SUBJECT/S: Labor’s Plan for a Sustainable Budget; Malcolm Turnbull’s 15 per cent GST on everything; Jay Weatherill.

HOST: Joining us now is the Shadow Minister for Finance and the Leader of Opposition Business in the House, Tony Burke. Mr Burke, good morning and thanks very much for coming on 5AA Breakfast.


HOST: Do you think Stephen Conroy’s assessment of Jay Weatherill’s GST position is a fair one? Did the Premier break a solemn promise to the voters of South Australia? 

BURKE: I don’t know what was said during the election. My main objection with him was the claims of whether or not we had fully funded our education promises, and that part of it he resolved in an interview last night. There is an argument to have back and forth here, and our position is very strong federally that we don’t believe an increase in the GST is a fair way to raise revenue. 

We understand the states are in a financial problem, we absolutely understand that with the cuts to education and health. So I can see why Jay Weatherill is saying he needs to have a conversation about tax. The issue with the GST though is something where we’ve just got a fundamentally different view to him. 

HOST: But is the political problem for Federal Labor that Jay Weatherill looks like he is thinking harder about this issue than you guys? Does it look like Jay Weatherill is being more responsible and saying ‘look, the system is broken, something has to change,’ where as you guys, to use a Keating-ism, run the risk of looking like you’re re-heating the soufflé and using the same tactics that you’ve attempted to use, unsuccessfully to use, in the past to win an election based on a GST scare campaign.

BURKE: The shift here, and it’s a weird thing that’s happened during the debate over the last year, is the Federal Government have been effectively claiming you’re only talking about tax reform if you’re talking about increasing the GST. Now, increasing the GST is a direct hit on the household budget.

Now we’ve been talking about tax reform and putting forward very specific proposals, fully costed proposals, on tax changes for ages now. So, the multinational tax change, changes in superannuation tax concessions, the tobacco excise; none of these new announcement, all of them have different people who are affected by it but that’s the way we want to be able to deal with the revenue challenges that are there at the moment. So, the GST’s not the only option, it’s the option that hits the household budget the hardest, it’s an option that we ruled out.

HOST: Is the sum of those reforms though, some $7 billion into states coffers, because that seems to be the sticking point here, that is the short term windfall of an increase from 10 to 15 per cent, albeit that’s not the entirety of the model Jay Weatherill’s talking about here. But, yes Federal Labor has been talking reform, but in dollars and cents what does it mean for state coffers. 

BURKE: What it means is the education shortfall is fully funded and we haven’t made our health announcements yet. So…

HOST: So we would be awaiting Federal Labor’s policy for how it’s going to help fund health in states around Australia?

BURKE: Yeah, I’ve made clear, I said this on the weekend as well, that the full announcements of our policies on health we haven’t done yet. The full announcement of our policies on education are now there and fully funded. 

If you look at the difference between, and it is the simplest way of explaining why the GST is ultimately an unfair way to go and a way that hits the household budget – when you talk about a GST, people have to go straight away to ‘what are you going to do about compensation?’ because it’s hitting families. When you talk about changes in superannuation tax concessions, no one says ‘oh, where’s the compensation?’ because you’re closing a loophole. When you talk about multinational tax avoidance, people don’t say ‘oh, where’s the compensation going to be?’ because you don’t need it because you’re fixing a problem with the system.

HOST: If you’ve got an upcoming announcement with regard to policy that will solve the issue of states funding health, would you not consult with premiers or at least a Labor premier? Why is Jay Weatherill in the dark about this? Surely he’d be in the conversation?

BURKE: All I’ve said to you is it’s a matter of record that those announcement haven’t been made. We’re still working through consultations. The main health fight we’ve been in and arguing about, has been the dismantling of Medicare, and over summer we’ve had to deal with what’s been happening on diagnostic testing and the further cuts. They’re not Tony Abbott cuts, they’re specific Malcolm Turnbull cuts on Medicare there. So, there’s a whole range of health issues we’ve directly engaged with, but on the state shortfalls, that part of the cuts that happened from the 2014 Budget, is something that we haven’t had specific announcements on yet.

