When Labor comes out and knocks back an idea even before it's had time to be put in the public domain properly, doesn't that demonstrate you're not willing to be a part of this government when it comes to this touchy issue of taxation reform?

BURKE: Be in no doubt when this Government talks tax reform they only ever have one idea, their idea is always the same - to increase the GST. Their idea is to attack lower and middle-income households. That's where they go every single time.

When Labor talks about tax reform, we've talked about superannuation reform. We've been willing to have a conversation and a debate about other forms of tax deduction and other forms of tax minimisation that are out there, including those that affect multinational corporations. Each of those ideas, when we’ve put them out, real tax reform ideas that help deal with the mid-term problems we face fiscally, the Government's ruled them out straight away.

They're coming out with a tax white paper where they've already said nothing about superannuation reform there. They have one idea alone: their idea is to increase the GST and every time we have this conversation they deny it and a few months later, another document emerges, another speech is given, another pressure is put on the states to show that what this Government has been about from day one is attacking lower and middle-income households.

JOURNALIST: In fairness it's not just the Government calling for a broadening of the GST, or perhaps even a raising of the rate. A lot of leading economists say it is an efficient tax, it is a good way to raise revenue, and that even if it is regressive you can offset that by giving tax relief to lower and middle income earners. Is that something Labor would be welcome to looking at, maybe giving something back to those people who would be affected by a raising of GST?

BURKE: With respect, that question ignores the enormity of the equation Joe Hockey has laid bare today. The equation that Joe Hockey has laid bare is to say for the money that states spend, they should be raising all of it and the GST's one of the tools by which they raise it.

Now if the transfer from the Commonwealth to the States at the moment is $100 billion and half of that is GST, you are talking about a massive hike on a regressive tax, and if that was to then involve a payment system to get this full money-go-round to deal with every aspect of the regression and the unfairness, we would be seeing the sort of wholesale change in family payments and pensions and income tax scales that would just be beyond the scale of anything that's been done by a previous government.

The enormity of what Joe Hockey has proposed today is about getting the states to call for a hike in the GST and to do that - and it's the only idea they keep coming back on - they always use the word 'reform', but reform always means one thing to them. It always means it always hurts the people who can afford to be hurt the least.

JOURNALIST: Are you saying you don't believe vertical tax imbalance between the state and Commonwealth levels is actually a problem for the tax system? A lot of economists claim there is an inherent inefficiency when you have one group raising the money and the other spending it. It makes more sense for those to be aligned. Do you not share those concerns?

BURKE: The only way to make those perfectly in line would be something like doubling the GST, or giving the states back the power to levy income taxes or company tax. Now the moment you get to the next stage of that question, the argument is in a world of pain.

There's a theoretical argument that some economists can run, but once you get to the next stage of where would you go then, you end up with horrific duplication or massive cuts in services. It ends up a bad economic equation once you take the question to the next point.

JOURNALIST: One of your former leaders Kevin Rudd had a different solution to that problem, which was to take of the hospital system if he didn't believe the funding balance worked. Is that something Labor would work on in the future? Perhaps taking on more responsibilities the states are currently have?

BURKE: We're not flagging anything of that nature. OK, thank you for your time.

Tony Burke