28 October 2014
Transcript - #2014035, 2014

Interview with Marius Benson, ABC NewsRadio

BENSON:

Steve Ciobo, good morning.

CIOBO:

Good morning.

BENSON:

Could I begin with exactly what the Prime Minister said at the weekend. He said he was open to reforms that "Improve the State's indirect tax base." That base is overwhelmingly made up of the GST, the Goods and Services Tax, that's the biggy. The Prime Minister is saying then, he's open to increasing the GST, is that right?

CIOBO:

Well, he also made it clear that the Abbott Government is determined to avoid anything that increases the overall burden of tax. So what we're wanting to look at here is the tax mix and not actually increasing the overall tax burden on the Australian people.

BENSON:

Well, the overall tax burden hasn't really changed from 24% where it went to under Gough Whitlam, in fact, from 19%. That's a given that the overall tax burden isn't going to change, but you are looking at the tax mix. That means you are looking at, potentially, increasing the GST to allow a reduction in income tax.

CIOBO:

Well, we want to have a debate about what's going to work best for our federation. The fact is that many people feel that it's a, to use the Prime Minister's words, a bit of a dog's breakfast. We know that there's a lot of duplication that exists between different tiers of government, so this is really an opportunity to start a discussion about how we want our federation to be shaped going forward. In large measure, that is also dependent upon the revenue streams that flow to different tiers of government.

BENSON:

Sure, but just can I just narrow it down, just to clarify that point, of the GST, the Prime Minister's promise was, before the election, that the GST was not going to change, full stop. End of story. Does that promise on the GST stand?

CIOBO:

It absolutely stands, Marius. The fact is that in this term there's no change that's taking place. What we've outlined is a proposal to look at the federation and to look at the way in which revenue flows to different tiers of government. We need to be able to have these conversations in Australia. The Prime Minister made it clear that a mature conversation about what structure, the tax mix, that's going to best serve our federation going forward and that we need to move beyond mindless politics on this issue and actually determine what's going to service our nation for the next 50 years.

BENSON:

You say there that there won't be any change in this term. There will be no increase in the GST before going to the people with the issue.

CIOBO:

Well, we want to make sure that we start this process. That's the entire reason why the Prime Minister gave the speech that he gave at Tenterfield. It's about saying to the Australian people, look let's have a conversation about the tax mix. Let's have a conversation about the different responsibilities for the various tiers of government. This is part of making sure that we set our nation up. Now obviously, there will be as a consequence of that discussion, different suggestions and recommendations that will be put out. There will be a green paper, which is expected in the second half of next year and then a white paper that follows on from that, that will contain recommendations which the Australian people have the chance to have a look at. Ultimately, have the chance to have a say on it in an election. That will help to shape this nation going forward.

BENSON:

Can I get you to respond to a criticism that comes from Labor and others, which is if you look at increasing indirect taxes, indirect taxes are regressive. The GST, petrol excise, things like that, they hit lower incomes harder as a proportion of income. The May budget hit low incomes hardest because it cut government services and as we've discussed, low-income households are the ones that depend on those government services that are gone. The poor are getting hit at every turn by this government. Is that a fair criticism?

CIOBO:

Of course it's not. I find it particularly curious that the Australian Labor Party would lead with their chin on this. It was the Australian Labor Party that introduced the world's biggest carbon tax, which was for all intents and purposes, a regressive tax. Let's not forget Marius, that the carbon tax that was introduced by the Labor Party and the Greens, was a tax that taxed the poor, who have as a percentage of their income, much higher expenses for energy than the wealthy do. Yet they somehow say, oh well every other tax that any other government is looking at changing or in some way amending, is a regressive tax that's not in their interests.

Yet the Greens and the Australian Labor Party, did that exact thing off the back of a carbon tax, but what's more, they didn't do it with a mandate from the Australian people. Unlike the Coalition who are saying, well let's look at our tax mix and instead, we're actually going to take that to an election.

BENSON:

Can I ask you about a speech Rupert Murdoch gave earlier this month to the G20 being reported in the Australian today and Rupert Murdoch is warning in that speech to the G20 of a widening wealth gap, a massive shift in societies that benefit the super rich. Is that widening wealth gap a problem in Australia?

CIOBO:

Rupert Murdoch's speech was a thought provoking speech. It was a speech that addressed the concerns that exist in relation to monetary policy settings in many respects. What we see through the easing of monetary policy is that there's more scope for the wealthy to generate increased asset values because they hold more assets and generally a consequence of looser monetary policy is that you get increases in asset values.

In terms of Australia, well let's think Australia is like many other countries around the world, grappling with the issue of how to drive economic growth through more than simply having loose economic... Or I should say, loose monetary policy. This in many respects, underscores this government's focus on investing in infrastructure. We believe that it's fundamental to Australia's long-term future to put record amounts of funding and the right framework in place to drive infrastructure across Australia and to ultimately drive productivity.

BENSON:

Sure, that's a good one, but can I just ask you, are you concerned about a widening wealth gap as is Rupert Murdoch?

CIOBO:

Well we know across the world that the wealthy are getting wealthy. I should say, the wealthy are getting wealthier. But we also know that the more disadvantaged in society are also, in relative terms, getting more wealthy. There is of course an increasing gap between the very wealthy and those that are not so fortunate. That ultimately is a challenge that any government faces globally in Western democracies.

BENSON:

Steve Ciobo, thank you very much.

CIOBO:

Pleasure.