HOST: Just in terms of Labor’s yet to be announced health policy though, Tony Burke, given you came up with the sort of eye-wateringly large figure with your education blueprint last week, I mean $37 billion is a whole stack of money, surely you can’t pull one equally giant rabbit out of the hat on health? If you do, doesn’t that kick the ‘where’s the money coming from?’ question into play much more seriously if you come up with such an extravagant health plan?

BURKE: What we’ve done on your question there of ‘where’s the money coming from?’ is the opposite if pretty much any opposition previously, which is we’ve put down the improvements to the Budget bottom-line well in advance of making any of the spending announcements. When we made the education announcement last week, none of the revenue announcements there were new. We had more than $70 billion over 10 years worth of improvements to the Budget bottom-line already announced, already on the table, to show we could easily afford the $38 billion education expenditure we announced last week.

HOST: My point though is, I understand what you’re saying about the revenue measures in terms of education, but the revenue measures don’t generate enough money to cover your health policy yet do they?

BURKE: We haven’t fully spent the money that we’ve saved, but there’s more savings announcements to come. There’s more savings announcements to come, we’ve made a commitment that there will be more saves than spends over the decade with anything that we take to the election. 

We’ve done more than any other Opposition in terms of getting this information out early. Most Oppositions wait until just on the eve of the election before you hear anything about that. I don’t think it should be a disadvantage for us, the fact we’ve provided the public with much more information on all of this, to get right into the debate, than any opposition in living memory.

HOST: So you’ve got the first Question Time of the year today and undoubtably Labor will be asking questions of the Government about its GST positions. What is Federal Labor going to do about the Jay Weatherill problem? Because presumably, every time you guys open your mouths in Question Time about tax, the Libs will be sitting there with their little dossier of everything Jay Weatherill said in the past six months.

BURKE: They will, but let’s not forget with all of this, if we’re talking about the impact on the household budget and they’re talking about a disagreement between politicians, I think the Australian people know who’s talking about them. I don’t mind for one minute being in an argument explaining the fact that if you increase the GST from 10 to 15 per cent that has a direct impact on the household budget. 

Let’s not forget as well, when they say there will be compensation in tax cuts, those tax cuts get eaten away over time through bracket creep. The GST hike is permanent and with inflation it actually increases. So you end up with this situation where even if on the day they could claim they were compensating, over time, and people have seen it before, you end up with a tax hike being permanent and the compensation being temporary. 

Now, if they want to respond to that with ‘oh yes, but there’s a Labor Party member here who’s said something different,’ and make some political point out of that, they can go for it. If we’re talking about the household budget and talking about the impact on the Australian people and they’re taking about the politics, the Australian people work out pretty quickly who’s talking about them.

HOST: We focus primarily on the component of the Weatherill plan that is the increase in the GST, he also talks about reform for the funding model to the states. He talks about a fixed percentage of Income Tax being used because the growth in that is expected to create more sustainable bottom-lines than an increased GST take would over the long term. Is there any merit in perhaps reviewing that component of the plan?

BURKE: That sort of discussion is a valid discussion that states and federal governments will work their way through. Let’s not forget how this problem arose. This problem has arisen, not because of a challenge between income tax revenue versus indirect taxes, it’s happened because in the 2014 Budget the Government broke their promises to fund education, broke their commitments to continue to fund hospitals, and took $80 billion out of the lot. 

That’s why the states are in this situation and that’s why I’m personally not particularly critical of Jay Weatherill for feeling a need to be engaged in the debate in any way, when the Government’s holding a gun to his head and saying we’re not giving him the money you need for schools or for hospitals. I can understand why he’s in that position. But that only gets you to the first step. 

The second step is what’s the right way to raise that money and a discussion, which you just described, whether you use the income tax stream versus an indirect tax stream, that’s a fair discussion to have. The thing that we rule out is that you attack the household budget as the way of doing it. 

HOST: Shadow Minister for Finance, Tony Burke, thanks very much for joining us on 5AA Breakfast. 

BURKE: Great to chat, see you.

Tony Burke